Hindcon Chemicals IPO of up to 27,60,000 equity shares of face value of Rs 10 each for cash at price of Rs 28 per equity share, aggregating up to Rs 7.73 crore will open on NSE’s Emerge platform on February 26 and close on February 28, 2018. Hindcon Chemicals Ltd. (HCL) is primarily engaged in manufacturing of chemicals particularly for construction industry with manufacturing facility located at Howrah, West Bengal which has an existing installed capacity of 30,000 MT per year. The Issue is being lead managed by Hem Securities Ltd. and Link Intime India Pvt. Ltd. is the registrar to the issue.
Hindcon Chemicals IPO: Financials
| (Rs. in lakhs) | |||||
| Particulars | HY 2018 | 31-03-2017 | 31-03-2016 | 31-03-2015 | 31-03-2014 |
| Revenue from Operations | 1726.78 | 3394.45 | 3335.76 | 3490.62 | 3088.61 |
| Other Income | 85.82 | 35.25 | 9.61 | 5.85 | 3.52 |
| Total Revenue | 1,812.60 | 3,429.70 | 3,345.37 | 3,496.47 | 3,092.13 |
| Cost of materials | 1,097.01 | 2,242.99 | 2,251.02 | 2,750.22 | 2,522.42 |
| Stock-in-trade | 41.32 | 99.01 | 85.82 | 111.65 | 68.38 |
| Finance Costs | 35.44 | 61.48 | 68.35 | 74.77 | 64.21 |
| Depreciation | 6.85 | 17.94 | 21.37 | 26.56 | 14.16 |
| Other Expenses | 150.81 | 390.89 | 534.69 | 339.79 | 245.86 |
| Total Expenses | 1,521.22 | 3,118.10 | 3,215.57 | 3,446.47 | 3,041.71 |
| Profit before tax | 291.38 | 311.6 | 129.8 | 50 | 50.42 |
| Total Tax | -75.45 | -101.62 | -44.47 | -16.32 | -15.71 |
| Profit after Tax | 213.11 | 207.55 | 83.98 | 33.16 | 34.15 |
| Net Worth | 1721.74 | 1508.63 | 1225.51 | 1141.53 | |
| Equity Capital | 748 | ||||
| NAV (post issue) | 40.32 | ||||
| Face Value | 10 | ||||
| EPS (FY17) | 2.77 | ||||
| RONW % | 6.28% | ||||
| Post Issue Equity | 1024 | ||||
| IPO Price | 28 | ||||
| Face Value | 10 | ||||
| Price/Book Value | 0.69 | ||||
| EPS Post Issue (on Fy17 earnings) | 2.03 | ||||
| PE – (fy17 Earnings) | 13.81 | ||||
| CAGR Sales 3 Yrs | 3.20% | ||||
| CAGR Net Profit 3 Yrs | 82.49% | ||||
| Market Cap | 2867.20 | Lakhs | |||
| Market cap / Sales | 0.84 | ||||
Hindcon Chemicals IPO: Salient Points:
- Hindcon Chemicals has range of innovative products and solutions for the construction industry.
- Company is primarily engaged in the manufacturing of construction chemicals such as Waterproofing additives, Plasticisers, Concreting Aids, Sealant Products etc, which finds their applications mainly in Construction Sector. portfolio consists of over 100 products. It also undertake waterproofing and rehabilitation jobs on works contract basis
- Its business is dependent on the performance of the construction and infrastructure industry.
- Company has won export awards and recognition.
- Hindcon Chemicals revenues are significantly dependent on sales of single product i.e. sodium silicate and over the years, such sales have emerged as the largest single contributor to its revenue and business. In F.Y. 2016-17, revenue from sale of sodium silicate accounted for 72.69% of its total revenue for such year
- In 2016-17, the company’s net revenue of operations was Rs 33.94 crore, of which 32.14 per cent came from exports to Nepal, Bhutan and Bangladesh
- Company has good clients like L&T,. Birla Tyres Ltd., Atlas Copco , Hindustan construction co. ltd., Ashoka Buildcon., Gammon India Limited, SAIL, Hindustan Zinc Limited etc.
- The stock is being offered at a PE of 13.81 on fully diluted equity. Further half yearly numbers are extremely encouraging.
- I intend to apply in Hindcon Chemicals IPO due to reasonable valuation and even more encouraging half yearly results and also the track of lead manager Hem securities in the past.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.