Citichem India Limited is engaged in buying and supplying organic and inorganic chemicals, bulk drugs, and food chemicals to the the pharmaceutical industry. Citichem India IPO shall be mobilizing Rs 12.60 crore entirely as fresh issue of shares.

About: Citichem India IPO

• They are mainly engaged in the buying, procuring, and supplying, of organic and inorganic chemicals, bulk drugs, and, food chemicals to pharmaceutical industry.
• The traded specialty chemicals and intermediates have a wide application in aluminium, steel, textiles, paper, dairy, paints, dyes & intermediates, soap making, pharma, food and adhesive Industry.
• Company also supplies food preventives and chemicals under its own brand name which is thereafter converted into sales in their own books by the distribution team who ensures safe delivery of bulk supply.
• These works are primarily sourced through our leased Registered Office located at Masjid Station, Mandvi, Mumbai.
• Promoters of Company are Mr. Arif Esmail Merchant, Mr. Hashim Arif Merchant, Mrs Fozia Arif Merchant and Mrs. Saima Hashim Merchant.

Financials: Citichem India IPO

Citichem India IPO: Salient Points

• Globally, India is the fourth-largest producer of agrochemicals after the United States, Japan and China. India accounts for ~16% of the world production of dyestuffs and dye intermediates. Indian colorants industry has emerged as a key player with a global market share of ~15%.
• With a CAGR of 12% for the chemical market, Citichem aims to capitalize on the growing demand for specialty chemicals in industries.
• Use of Net proceeds:

• Citichem India Limited operates three key business divisions i.e. Specialty Chemicals, Food Chemicals, and Laboratory Chemicals.
• Their portfolio includes highly demanded products such as Caustic Soda Flakes and Hydrogen Peroxide.
• Citichem has built strong supplier and customer relationships, positioning itself well in a competitive market.
• Citichem aims to evolve as trading company focusing on high-margin specialty chemicals rather than commodity trading.

• Peers: Company has indicated two peers

• Shankar Lal Rampal Dye-Chem Ltd with a PE of 56.3 and much larger revenue base , Vinyl Chemicals, as their listed peers. They are trading at a P/E of 25.2 but is mainly into importing and trading Vinyl Acetate Monomer (VAM). Vinyl Chemicals (I) Ltd is promoted by Pidilite Industries Ltd.

• One of their main focus right now for the next couple of years will be to expand the food product portfolio related chemicals. wants to tie up global leaders and build a retail brand for commonly used chemicals in housing sector.
• From IPO proceeds plans to have own fleet of vehicles to provide better service to clients and property for warehouse to store chemicals.
• They are also setting up R&D of waste recycling,
• PE FY25 (annualized) 57.9x ; PE Fy24: 41.3x
• Revenues have been static or down in last fiscal but profit have shown uptick as company is focusing not on volumes but better margin products.
• Company says Q1 is slack and in H2 revenues are better.
• Citichem India IPO is quite expensive on valuations. This is a small issue and company is smaller compared to peers and is asking for premium valuations. IN past it has been seen that many small support such issues. issues in SME are able to see good listing as it is easy to support such issues by interested parties. Though it is a trading company prospects look good if management can walk the talk. I may apply in moderate numbers though issue is likely to see good subscription. It is \high risk case.
• GMP as reported on social media is around Rs. 30 (43%)
• Lead Manager Horizon Management Private Limited has a mixed record having managed many winners like Cosmic CRF Limited, Shree Karni Fabcom Limited, Osel Devices Limited, Veritaas Advertising Limited but last two issues and some other issues in the past have not listed well or have moved below IPO price subsequently. .
• Market Maker Aftertrade Broking Pvt Ltd has below average record if listing gains as well as subsequent gains is a criteria.
• SME IPOs are quite volatile and new retail investors need to exercise considerable caution in my view.
• This post is exploratory and educational purposes only. Please do your own diligence before investing in SME IPOs like this.
• Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.