Kronox Lab Science IPO - Investment Rationale, Issue Details, Financials, Risks And More: Anand Rathi

Anand Rathi Report

Kronox Lab Science Ltd. launched its initial public offering today and the offer will close for subscription on June 05. The manufacturer of high purity specialty fine chemicals has fixed the price band in the range of Rs 129- Rs 136 apiece. The minimum order lot is 110. The Rs 130.15 crore IPO is entirely an offer-for-sale of 95.7 lakh equity shares by promoters.

Valuation

Kronox Lab Science has a wide range of products finding applications in diversified end user industries with high entry and exit barriers due to long customer approval cycles and strict product standards with focus on R&D and Quality Control and Zero debt company with strong and consistent financial performance.

At the upper price band company is valuing at P/E of 27.98 times, enterprise value/Ebitda 22.78 times with a market cap of Rs 5,046 million post issue of equity shares and return on net worth of 37.19%.

We believe that the IPO is richly priced and recommend an “Avoid” rating to the IPO.

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