Stallion India Fluorochemicals IPO — Should You Subscribe? Read Anand Rathi's Analysis

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Anand Rathi Report

Stallion India Fluorochemicals Ltd. will launch its initial public offering on January 16 and the offer closes for subscription on Jan. 20. The refrigerants, industrial gases and related products supplier has set the price band at Rs 85 to Rs 90 apiece.

The Rs 199.5 crore IPO consists of a fresh issue of 1.79 crore shares worth Rs 160.73 crore and an offer for sale of 43 lakh shares totalling Rs 38.72 crore. The minimum order lot for bidding is 165.

Objects of the Issue

• Funding incremental working capital requirements of the company.

• Funding capital expenditure requirements for Semi-conductor and specialty gas debulking and blending facility.

• Funding capital expenditure requirements for Refrigerant debulking and blending facility.

• General corporate purposes.

Valuation & Outlook

Stallion India Fluorochemicals is engaged in the business of variety of refrigerant and industrial gases. The company has created a unique space in the segment with quality and economical products. The company holds a prominent position with a market share of 10% in fluorochemicals industry.

With its planned business strategy and capex mode, there is a significant headroom to improve earnings in coming years. On the valuation front, at an upper band, company is fairly priced at P/E of 48x post issue of equity shares on FY24 earning basis.

We believe that the company has a scope of business improvement on the back of industry tailwinds and business scalability. Thus, we recommend a “Subscirbe – long term” rating to the IPO.

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