Clean Science & Technology IPO: All You Need To Know

Vials of different coloured chemicals. (Photographer: Hannelore Foerster/Bloomberg).

Clean Science & Technology Ltd. will launch its three-day initial public offering on Wednesday as promoters look to pare holdings in the specialty chemicals maker.

The Rs 1,546.62-crore IPO, opening on July 7, will comprise an offer-for-sale of 1.71 crore shares by the promoters, according to the Maharashtra-based company's red herring prospectus. The price band is fixed at Rs 880-900 apiece.

Key Details

Minimum bid size: 16 equity shares and in multiples thereof.
Listing: NSE and BSE.
Book running lead managers: Axis Capital, Kotak Mahindra Capital, JM Financial.

The company's market value, according to BloombergQuint's calculations, will be Rs 9,559.70 crore at the upper end of the price band.

Watch the interview with Clean Science's management here:

Ownership

Promoters of Clean Science will sell 16% of the post-issue equity in IPO. They will own 79% after the share sale.

Business

Clean Science manufactures performance chemicals (MEHQ, BHA) used in liquid detergents, cosmetics and antioxidants, among others; pharmaceutical intermediates such as Guaiacol and DCC; and FMCG chemicals like anisole (making of dyes, fragrances) and 4-MAP (for resins, flavoring agents).

The company has two facilities with 11 production lines (including three lines for catalyst production). It has a capacity of 29,900 million tonnes per annum, with utilisation at 71.94%. The firm is in the process of setting up a third facility, while its fourth unit will be set up by 2023-24.

Clean Science, according to its red herring prospectus, claims to have become the largest producer of MEHQ, BHA, anisole and 4-MAP globally by installed manufacturing capacities as on March 31, 2021.

The company derives majority of its revenue from the sale of MEHQ, primarily involved in the manufacturing of acrylic fibers, paints and inks, adhesives and super absorbent polymers. It's also used in the agriculture industry. In the fiscal ended March 2021, revenue from the sale of MEHQ amounted to Rs 246.36 crore. That's 48.08% of the company's revenue from operations.

In 2020-21, revenue from Clean Science's top 10 customers amounted to Rs 245.46 crore, with Rs 68.04 crore coming from its largest customer. That's 13.28% of its top line.

The company derives a significant portion of its revenue from operations from China, India, Europe, and the Americas.

Finances

Clean Science's revenue grew at an annualised rate of 14.2% between FY19and FY21. Its profit after tax witnessed a CAGR of 42.5% during the period. The company's Ebitda margin stood at 38.7% in FY21.