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Chemel Biotect offer estimated to be expensive

Chemcel Biotect, an agro chemical company plans to raise Rs 24.64 crore through an IPO.

08 Sep 2008

Chemcel Biotect, an agro-chemical company plans to raise Rs 24.64 crore through an Initial Public Offering (IPO). The company plans to offer the IPO at a fixed price of Rs 16 each.

A manufacturer and supplier of  pesticide products used for different crops such as paddy, sugarcane, cotton, chilies, turmeric, pulses and vegetables, this company is a purely regional player  in Andhra Pradesh with an annual turn over of Rs 24.57 crore.

The company plans to put in another Rs 9.45 crore towards working capital for expanding its agro-chemicals business.

The growth of the company will come from agro chemicals but, in the longer term growth could come from the bio-diesel business. As per the valuation, the issue is expensive. At the offer price of Rs 16, the Private Equity works out to 34 times its Financial Year (FY) 20008 fully diluted earnings. Even after considering the future growth and estimated FY11 earnings of Rs 1.1 per share, the PE works out to 14.5 times.

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