Keshav Lahoti, Associate Equity Analyst, Angel Broking Ltd
Chemcon Speciality Chemicals IPO was subscribed by 12.62 times on the second day of issue. Retail portion was most subscribed by 22.94 times. Due to over subscription in such a big number, most of the retail investors will be disappointed as they won't get a single lot. Non institutional and QIB were subscribed 3.50 and 1.37 times respectively. Such oversubscription was in line with our expectation, as we believe a lot is left on the table for the investors by comparing its valuation with other speciality chemical companies. We are positive on the future outlook for the industry as well as the Company, so in our IPO Note we have recommended to "Subscribe" to the issue for long term as well as for listing gains.
Due to its position as leading manufacturer of its products globally, it is getting strong traction among investors. But, product concentration and client concentration risk cannot be ruled out. Although Company clients are sticky in nature, they have long standing relationships. Aurobindo Pharma has been its client for more than 20 years.