Archean Chemical Industries Limited (ACIL) IPO opens for subscription on 9th November and closes on 11th November. Let us look at the IPO details and the company. 

Archean Chemical Industries Limited IPO Details

• Price band: Rs. 386 – Rs. 407
• Issue Size: •         Rs. 1,462.31 crore (Fresh issue of Rs. 805 crore & remaining OFS)
• Reservation: QIB 75%, Retail - 10%, NII 15%
• Minimum Investment: Investors need to make a minimum investment of Rs. 14,652
• Bid lot: Investors can bid for 36 shares and in multiples of 36 shares

What does Archean Chemical Industries do? 

ACIL is a leading specialty marine chemical manufacturer in India. They are focused on producing and exporting bromine, industrial salt, and sulphate of potash to customers in different parts of the world.

For FY21, they are the largest exporters of bromine and industrial salt. Also, they have among the lowest production costs globally for industrial salt and bromine.

What is the industry outlook in which Archean Chemical Industries operates? 

The global demand for sulphate of potash is expected to grow at a CAGR of 6.0% between CY21 and CY25. The global demand for industrial salt is estimated to grow at a CAGR of 2.8% between CY20 and CY25. The bromine global market is estimated to grow at a CAGR of 5.8% between CY20 and CY25.

Who are the listed peers of Archean Chemical Industries?

ACIL has a few popular names as listed peers. The listed peers include companies like Tata Chemicals, Aarti Industries, Deepak Nitrite, and Neogen Chemicals. The total income (FY22) of ACIL is higher than Neogen Chemicals. Other peers are much bigger players.

Archean Chemical Industries Limited: Financial numbers

Below are the key financial numbers of ACIL:

• For FY20, FY21, and FY22, ACIL reported a revenue of Rs. 608.17 crore, Rs. 740.76 crore, and Rs. 1130.44 crore, respectively. It has grown at a CAGR of 36.3%.
• The EBITDA was Rs. 156.83 crore, Rs. 276.25 crore, and Rs. 479.54 crore for FY20, FY21, and FY22, respectively. The EBITDA margin for the same period was 25.79%, 37.29%, and 42.42%, respectively.
• In FY20, the company reported losses, but in the last two financial years, the company has reported a net profit.
• ACIL has posted an average EPS of Rs. 10.70 and an average RoNW of -34.05% for the last three financial years.
• The company had a high Debt to Equity ratio in FY20 - 155.44. It has come down significantly to 3.53 in FY22.

What are Archean Chemical Industries' strengths?

The company has highlighted its many strengths in the RHP. Below are some of the many listed strengths:

• ACIL is the leading specialty marine chemical manufacturer in India since 2013.
• It operates in an industry with a high entry barrier - the high cost of development products, investment in salt beds, limited availability of raw materials, etc.
• Its integrated manufacturing site with access to the Rann of Kutch reserves and close connectivity to ports, allows ACIL to manage the production process efficiently and to deliver high-quality and timely products to customers.
• They are the largest Indian exporter of industrial salt and bromine. For FY22, 66.74% of its revenue from operations was attributed to export sales.

What are Archean Chemical Industries' plans for growth and expansion? 

• ACIL is setting up a new facility to manufacture bromine performance derivative products through its subsidiary - Acume Chemicals Private Limited.
• The company plans to expand its manufacturing capacities for industrial salt production by adding a washery of 250 tons per hour.
• ACIL will expand globally to serve its existing direct end-use customers and secure new direct end-use customers, and expand the reach of products in new markets. 

What are the risks associated with Archean Chemical Industries' business?

• In RHP, ACIL has highlighted risks associated with its business. Some risks are highlighted below:
• The business is dependent on and will continue to depend on its manufacturing facility, and it is subject to certain risks in its manufacturing processes.
• ACIL's manufacturing facility is located in Gujarat. It exposes them to regulatory and other geography-specific risks such as weather and natural occurrences and economic, regulatory, demographic, and other changes in the state.
• The company only has three products. If the production of any of the three products is disturbed, it will impact company sales and financials.
• Since they are an export-oriented business, the exchange rate fluctuation may impact their financials.

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