Speciality Chemical Company Kronox Lab Sciences Files DRHP For Main-Board IPO

Kronox Lab Sciences Limited, a company located in Vadodara, has submitted its draft red herring prospectus (DRHP) to SEBI for a main-board initial public offering (IPO) of Rs 150 Cr by the sale of freshly issued shares priced at Rs 45 crore and an offer for sale (OFS) of 78 lakh equity shares by the company's promoters. Kronox is a producer of speciality fine chemicals with high purity. Its products are used in many different industries for a variety of purposes, including metallurgy, biotech, pharmaceutical formulations, active pharmaceutical ingredients, scientific research and testing, nutraceuticals, personal care, agrochemicals, and animal health.

The offer, which has a face value of Rs 10 for each equity share, comprises an offer-for-sale (OFS) by promoters selling shareholders as well as a new issuance of equity shares. The proceeds of the new issuance will be used for general company purposes and to cover working capital requirements, as per the DRHP. Of the book-building offer, not less than 15% will be made available to non-institutional investors, 35% will be made available to retail individual investors, and 50% will be made available to qualified institutional buyers.

Pantomath Capital Advisors Private Limited is the sole lead manager responsible for book running. It is proposed that the company list its equity shares on the NSE and BSE.

As a participant in import substitution, Kronox exports to over 20 nations, with the United States, the United Kingdom, Mexico, Australia, and Egypt being among its top export destinations. Padra, Vadodara, Gujarat is the headquarters of the company's three manufacturing sites as well as its Research, Development, and Testing ("RDT") laboratory.

With no debt, Kronox operates at a profit margin of more than 15% after tax. It's interesting to note that Kronox has a strong track record, having issued bonus shares and buybacks twice in the last four fiscal years.
Growing at a CAGR of 24% from FY 2021 to FY 2023, Kronox's consolidated revenue from operations for FY 2023 was Rs. 95.6 crores.

With an EBITDA margin of 23.0%, the company posted an EBITDA of Rs. 22.0 crores. With a PAT margin of 17.0% and a compound annual growth rate (CAGR) of 31% from fiscal 2021 to fiscal 2023, the company's profit after tax for FY 2023 was Rs. 16.6 crores. For the fiscal year 2023, the company's returns on equity (RoE) and capital employed (RoCE) were 37.2% and 49.9%, respectively. The company has not had any debt since FY 2021.

With over 185 products, Kronox's portfolio of high purity speciality fine chemicals is primarily used as raw materials and reacting agents in the production of APIs, excipients in pharmaceutical formulations, reagents for laboratory testing and scientific research, ingredients in nutraceutical formulations, and fermenting agents in biotech applications, among other uses. The company served 625 customers in the preceding five fiscal years, representing a diverse base of both domestic and international clients.