Clean Science IPO (Clean Science and Technology IPO) envisages to raise Rs 1,546.6 crore. It has a price band of Rs 880-900 per share. The Pune-based speciality chemical manufacturer Clean Science and Technology will be opening on Wednesday, July 7, 2021 The Pune-based company is into the speciality chemical segment. It manufactures functionally critical specialty chemicals such as performance chemicals, pharmaceutical intermediates and FMCG chemicals.
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Clean Science IPO (Clean Science and Technology IPO) Details:
| Issue Period | 7th July – 9th July, 2021 |
| Issue Details | Offer for Sale of equity Shares upto ₹ 1,546.62 Cr |
| Face Value (₹) | 1 |
| Issue Size (₹ Cr) | ₹ 1,546.62 Cr |
| Bid Lot | 16 Shares and in multiple thereof |
| Price Band | ₹ 880 – 900 |
| Issue Structure : | |
| QIB | 50% of the offer |
| NIB | 15% of the offer (₹ 231.99 Cr) |
| Retail | 35% of the offer ( ~ 6,014,639 Shares,₹ 541.32 Cr) |
| Applications for 1x retail | 3.76 Lacs |
| BRLMs | Axis Capital, JM Financial, Kotak Mahindra Capital |
| Registrar | Link Intime India Pvt. Ltd. |
Updates & Indicative Time Table:
- ANCHOR ISSUE: IPO bound Clean Science and Technology raised Rs 464 crore from 41 anchor investors . The anchor investors include likes of Government of Singapore, BlackRock Global Funds, Goldman Sachs India, Abu Dhabi Investment Authority, BNP Paribas Arbitrage, Axis Mutual Fund, ICICI Prudential Mutual Fund, HDFC Mutual Fund, SBI Mutual Fund, SBI Life Insurance Company, ICICI Prudential Life Insurance Company and Aditya Birla Sun Life Insurance Company among others.
- Indicative Timetable
- Finalization of Basis of Allotment 14-07-2021
- Refunds/Unblocking ASBA Fund 15-07-2021
- Credit of equity shares to DP 16-07-2021
- Trading starts 19-07-2021
About Clean Science and Technology
- Clean Science and Technology Limited was incorporated in the year 2003.
- Company’s name was changed to ‘Clean Science and Technology Pvt. Ltd.’ in 2006, so as ro reflect company’s vision of focusing on sustainable chemistry led by innovative technology and lower effluents.
- Clean Science and Technology Limited (CSTL) is among the few companies which are globally focused fully on developing newer technologies using in-house catalytic processes, which are eco-friendly and cost competitive.
- Some of these novel technologies have been developed and commercialized for the first time.
- CSTL has 2 certified production facilities at Kurkumbh (Maharashtra), in close proximity to the JNPT port. Each facility has an on-site R&D unit, quality control department, warehouse, and effluent treatment system that treat effluent, to make their facilities zero liquid discharge facilities. Their facilities
have dedicated production lines for their products, with a combined installed capacity of 29,900 MTPA and capacity - The production facilities clocked utilization rates of 71.94% for Fiscal 2021.
- Company’s products are used as key starting level materials, as inhibitors, or as additives, by customers, for products sold in regulated markets.
- Key customers include Bayer AG, SRF Ltd, Gennex Laboratories Ltd, Nutriad International NV and Vinati Organics Ltd.
- The company has about 349 permanent employees. In addition, they take services of contract with third-party manpower.
Clean Science IPO: Financials
| Particulars / (₹ In Cr) | 2021 | 2020 | 2019 |
| Revenue from Operations | 512.43 | 419.3 | 393.27 |
| Revenue Growth (%) | 22.21% | 6.62% | – |
| EBITDA as stated | 284.6 | 196.15 | 147.6 |
| EBITDA (%) as stated | 55.54% | 46.78% | 37.53% |
| Adj. EBITDA | 258.95 | 185.29 | 136.31 |
| Adj. EBITDA (%) as stated | 50.53% | 44.19% | 34.66% |
| Profit Before Tax | 267.3 | 182.32 | 136.54 |
| Net Profit for the period | 198.38 | 139.63 | 97.66 |
| Net Profit (% )as stated | 38.71% | 33.30% | 24.83% |
| Equity Share Capital~ | 10.62 | 1.33 | 1.42 |
| Reserves | 529.05 | 340.77 | 270.64 |
| Net worth | 539.67 | 342.1 | 272.06 |
| RoNW (%) | 36.76% | 40.82% | 35.90% |
| NAV(₹ ) | 50.81 | 32.21 | 25.61 |
| ROCE (%) | 73.89% | 58.48% | 50.75% |
| Net Cash from Operating Activities (₹ Cr ) | 192.85 | 160.1 | 84.74 |
| EPS (₹ ) | 18.68 | 13.15 | 9.19 |
| FV | 1 | ||
| IPO Price | 900 | ||
| FY21 EPS | 18.68 | ||
| PE | 48.18 | ||
| Market Cap in Rs. Cr. | 9558 | ||
| Market Cap / Sales | 18.65 |
Pros
- Track record of strategic process innovation through consistent R&D initiatives
- Among the largest producers globally of functionally critical specialty chemicals used across various industries and geographies resulting in a de-risked business model.
