JG Chemicals Fizzles on Debut: Lists Below Issue Price

13 Mar 2024 , 09:52 AM

JG Chemicals, a leading manufacturer of zinc oxide, made its debut on Dalal Street with its shares listing at a 5% discount. On the National Stock Exchange (NSE), the shares commenced trading at ₹209, reflecting a 5.43% discount from the issue price of ₹221. Meanwhile, on the Bombay Stock Exchange (BSE), the shares opened at ₹211, indicating a 4.52% discount.

The strong investor interest in the JG Chemicals IPO resulted in a subscription rate of 27.78 times during the subscription period from March 5 to March 7. Notably, non-institutional investors oversubscribed their quota by 46.33 times, while qualified institutional buyers subscribed 32.09 times, and retail investors subscribed 17.44 times.

The IPO raised ₹251.19 Crore for JG Chemicals, consisting of a fresh issue of shares worth ₹165 Crore and an offer-for-sale of 39 lakh equity shares worth ₹86.19 Crore by the promoters. Based in Kolkata, JG Chemicals is the largest zinc oxide manufacturer in India, catering to major global tire manufacturers. With over 90% of revenue coming from repeat business, the company maintains strong long-term relationships with its customers.

In addition to serving nine out of the top ten global tire manufacturers and all eleven leading tire manufacturers in India, JG Chemicals supplies products to prominent paint, footwear, and cosmetics companies in India.

For the financial year 2022-23, JG Chemicals recorded a robust 31.7% year-on-year growth in net profit, reaching ₹56.8 Crore, with revenue increasing by 28% to ₹784.6 Crore. In the nine-month period ending December FY24, net profit stood at ₹18.51 Crore on revenue of ₹486.3 Crore.

The company plans to utilize ₹91 Crore of the net proceeds from the fresh issue for its material subsidiary, BDJ Oxides, and allocate ₹35 Crore for long-term working capital requirements. The remaining funds will be utilized for general corporate purposes.

JG Chemicals operates three manufacturing facilities with a total installed capacity of 77,040 metric tonnes per annum, located in Jangalpur and Belur (Kolkata), and Naidupeta (Andhra Pradesh).