Kronox Lab Sciences IPO Review

Kronox Lab Sciences IPO Review: The world of specialty chemicals is a highly specialized and demanding field where purity and precision are paramount. One such company in this field is Kronox Lab Sciences. From pharmaceuticals to pesticides, Kronox Lab Sciences products play a critical role in numerous applications.

Kronox Lab Sciences is preparing for an initial public offering (IPO). The IPO will open for subscription on June 3, 2024 and will close on June 5, 2024. In this article, we look at Kronox Lab Sciences IPO Review 2024 and analyze its strengths, weaknesses, financials, and GMP. Read on to find out!

Kronox Lab Sciences IPO Review – Company Overview

Founded in 2008, Kronox Lab Sciences Limited is a manufacturer of high-purity specialty fine chemicals for a variety of end-use industries. The company’s product portfolio consists of 185 products, including phosphates, sulfates, acetates, chlorides, citrates, nitrates, nitrites, carbonates, EDTA derivatives, hydroxides, succinates and gluconates.

The company’s high-purity specialty fine chemicals are used in API manufacturing, pharmaceutical formulation, scientific research, functional foodBiotechnology applications, pesticide formulations, personal care products, metal refineries and animal health products.

The following images show applications of the company’s products in the following industrial sectors:

In addition to producing products according to various domestic and international standards, we also carry out customized manufacturing with purities that differ from industry standards to achieve the high purity required by our customers.

The products are sold to customers in India and more than 20 countries, including the United States, Argentina, Mexico, Australia, Egypt, Spain, Turkey, United Kingdom, Belgium, United Arab Emirates and China.

The company conducts its operations through three manufacturing facilities located in Vadodara, Gujarat, close to Mundra, Kandla, Hazira and Nhava Sheva ports. As of December 31, 2023, the facility area is 17,454㎡. The installed capacity is 7,242 TPA.

Kronox Lab Sciences IPO Review – Industry Overview

The chemical industry is an important part of the global economy and is essential to almost every aspect of modern life. We provide services to a variety of fields including agriculture, construction, automobiles, FMCG, consumer durables, electronics, and healthcare.

The production of Indian chemical industry, excluding pharmaceuticals, is approximately Rs. 9.10 lakh crore in FY22, accounting for 8.4% of the manufacturing sector’s output value in constant prices compared to 7.9% in FY18. Chemicals and chemical products other than medicines Compound Annual Growth Rate (CAGR) is 8.8% from FY18 to FY22.

Additionally, according to the Ministry of Chemicals and Petrochemicals, Government of India, India ranks 11th in the world in exports of chemicals (excluding pharmaceuticals) and 6th in imports of chemicals (excluding pharmaceuticals).

Kronox Lab Sciences IPO Review – Financials

A look at Kronox Lab Sciences’ financials shows that it is a relatively small company with assets of ₹54.03 crores as of March 2023.

Looking at the financials, we see that revenue has increased from ₹63.24 crores in FY21 to ₹97.50 crores in FY23. The increase in revenue is accompanied by an increase in profits from ₹9.73 crores in March 2021 to ₹16.62 crores in March 2023.

Along with the increase in sales and profits, the company reported a slightly higher PAT margin of 17.04%. This means the company has been able to manage its costs effectively while growing its business.

For the nine months of FY24, the company’s revenue and net profit stood at ₹68.44 crores and ₹15.47 crores respectively, with a PAT margin of 22.60%.

As of FY23, the company reported 37.19% and RoCE of 49.86%, indicating excellent return on shareholder capital and efficiency in resource utilization. Additionally, the company enjoys a debt-free status which gives it sufficient leverage to raise debt financing in the future.

fellow worker

The Company believes that there is no other listed company in India engaged in a similar product segment. However, we have identified the following specialty chemical companies that have similar product ranges and/or similar supply chains to the end-user industries to which Kronox Lab supplies products.

Company Strengths

• The company manufactures a wide range of high-purity specialty fine chemical products with applications across industries such as pharmaceuticals, scientific and laboratory research, nutraceuticals, biotechnology, pesticides, personal care, metallurgy and animal health.
• The company has a long-standing relationship with its customers, with revenue from its top 20 customers reaching ₹49.68 crore in FY23, with a contribution of 67.05% in FY23.
• The products the company manufactures require deep domain knowledge to meet the desired purity levels. Additionally, due to the nature of the applications, processes and products are measured and applied according to established national and international standards and the strict specifications of our customers. This creates a barrier to entry for new entrants to the field.
• The company’s financials have seen steady growth in sales and profits over the past three years due to increased operations and effective management. Additionally, the company has no debt, giving it ample leverage to utilize debt financing in the future.
• The company has three manufacturing facilities strategically located in Padra, Vadodara and Gujarat, close to several ports including Kandla, Mundra, Hazira and Nhava Sheva. This allows the company to easily access port facilities and quickly import raw materials and export products.

company’s weaknesses

• The Company’s products are supplied in limited quantities for specific uses in applied industries. Reduced customer demand for our products could result in loss of business and affect our financial performance.
• The company’s product portfolio consists of more than 185 products, but sales are dominated by the top 20 products. If demand for these products decreases, the company’s business will be affected.
• The company does not have long-term contracts with its customers. It also generates 50.68% of its revenue from its top 10 customers in FY23. Any decrease in demand from these customers could have a negative impact on our business.
• The Company relies on third party transportation; logistics center A service provider that delivers raw materials to manufacturing facilities and delivers products to customers. Delays in the delivery of products or raw materials or increased costs for such companies could have a negative impact on our business.
• The company primarily exports its products to the United States, which contributed 22.93% to the company’s revenue in FY23. Significant social, political or economic disruption in the United States or adverse changes in trade and tariff policies could disrupt exports to the United States and adversely affect the Company.

Kronox Lab Sciences IPO Review – GMP

Shares of Kronox Lab Sciences were trading at a premium of 57.35% in the gray market on May 30, 2024. The stock was lagging at Rs.214. This is a premium of Rs 78 per share to the ceiling price of Rs 136.

Kronox Lab Sciences IPO Review – Key IPO Information

promoter: Jogindersingh Jaswal, Ketan Ramani, Pritesh Ramani

Book Operations Lead Manager: Pantomath Capital Advisors Private Limited

Proposal registered by: KFin Technology Limited

purpose of the problem

As the entire IPO is conducted through an offer for sale, the entire proceeds will be distributed based on the participation of the promoters. In addition, we expect that this IPO will improve the company’s visibility and brand image as well as provide liquidity to existing shareholders.

conclusion

In this article, we have taken a detailed look at Kronox Lab Sciences IPO Review 2024. The company demonstrates strengths such as a diverse product portfolio, strategic manufacturing facilities, and impressive financial performance.

But at the same time, risks associated with customer concentration, export dependence and the competitive nature of the chemical industry must be taken into account. What do you think the future holds for your company? Applying for an IPO? Let us know in the comments below.

Written by Aaron Barth

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