- Experienced Promoters and senior management with extensive domain knowledge
- Strong and long-standing relationships with key customers
- Automated manufacturing facilities with proven design and commercialization capabilities and strong focus on EHS
- Strong and consistent financial performance in the last three fiscals.
Cons
- The company is subject to strict quality requirements, regular inspections, and audits.
- The company operates in a hazardous industry and is subject to certain business and operational risks.
- Exchange rate fluctuations may adversely affect the company
- A significant portion of its Revenues are from Top 10 customers.
Clean Science IPO: Assessment
- Clean Science and Technology Limited enjoys the distinction of being among the leading companies in India to have commercialized use of environment-friendly processes to manufacture certain specialty chemicals and attained global capacities in these products.
- Clean Science and Technology Limited is amongst the leading companies globally that is focused entirely on developing newer technologies using in-house catalytic processes, which are eco-friendly and cost competitive. Focusing entirely on developing newer technologies has enabled it to emerge as the largest manufacturer globally of certain specialty chemicals in terms of manufacturing capacities.
- The company manufactures functionally critical specialty chemicals such as Performance Chemicals – Mono methyl ether of hydroquinone (“MEHQ”), Butylated hydroxyl anisole (“BHA”), and L-Ascorbyl Palmitate (“AP”), Pharmaceutical Intermediates- Guaiacol and Dicyclohexyl Carbodimide (“DCC”) which are also widely used in anti-retroviral drugs, and FMCG Chemicals- 4-Methoxy Acetophenone (“4-MAP”) and Anisole.
- Within 17 years of incorporation, Clean Science and Technology has grown to be the largest manufacturer globally of MEHQ, BHA, Anisole and 4-MAP, in terms manufacturing capacities as of March 31, 2021.
- Clean Science and Technology export revenue stood at of Rs. 344.7 crs i.e. 68.59% of total revenue in FY21.
- The company’s customers and distributors are located in India and outside India, including China, United States, Europe, Japan, Taiwan and Korea.
- Between Fiscal 2019 and Fiscal 2021, company’s
- Total Revenue from operations has grown at a CAGR of 14.15%
- The EBITDA Margin was 37.53%, 46.78% and 55.54% respectively;
- The adjusted EBITDA was 34.66%, 44.19% and 50.53% respectively;
- The ROCE was 50.75%, 58.48% and 73.89%, respectively
- Net cash from operating activities was ₹ 84.74 crore, ₹ 160.10 crore and ₹ 192.85 crore.
- The specialty chemicals industry has significant entry barriers.
- There is Shift of key raw materials sources to India due to tightening environment norms in China. Clean Science and Technology IPO is well positioned to capitalize on this due to lower production costs, innovative and economical techniques & established relationships with MNCs
- Clean Science IPO was last reported to be commanding a GMP of Rs. 470-480.
- Clean Science and Technology IPO is seeking a PE multiple of 48 times on its FY21 earnings, ,Other chemical peers like Fine Organics, Vinati Organics, Camlin Fine Sciences, Anupam Rasayan, Rossari are ruling at higher PE multiple than this leaving room for upside.
- I intend to apply in Clean Science IPO (Clean Science and Technology IPO). The Clean Science IPO looks quite good both from angle of listing gains and is a strong case for medium term/ long term portfolio. The company could be an outperformed given its track record of continued focus on clean technologies, product identification, process innovation, catalyst development, significant global scale of operations as well as strategic backward integration.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in 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. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.