Archean Chemical hits highest level since debut; up 51% against issue price

Shares of Archean Chemical Industries (ACIL) hit a new high of Rs 612.70 as they rallied 7 per cent on the BSE in Friday’s intra-day trade in an otherwise subdued market. The stock of the specialty chemicals company was trading at its highest level since its listing on November 21, 2022. In comparison, the S&P BSE Sensex was down 0.22 per cent at 59,826 at 11:15 AM.

With today’s gain, the stock price of ACIL has surged 51 per cent against its issue price of Rs 407 per share.

ACIL is a leading specialty marine chemical manufacturer in India. It manufactures three major product categories such as bromine, industrial salts and sulphate of potash.

ACIL commanded a leadership position in Indian bromine merchant sales (traded bromine in the market) by volume in financial year 2021, and it was the largest exporter of Bromine from India by volume during the year. It was also the largest exporter of industrial salt in India with exports of 2.7 million MT.

ACIL is the only manufacturer of sulphate of potash from natural sea brine in India. The sulphate of potash market is being driven by the advantages of sulphate of potash over muriate of potash and growing demand driven by its use in fertilizers primarily for growing fruit and vegetables and medical uses as low potassium levels have been linked to cancer and certain cardiovascular diseases. It aims to be the key producer and supplier of sulphate of potash in India.

ACIL has planned product innovation, and capex to expand existing as well as new manufacturing facilities ensures positive business growth. The company has delivered 36.3 per cent / 77.7 per cent growth in revenue and EBITDA between FY20-22, respectively. It has benefited from its fixed sales contracts with agreed pricing and volumes of approximately 12 months duration with its bromine customers of approximately 24 months duration with its industrial salt customers.

The Rs 1,462 crore initial public offering (IPO) of ACIL had received good response with the issue getting subscribed 32.23 times. The company proposed to utilize the net proceeds of the fresh issue towards redemption or earlier redemption in part or full of non-convertible debentures (NCDs) issued by the company amounting Rs 644 crore and general corporate purposes prepayment.

According to the Company Commissioned F&S Report, from calendar years 2022 to 2025, the Asia Pacific (APAC) chemicals market is expected to grow at the fastest rate of 5-6 per cent, while the chemicals markets in Western Europe, North America, and Japan are expected to grow at a slower rate of 2-3 per cent since they are relatively mature, HDFC Securities had said in IPO note.