Bumper stock market listing for Clean Science and Technology

Shares of Clean Science and Technology Ltd were listed on the stock at 100 percent premium to their issue price. The stock opened at Rs1,784.40 apiece on the BSE, a jump of 98.3 percent from its issue price of Rs 900. The benchmark Sensex was down 0.7 percent at 52782.

The specialty chemicals manufacturer’s Rs1,546 crore initial public offering was subscribed over 93 times last week. The company is among the few global manufacturers focused on developing newer technologies used in house catalytic processes, which are eco-friendly and cost-effective.

In a note Reliance Research note said that CSTL’s RoE at 37 percent is superior to its peers, which along with a healthy asset turnover ratio at 3.8x this year and better OCF yield offer an edge. Further, strong growth prospects for domestic specialty chemical manufacturers on the back of China+ One strategy may eventually aid CSTL to sustain strong earnings momentum, going forward. 

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Analysts say that peers like Vinati Organics trades at 77.4 times its FY2021 EPS of Rs26.2, Fine Organics Industries at 75 times. Navin Fluorine International trades at 76.1 times its FY2021 EPS of ₹49.9 and PI Industries trades at 62.2 times its FY2021 EPS of ₹48.7, which offers valuation comfort for Clean Science.

On FY21 earnings basis, Clean Science is trading below the industry average of 55.4 times. Customers from the trade market say that distributors in India and internationally which includes China, Europe, the US, Taiwan, Korea, and Japan. Nearly two-third of its revenues comes from exports. 

The return ratios of the company including return on equity and return on capital employed remains impressive at 38 per cent and 26 per cent.  In view of the strong financials and the grey market premium, most brokerages had assigned a ‘subscribe’ rating to the firm’s IPO.