JG Chemicals IPO Disappoints on Debut, Lists at 5% Discount

JG Chemicals IPO Makes Dismal Debut 

JG Chemicals IPO, a prominent zinc oxide manufacturer saw its shares stumble on their first day of trading on the National Stock Exchange and the Bombay Stock Exchange. The company's initial public offering had gained significant interest from investors, but the share price failed to meet expectations. On the NSE, JG Chemicals shares opened at ₹209, marking a 5.43% drop from the issue price of ₹221. On BSE, the opening price was ₹211 per share representing a 4.52% decrease compared to the issue price of ₹221. 

Experts had anticipated a listing price ranging from ₹230 to ₹237 per share, but the actual debut fell short of these projections. It disappointed the grey market which had anticipated around 2% listing gain from the stock. According to the Bombay Stock Exchange, the company's market capitalization stands at ₹826 crore. After its listing, J G Chemicals IPO market price fluctuated reaching a high of ₹213.75 and a low of ₹201.90 during intraday trading. At 10:02 AM, the stock was trading at ₹206.05 which was 7% lower than its issue price.

JG Chemicals IPO Subscription and IPO Details

Despite the weak debut, JG Chemicals IPO gained attention from both retail and non institutional investors. On the final day of subscription, JG Chemicals IPO was oversubscribed by 27.78 times with the retail portion being subscribed 17.44 times, NII portion 46.33 times and the Qualified Institutional Buyers portion 32.09 times. JG Chemicals IPO was available for subscription from March 5 March to 7March with a price range of ₹210 to ₹221 per share. Investors had the option to bid for a minimum of 67 shares and in multiples of 67. 

JG Chemicals IPO comprises both a fresh issue and an offer for sale. The company plans to allocate the proceeds from the fresh issue to various initiatives including investment in its subsidiary BDJ Oxides, loan repayments and the establishment of an R&D center. Funds will be utilized to meet long term working capital needs for both the parent company and the subsidiary along with addressing general corporate requirements.

Read more about JG Chemicals IPO

About JG Chemicals Ltd

Established in 2001, JG Chemicals holds the position of India's largest zinc oxide manufacturer and ranks among the top 10 globally. The company offers a diverse portfolio of over 80 grades of zinc oxide catering to industries such as rubber, ceramics, paints, cosmetics, pharmaceuticals and more.

JG Chemicals operates three manufacturing plants in Nellore, Andhra Pradesh and Kolkata, West Bengal, owned and operated by its subsidiary BDJ Oxides. The company serves nine out of the top 10 global tire manufacturers and all 11 of India's top tire manufacturers.

Between FY21 and FY23, JG Chemicals witnessed a robust growth of 21% in revenue from operations and a 25% increase in profit on a compound annual growth rate basis. Additionally, the zinc oxide market in India is projected to grow at a CAGR of 10% to 12% between FY22 and FY27 which bodes well for the company's future prospects.

To Summarize

Although the initial trading wasn't as exciting as expected, JG Chemicals still has a good chance to benefit from its solid position in the zinc oxide industry. Investors will be keeping a close eye on how well it does in the next few months.