Robust debut: Here is your listing day strategy for Clean Science & Technology
The valuations on an absolute, as well as a relative basis, are high and investors should consider booking profits at such high valuations
Shares of Clean Science & Technology on Monday listed at Rs 1,784.40 on the BSE, registering a gain of 98.27% against the issue price of Rs 900. At 11:45 am, the stock corrected a little on profit-booking at higher levels and quoted at Rs 1,612 marking a premium of 79.11%.
Listing strategy
Most brokerages had a subscribe rating on the IPO. Saurabh Joshi, of Marwadi Shares and Finance, suggest investors can book profit as valuations after the listing has become expensive. “FY21 adjusted EPS (earnings per shares) of 18.68 at listing price of Rs.1,755 implies a P/E (price to earnings) of 93.95 which is expensive when compared to its peers namely Vinati Organics and Fine Organics which are available at a P/E of 72.9 and 76.4, respectively. The valuations on an absolute, as well as a relative basis, are high and investors should consider booking profits at such high valuations.”
On the contrary, B&K Securities has a price target of Rs 1,600 per share. As it believes the unique catalytic process has helped the company to improve productivity, yields and cost efficiency resulting in superior financial performance. The brokerage firm is of the opinion that the company can deliver Sales a growth of 27.3% CAGR (Compounded Annual Growth Rate), EBITDA (Earnings Before Interest Tax Depreciation & Amortization) to grow at a CAGR of 25.4% while PAT (Profit After Tax) is likely to grow at CAGR 25% over FY21-25E. The company has a strong balance sheet with net cash of Rs 2,500 crore and a healthy return on capital employed of 58.6%.
About Clean Science & Technology
Clean Science and Technology is one of the leading chemical manufacturers globally. It manufactures functionally critical specialty chemicals such as performance chemicals (MEHQ, BHA, and AP), pharmaceutical intermediates (Guaiacol and DCC), and FMCG Chemicals (4-MAP and Anisole).
The company supplies its products to manufacturers and distributors in India as well as overseas markets i.e. China, Europe, USA, Korea, Taiwan, and Japan. Bayer, Genex Laboratories, Nutriad International, SRF, Vinati Organics are a few of its customers. In fiscal 2020, it generated 69% of revenues through export.
(Disclaimer: The recommendations in this story are by the respective research and brokerage firm. Money9 & its management do not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)
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