Citichem India IPO Lists Flat at ₹70 on BSE SME: A Detailed Analysis

Citichem India, an emerging player in the chemical trading sector, made its market debut on January 3, 2025, listing its shares at ₹70 on the BSE SME exchange, which was the same price as the IPO. Despite receiving a phenomenal response from investors, with the IPO being subscribed a whopping 414.35 times, the shares remained stagnant at the offer price on the listing day.

This flat debut raises questions about the Grey Market Premium (GMP) trends and what it means for investors. The IPO's GMP was expected to be ₹20, indicating a 28.57% premium based on pre-listing indications, but the actual performance on the BSE SME was in line with expectations, showing no immediate gains post-listing.

Citichem India specializes in the procurement and supply of organic and inorganic chemicals, bulk drugs, and food chemicals primarily catering to the pharmaceutical industry. The company also deals with chemicals used in diverse industries, including aluminium, steel, textiles, paints, and adhesives, among others. The firm’s operations span from sourcing chemicals to ensuring safe deliveries through its distribution network.

The IPO raised a total of ₹12.60 Crores through the Fresh Issue of 18.00 Lakh shares. The lot size was set at 2,000 shares, and the minimum investment for retail investors was ₹1,40,000, while HNI investors had to invest in multiples of ₹2,80,000 for two lots. The market capitalization of Citichem India at the IPO price stood at ₹47.60 Crores.

Citichem India’s Financial Performance and Growth Prospects

The financials of Citichem India show steady growth in the past few years. For the fiscal year 2024, the company reported revenues of ₹149.07 Lakhs for the period ending June 30, 2024. In comparison, the revenue for FY 2023 stood at ₹1,960.58 Lakhs. The EBITDA for FY 2024 was ₹28.39 Lakhs, up from ₹44.71 Lakhs in FY 2022. The Profit after Tax for FY 2024 was ₹19.95 Lakhs, showing consistent profitability despite fluctuating revenues.

The company’s EPS for FY 2024, prior to the IPO issue, stood at ₹2.24, and post-issue, it is expected to be ₹1.64. With a pre-issue P/E ratio of 31.25x and a post-issue P/E ratio of 42.56x, the company seems fully priced compared to its industry peers, whose P/E ratio stands at 60x.

While these metrics indicate that the IPO is priced in line with market expectations, the GMP trend, which was positive pre-listing, has proven to be unreliable for making listing gain predictions. As the GMP fluctuates, it’s important to understand that it reflects demand and supply in an unorganized market and may not directly align with the actual listing performance.

The IPO Subscription and Market Trends

The Citichem India IPO saw overwhelming participation, with subscription rates hitting 414.35 times on the final day of bidding. This clearly indicates a strong investor interest in the company, particularly given the IPO's price band of ₹70 per share. This demand likely stems from the company’s solid growth prospects, steady financial performance, and wide-ranging industry applications for its chemicals.

Interestingly, the Grey Market Premium was a point of interest for many investors, with analysts suggesting potential gains of 28.57% based on market sentiments and the financials of Citichem India. However, as the shares listed flat on the exchange, it highlights that GMP trends do not always reflect the final listing price.

In the coming weeks, it will be crucial to see how Citichem India performs in the market. Will the flat debut result in gradual growth, or is the company now priced out of the market? Investors will need to monitor post-listing trends to gauge the stock’s future potential.

Citichem India is managed under the leadership of Mr. Arif Esmail Merchant, the Promoter & Managing Director, who brings over 30 years of experience in the chemical industry. His leadership, coupled with the company’s consistent performance, positions Citichem India to explore further expansion in its core markets.

Why Investors Should Be Cautious: A Final Word on Citichem India IPO

Despite the massive subscription numbers and a promising business model, we recommend investors exercise caution with the Citichem India IPO. While it may offer potential growth, the flat debut suggests that immediate listing gains may not materialize. Investors looking for quick gains should consider other opportunities in the market that may be better poised for short-term returns.

The Upcoming IPOs in this week and coming weeks are Indobell Insulation, Standard Glass Lining, Quadrant Future, Capital Infra Trust, Delta Autocorp, B R Goyal.

The Current active IPO is   Fabtech Technologies, Leo Dry Fruits, Davin Sons, and Parmeshwar Metal.

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