Kronox Lab Sciences Limited manufactures High Purity Speciality Fine Chemicals for diversified end user industries. The High Purity Speciality Fine Chemicals are used mainly as (i) reacting agents and raw material in the manufacturing of Active Pharmaceutical Ingredients (APIs); (ii) excipients in pharmaceutical formulations; (iii) reagents for scientific research and laboratory testing; (iv) ingredients in nutraceuticals formulations; (v) process intermediates and fermenting agents in biotech applications; (vi) ingredients in agrochemical formulations; (vii) ingredients in personal care products; (viii) refining agents in metal refineries; and (ix) ingredients in animal health products, amongst others. The products are manufactured in accordance with industry standards like IP, BP, EP, JP, USP, FCC, LR, AR, GR and ACS in addition to custom manufacturing specifications, which differ from the industry standards, required by the customers in select cases. They manufacture High Purity Speciality Fine Chemicals of various grades in particle sizes ranging from 10 mesh to 100 mesh. The range of more than 185 products spanning across the family of phosphate, sulphate, acetate, chloride, citrate, nitrates, nitrites, carbonate, EDTA derivatives, hydroxide, succinate, gluconate, among others are supplied to customers in India and more than 20 countries globally. In addition to the manufacturing of products in accordance with various domestic and international standards, they also undertake custom manufacturing to achieve high levels of purity, as specified by the client, having different purity levels than the prescribed industry standards. They continue to expand the range of products in order to meet changing demands of the end user industries. For the nine months periods ended December 31, 2023, December 31, 2022 and Fiscal 2023, Fiscal 2022 and Fiscal 2021, they manufactured and sold 188, 155, 157, 156 and 159 products, respectively. The products are supplied to various industries for use in their products and processes. Over the years, they have expanded the scale of operations and global footprint with customers in over 20 countries including United States, Argentina, Mexico, Australia, Egypt, Spain, Turkey, United Kingdom, Belgium, United Arab Emirates, China, among others. During Fiscal 2023, they exported the products to 15 countries. For nine months periods ended December 31, 2023, December 31, 2022 and for the Fiscals 2023, 2022 and 2021, the revenue from exports (excluding merchant exports) amounted to Rs 169.70 million, Rs 195.67 million, Rs 242.68 million, Rs 192.95 million and Rs 128.43 million and accounted for 25.07%, 26.41%, 25.39%, 23.46% and 20.56%, of the revenue from operations, respectively. The Company’s revenue from exports have grown at a CAGR of 37.46% between Fiscal 2021 and 2023. During the nine months periods ended December31, 2023, December 31, 2022and the Fiscal 2023, Fiscal 2022, Fiscal 2021, they served 353, 307, 351, 316 and 283 customers, respectively. They have served more than 592 customers in the last three (3) financial years and during the nine months period ended December 31, 2023 of which 141 customers amounting to 23.82% of total customers placed repeat orders. They have added 81, 78, 99, 92 and 76 new customers during the nine months periods ended December 31, 2023, December 31, 2022 and Fiscals 2023, 2022 and 2021, respectively. They have three (3) Manufacturing Facilities situated at Vadodara in Gujarat are close to the seaports of Mundra, Kandla, Hazira and Nhava Sheva. The Manufacturing Facilities are cumulatively spread across 17,454 sq. mtrs. and as on December 31, 2023, have an aggregate installed capacity of 7,242 TPA. The Unit I/II hold certifications such as, FSSC 22000 (Version 5), ISO 9001:2015, ISO 14001:2015, ISO 45001:2018. Further, they have also obtained certifications such as Kosher, Halal, GMP and GLP for some of the products manufactured at Unit I. Additionally, they have acquired a land admeasuring to 20,471sq. mtrs. at GIDC -Dahej II Industrial Estate. As per financial performance, Kronox Lab Sciences Limited has posted total income / net profits of Rs 63.24 Cr / Rs 9.73 Cr (FY21), Rs 83.34 Cr / Rs 13.63 Cr (FY22), Rs 97.50 Cr / 16.62 Cr (FY23) and Rs 68.49 Cr / Rs 15.46 Cr (Q3 FY24). So as per previous financials data, company has shown good growth. Company has shown above average results. Company has an average EPS of Rs 3.71 and average RoNW of 35.90% for last three fiscals. Issue is priced at a P/BV of 11.30 as per NAV of 12.04 as on Post issue. If we attribute latest earnings of FY22, FY23, TTM and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 37.03, 30.37, 28.04 and 24.47 respectively, which looks fully priced. As per RHP, comparision between listed peers is shown in above table. Pantomath Capital Advisors Private Limited: This is 8th Main Board IPO from this BRLM. From last 7 Main Board IPOs, all opened above or at par issue price on the day of listing. As of now, from last 7 Main Board IPOs, one is trading below issue price and remaining are trading above issue price. ( As on 29.05.2024) As per financials, Kronox Lab Sciences Limited has shown above average growth, RoNW is 37.19% and P/E is respectively 37.03, 30.37, 28.04 and 24.47 as per FY22, FY23, TTM and annualised FY24 earnings. So, issue looks fully priced. Company is in business of High Purity Speciality Fine Chemicals. The growth of the sector will be good. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO, but complete speciality chemical sector is underperforming market, so listing gains will be limited. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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