JG Chemicals IPO

JG Chemicals IPO Analysis

Company Overview

JG Chemicals is a leading zinc oxide manufacturer in India, commanding a 30% market share. The company's diverse product portfolio includes over 80 grades of zinc oxide used across various industries, such as rubber, ceramics, paints, pharmaceuticals, electronics, and more. The rubber and tyre industries account for around 90% of its sales revenues. JG Chemicals has established strong customer relationships, being a supplier to 9 out of the top 10 global tyre manufacturers and all of the top 11 Indian tyre manufacturers​.

Company Financials

JG Chemicals has shown robust financial performance, with revenue from operations and profit after tax witnessing significant growth. The company's revenue from operations grew at a Compound Annual Growth Rate (CAGR) of 23.87% between Fiscals 2020 and 2022, while its profit after tax grew at a CAGR of 75.80% over the same period​.

Company SWOT Analysis

• Strengths: Largest zinc oxide manufacturer in India, strong international customer base, operates in an industry with high entry barriers, consistent financial growth, and focus on sustainability​.

• Weaknesses: Dependence on a few major clients for a significant portion of revenue.

• Opportunities: Expansion into new industrial sectors and international markets.

• Threats: Risk of loss due to low manufacturing levels, reliance on purchase orders without long-term contracts.

IPO Overview

The JG Chemicals IPO comprises a fresh issue of INR 202.5 crore and an Offer for Sale (OFS) of up to 5.7 million equity shares. The IPO is scheduled to open on March 5, 2024, and close on March 7, 2024, with a listing date of March 12, 2024. The issue price is set between ₹210 - ₹221 per equity share​.

IPO Details

• IPO Date: March 5, 2024 - March 7, 2024

• Issue Type: Book Built Issue IPO

• Issue Size: INR 251.19 Crore

• Face Value: ₹10 per equity share

• Price Band: ₹210 - ₹221 per equity share

• Listing At: BSE, NSE

• Lot Size: 67 Shares

Objectives of the Issue

The net proceeds from the IPO are intended for investment in its subsidiary BDJ Oxides for repayment/pre-payment of borrowings, funding capital expenditure for setting up a research and development center, funding long-term working capital requirements, and for general corporate purposes​.

JG Chemicals IPO Grey Market Premium (GMP)

JG Chemicals IPO is commanding a strong GMP of around 25%.

Conclusion for JG Chemicals IPO

JG Chemicals presents a compelling investment opportunity with its leadership position in the zinc oxide market, diversified customer base, and strong financial performance. However, potential investors should consider the company's reliance on a few major clients and the absence of long-term contracts with its clients. Assessing both the strengths and weaknesses is crucial for aligning with individual risk appetites.

Disclaimer: All information is provided for educational and informational purposes only. Data is fetched from publicly available sources such as the DRHP filed by the company and other reliable sources. Please consult a financial advisor or do your own analysis before investing/trading in the stock market.