Clean Science IPO opens tomorrow for subscription and it has already created a strong buzz in the informal grey market with premiums reaching as much as 50% of the offer price. The specialty chemical player plans to sell shares in the range of INR880 – 900 per share, raising as much as INR1,546.6 crore. Clean Science IPO GMP is currently quoting around INR460 per share after increasing in the last few days. Here is how the premiums have fared in recent days:
Clean Science IPO GMP Daily Movement
| Date | GMP (in INR) | Kostak (in INR) | Subject to Sauda (in INR) |
| 17 July 2021 | 580 | – | – |
| 16 July 2021 | 580 | – | – |
| 15 July 2021 | 560 | – | – |
| 14 July 2021 | 520 | 950 | – |
| 13 July 2021 | 520 | 950 | – |
| 12 July 2021 | 500 | 930 | 6,000 |
| 10 July 2021 | 550 | 950 | 6,000 |
| 9 July 2021 | 520 | 900 | 5,500 |
| 8 July 2021 | 480 | 850 | 5,000 |
| 7 July 2021 | 480 | 850 | 5,200 |
| 6 July 2021 | 460 | 750 | 4,800 |
| 5 July 2021 | 430 | 700 | 4,200 |
| 3 July 2021 | 400 | 630 | 3,700 |
| 2 July 2021 | 380 | 550 | 3,600 |
| 1 July 2021 | 350 | 525 | 3,500 |
| 30 June 2021 | 320 | 450 | 2,900 |
Clearly, Clean Science enjoys high IPO GMP and this isn’t without reasons. The company is a global leader in production of starting level materials such as MEHQ, BHA, Anisole and 4-MAP which are used in performance chemicals, pharmaceutical intermediates and FMCG chemicals. What’s more interesting is that Clean Science has developed indigenous technologies using catalytic processes, although the same are yet to be patented. While this is a clear red flag, it is not an uncommon practice in the industry. Many a times, management is simply burdened with other operational responsibilities, especially when the company in question is growing rapidly.
Here is a detailed view at Clean Science’s positive attributes
It has several marquee names among its client list and it is reassuring to see that many of these stayed with the company for long periods. Important among its key customers are Bayer AG, SRF, Gennex Laboratories, Nutriad International NV and Vinati Organics.
Despite the positivity around the offer, it is important to stay grounded and ask questions if the IPO is a long term investment. Thankfully, several analysts from leading brokerage houses have already weighed in.
In the IPO note, Jyoti Roy from Angel Broking noted, “We believe that the India specialty chemical industry is going to be one of the biggest beneficiaries of shifting of supply chains post the Covid-19 pandemic. Given CSTL’s financial performance, industry leading returns ratios and favorable outlook for the industry we recommend “SUBSCRIBE” to the issue.”
Similar sentiments were echoed by Ventura Securities which mentioned that its valuations are supported by high growth potential, dominant producer status, best in class profitability, and sustainable high return ratios. The firm also mentioned that the slowdown in China has created a significant opportunity for Indian companies in the performance chemicals space.
This is a recurring theme and it promises a long runway not just to Clean Science but also other specialty chemical players. Astha Jain, Senior Research Analyst at Hem Securities cited the company’s robust financial position, leadership in market share in some of its products, strong clientele and positive industry prospects as the reason for the “Subscribe” recommendation.
