J G Chemicals slips 16% below its issue price on debut day

• The stock closed at ₹184, falling ₹36 below its issue price of ₹221.
• The market cap of the company is at ₹723 crore, according to the BSE

Zinc Oxide maker J G Chemicals fell sharply by 16.4% below its issue price as it made its debut on the stock exchanges on Wednesday. While the grey market was expecting a mere 2% listing gains from the stock, it disappointed it by listing at a sharp discount to its offer price.

The stock closed at ₹184 as compared to its issue price of ₹221. The market cap of the company is at ₹723 crore, according to the Bombay Stock Exchange.

The Andhra Pradesh-based company is India’s largest zinc oxide maker, with a 30% market share in the domestic market.

Its ₹251 crore initial public offer (IPO) was subscribed 28 times the shares on offer with good interest from institutional as well as retail investors. It has raised ₹75.35 crore from anchor investors ahead of opening its issue to the public.

The listing gains offered by recent market debuts have been mixed, with a few zooming ahead and others also listing at a discount. Here are the listing gains of the last few market debuts.

Company	Listing gains
Bharat Highways InVit	2%
R K Swamy	-13%
Mukka Proteins	57%
Exicom Tele-Systems	87%

J G Chemicals IPO opened between March 5-7 with a price band of ₹210-221. The issue is a combination of a fresh issue and an offer for sale. The company intends to use proceeds from the fresh issue to invest in its subsidiary BDJ Oxides, loan payments and to set up an R&D centre. It also intends to use the proceeds to fund long-term working capital requirements of the parent company as well as the subsidiary; in addition to general corporate purposes.

Apart from a large domestic market, J G Chemicals serves 50 global customers across 10 countries. It offers 80 grades of products and can serve a diverse set of industries like rubber, ceramics, paints, pharmaceuticals, animal feed and more. The company currently operates on a total capacity of 77,040 million tonnes per annum including recent capacity expansions at the Naidupeta facility of 36,960 MTPA. The facilities have an average utilisation of 65%.

It also intends to establish a greenfield manufacturing facility in Gujarat to cater to the ceramics industry. “Currently, 90.5% of revenue comes from the tyre and rubber industry with 76% of total revenue coming from top 10 customers. The company’s sales have grown at 13.32% compounded annual growth rate (CAGR) in the last 5 years,” says an IPO note by Arihant Capital.