Anupam Rasayan hits 52-week low; stock slips 25% in a month

Shares of Anupam Rasayan hit a 52-week low of Rs 619.3 and slipped 9 per cent on the BSE in Monday’s intra-day trade. In the past one month, the stock of specialty chemicals fell 25 per cent, as compared to 1.3 per cent rise in the S&P BSE Sensex. It has corrected 44 per cent from its 52-week high level of Rs 1,106 that it had touched on February 2, 2022.

On May 24, 2022, the board had approved fund raising for an aggregate amount of Rs 800 crore through issue of equity shares via qualified institutions placement. The fund raising is subject to shareholder and regulatory approvals.

Anupam Rasayan is one of the leading companies engaged in custom synthesis (CSM) and manufacturing of specialty chemicals in India. The company had made a stock market debut on March 24, 2021. Anupam Rasayan had raised Rs 760-crore initial public offer (IPO) by issuing shares at price of Rs 555 per share. Earlier, it had hit a record low of Rs 472.25 on March 31, 2021.

In March 2022, the company had completed the acquisition of 24.96 per cent of total equity shareholding of and joint control of Tanfac Industries (TIL) from Birla Group Holdings, (a promoter company which is part of Aditya Birla Group) and few other promoter group of TIL.

Meanwhile, in Q4FY22, Anupam Rasayan’s earnings before interest, taxes, depreciation, and amortization (EBITDA) margin expanded 700 bps to 31 per cent from 24 per cent in Q4FY21. The margin improvement was driven by expansion in gross margin due to favourable inventories. The company expects inventory levels to come down significantly over the next few quarters, which should also reduce working capital debt (around Rs 200 crore).

That apart, analysts at JM Financial Institutional Securities raised its FY23/24 EBITDA estimate by ~2-3 per cent as they believe margin improvement from previously held inventories and expect some contribution from new capex.

“However, our FY23/24 PAT estimates have been lowered by ~4 per cent/3 per cent to account for higher interest expense arising from increased debt levels (due to Tanfac acquisition and upcoming capex),” the brokerage firm said.

The management said that current inventory levels were elevated because of fluid environment. They expect the supply chain disruption to stabilise and correction in inventory levels over next few quarters as input cost inflation cools off. Moreover, the management remains hopeful of six months’ pricing contracts with all of its customers over the next few quarters.