Kronox Lab Sciences Limited IPO Summary

About the Company:

Incorporated in November 2008, Kronox Lab Sciences Limited is engaged in the manufacturing of High Purity Fine, inorganic chemicals, phosphate and metallic chemicals for diverse end-user industries. Their products have applications across a wide spectrum of industries like pharmaceuticals, scientific and laboratory research, nutraceuticals, biotech, agrochemicals, personal care, metallurgy and animal health.

Over the years, they have expanded their product portfolio to more than 185 products and have operations and global footprint with customers in over 20 countries. The company has served over 592 customers in the past three years. The company has three manufacturing facilities in Vadodara, Gujarat, close to the seaports of Mundra, Kandla, Hazira, and Nhava Sheva.

Industry Overview:

The global chemical industry is an integral element of the global economy and plays a critical role in nearly every facet of modern life serving numerous sectors such as agriculture, construction, automotive, FMCG, consumer durables, electronics, healthcare, etc.

The size of the Indian chemicals industry, excluding pharmaceuticals, in terms of the value of output in the year FY22 was around Rs. 9.10 lakh crores. The chemical and chemical products except pharmaceuticals have registered a CAGR of 8.8% from FY18 to FY22. As per the Government of India’s Department of Chemicals and Petrochemicals, India ranks 11th in the world exports of chemicals (excluding pharmaceutical products) and 6th in the world imports of chemicals (excluding pharmaceutical products).

Major chemicals in India are broadly divided into 5 segments as:

● Alkali chemicals are strong bases used in many industrial processes, like making soap and paper.

● Inorganic chemicals are compounds that don't contain carbon-hydrogen bonds. They're used in various products, like plastics, paints, and fertilizers.

● Organic chemicals are based on carbon and hydrogen atoms. They're found in living things and petroleum and are used in numerous products, like plastics, drugs, and solvents.

● Pesticides and insecticides are chemicals that kill pests, such as insects, weeds, and fungi.

● Dyes and pigments are coloring agents used in various materials like textiles, paints, and plastics.

The production of major chemicals in India on an aggregate basis grew at a CAGR of 4.61% from 11,069 thousand metric tonnes in FY18 to 12,743 thousand metric tonnes in FY22. The rise in output is primarily supplemented by a 4.3% CAGR in the production of alkali chemicals.

Financials:

1. Revenue from Operation

2. EBITDA

3. Net Profit

4. ROCE & ROE

Key Risks:

1. The majority of the sale of the products is concentrated in industries viz. Pharmaceuticals and Scientific Research and Laboratory Testing. Any change in demand or change in application or processes by the customers in these industries may lead to loss of revenues and profits.

2. The top 10 customers contributed 45.22%, 53.58%, 50.68%, 56.18% and 56.32% of their revenue for the nine months periods ended December 31, 2023, December 31, 2022 and the Fiscals 2023, 2022 and 2021 respectively. They are subject to uncertainties in demand and there is no assurance that the customers will continue to purchase their products.

Objects of the Issue:

The Offer is an Offer for Sale and the Company will not receive any proceeds from the Offer The Objects of the Offer are to:

1. Carry out the Offer for Sale of up to 95,70,000 Equity Shares by the Promoter Selling Shareholders; and

2. Achieve the benefits of listing the Equity Shares on the Stock Exchanges. Further, the Company expects that the proposed listing of the Equity Shares will enhance the visibility and brand image, provide liquidity to its existing Shareholders, and provide a public market for Equity Shares in India.

Peer Comparison:

Valuation:

The Company has a P/E of 31.62x. The Industry has a average P/E of 67.50x

IPO Details: