Chemplast Sanmar- Recent Listing

• Chemplast delisted in June 2012 at Rs. 15 per share for FV Re. 1 each. Earlier listed with stock symbol CHEMPLAST (ISIN INE488A01027).
• Today listed as CHEMPLASTS (ISIN INE488A01050) with FV Rs. 5 each share and share price ruling at Rs. 527 (IPO at Rs. 541). Thus effective delisting price of Rs. 75, nine years ago, which implies 25% rise in CAGR price, much higher than Nifty 500 CAGR return of 14% in past 9 years.   
• In FY19, company demerged its commodity chemicals business of S-PVC and immediately before the IPO, acquired it again on 31.3.21, merging it with the speciality chemicals business, thus presenting a bigger business entity seeking re-listing.
• Fairfax, owned by Prem Watsa, popularly known as Warren Buffet of Canada, is an investor in the group’s holding company. But the stake was acquired through structured debt, to fund company’s ambitious plans in North Africa, which eventually ran into troubled waters.
• Blindly following investments of marquee investors may be perilous for retail investors as risk appetite and time horizon differs from large investor.
• The Company and Sanmar Group as a whole faced severe liquidity crunch, and had to raise money at an unheard rate of 17.5% p.a. in Dec 2019. Also, no bank was willing to lend to the company and this money had to be borrowed from private financiers, which is now aimed to be repaid from IPO proceeds. Group-level leverage remains, which may ultimately weigh on the company.

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