In December 2024, the IPO batch of over 10 companies welcomed a new entrant in the primary market: Citichem India Limited. The SME IPO opened for subscription on 27 December 2024 on the BSE Limited (BSE SME) SME platform. The company aims to raise Rs.12.6 crore through this fresh equity sale at seven times its face value of Rs.10 per share.
Now, before investing in the IPO, you must carry out thorough research, right? Here are a few essentials to help highlight the important aspects of the IPO.
Citichem IPO Details:
| Offer Price | Rs.70 per share |
| Face Value | Rs.10 per share |
| Opening Date | 27th December 2024 |
| Closing Date | 31st December 2024 |
| Total Issue Size (in Shares) | 18,00,000 shares |
| Total Issue Size | Rs.12.60 Cr |
| Issue Type | Fixed Price Issue IPO |
| Lot Size | 2000 Shares |
The Citichem India IPO is a fixed-price IPO launched as an entirely fresh issue of 18 lakh shares. Here, a fixed-price IPO is when the share price is set in advance and does not change based on demand or bids. The minimum required investment from a retail investor is set at Rs.1,40,000, and for the HNIs (High Networth Individuals), it is 2 lots worth Rs.2,80,000.
The Citichem IPO is 100% underwritten. Horizon Management Private Limited is the lead manager for the IPO, with Kfin Technologies Limited as the registrar and Aftertrade Broking Private Ltd as the market maker. A market maker ensures liquidity and stable trading by actively buying and selling shares of the stock. At the same time, the registrar manages investor applications, share allotment, and record-keeping for the issue.
Additionally, the company’s promoters, Mr. Arif Esmail Merchant, Mrs. Fozia Arif Esmail Merchant, Mr. Hashim Arif Merchant, and Mrs. Saima Hashim Merhant, currently hold 83.25% of the company’s shares, which will reduce to 61.21% post IPO.
Allocation Of Shares:
The 18,00,000 fresh IPO issue has been divided into reservations for the different stakeholders. The reservation portion for the market maker is 92,000 shares, which at Rs.70 per share aggregates to Rs.64.40 lakhs.
Another lot of 8,40,000 shares are separated for the retail individual investors who usually invest up to Rs.2 lakh each, and the same portion is kept for individual retail investors who would invest more than Rs.2 lakh.
Objectives Of The IPO:
The net proceeds of the IPO are estimated to be Rs.11.80 crore, that is, the difference between the amount raised and the IPO expenses. The plan is to proceed with strategic investments to drive growth and efficiency. Around Rs.360.00 lakhs (28.57%) will be used for acquiring property, Rs.469.10 lakhs (37.23%) will go towards purchasing vehicles and accessories, and Rs.279.70 lakhs (22.20%) is allocated for general corporate purposes.
Grey Market Premium:
As of 7:34 a.m. on 27th December 2024, the Citichem India IPO’s grey market premium (GMP) was Rs.30 per share, indicating strong investor interest ahead of its listing. This premium suggests a potential listing gain of 42.86%, with the shares likely to debut at around Rs.100 per share on the BSE SME, assuming current trends hold steady. The estimate is based on the upper end of the IPO price band set at Rs.70, highlighting positive sentiment in the grey market. Source: Live Mint
Overview Of The Company:
Citichem India Limited, established in 1992, supplies specialty chemicals, active pharmaceutical ingredients (APIs), and food-grade chemicals. It caters to industries like pharmaceuticals, steel, textiles, food, adhesives, and paints. The company offers chemicals like Caustic Soda Flakes, Citric Acid Monohydrate, and Hydrogen Peroxide. Known for quality and innovation, it has earned a trusted reputation across diverse sectors.
Citichem’s management team has expertise in regulatory affairs, sales, marketing, and finance. This enables them to seize market opportunities, navigate complexities, and drive growth. They use a customer-centric and order-driven business model that ensures quality supply and economies of scale. Additionally, Citichem aims to expand procurement sources and strengthen its market position.
Financial Parameters Of Citichem India Limited:
EPS
Earnings Per Share (EPS) shows a company’s profitability per share. A higher EPS indicates better profitability, while a lower EPS may signal financial struggles. For Citichem, the EPS has increased in FY2024 to Rs.2.24 from the drop of FY2023 to Rs.0.80. Plus, as of the quarter ending June 2024, the EPS was Rs.0.4.
Net Worth
As of FY2024, the company’s net worth was Rs.7.25 crore, the highest in the past three years. And as of the quarter ending June 2024, the net worth increased to Rs.7.45 crore.
Total Borrowings
The company has been reducing its borrowings over the past three years, reaching Rs.1.08 crore as of the first quarter of FY2025.
SWOT Analysis of Citichem India Limited:
| STRENGTHS | WEAKNESSES |
| Experienced Promoters: Citichem’s promoters have over 25 years of experience in sourcing, negotiating, and supplying chemicals, giving them deep market insights and a strong ability to spot growth opportunities. Quality Commitment: The company focuses on high-quality products sourced from credible suppliers. Its rigorous quality management ensures that only certified products are delivered to clients, strengthening its reputation. | Dependence on Few Customers: A significant portion of Citichem’s revenue relies on a small number of customers. Any loss or reduction in purchases from these key clients could negatively impact the company’s financial performance. |
| OPPORTUNITIES | THREATS |
| Strategic Investments: The IPO proceeds will help Citichem expand its operations with investments in property, vehicles, and corporate purposes, driving growth and efficiency. Market Expansion: With plans to diversify procurement sources, Citichem is poised to strengthen its market position and increase its customer base. | Hazardous Chemicals Risks: As the company deals with hazardous and corrosive chemicals, accidents could lead to operational disruptions, financial losses, and legal consequences. |
Citichem India Limited has established itself in the chemicals industry, emphasizing quality and benefiting from its extensive experience. The company is currently pursuing an IPO for the purpose of raising funds to support its strategic investments, which may enhance its growth prospects. However, it’s important to consider some areas of concern, such as the company’s reliance on a limited number of key customers and the inherent risks associated with handling hazardous chemicals.
As with any investment, you must consider the company’s current performance, growth prospects, and risks. Research and weigh all the factors before deciding whether Citichem’s IPO fits your investment strategy.
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Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.
FAQ
What is meant by pre-apply in the case of Citichem India IPO?
The pre-IPO allows investors to invest in the IPO 2 days before the start of the subscription period.
What is Citichem India Limited’s PAT?The profit after tax figure of the company as of FY2024 is Rs.111.83 lakhs.
Can I submit multiple applications for Citichem India Limited’s public issue using the same PAN?
No, you can only submit one application using your PAN card.
I’m Archana R. Chettiar, an experienced content creator with
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