Citichem India Lists Flat at Issue Price, Shows Mixed Performance on BSE SME

Citichem India Limited, a speciality chemicals supplier operating since 1992, marked a muted entry into the public markets on Friday, 3rd January 2025. The company, which has established itself as a distributor of organic and inorganic chemicals serving pharmaceutical and other industrial sectors, commenced trading on the BSE SME platform with an initial flat performance followed by some selling pressure.

Citichem Listing Details

The company's market debut reflected cautious investor sentiment despite strong subscription numbers:

• Listing Time & Price: When trading commenced at market open, Citichem India shares debuted at ₹70 on BSE SME, exactly at the IPO price, making a flat start. This muted opening suggests investors took a measured view of the company's near-term prospects despite its established presence in chemical distribution.
• Issue Price Context: The company had priced its IPO at ₹70 per share as a fixed price issue. Despite the conservative pricing, the market's initial response indicated a wait-and-watch approach from investors.
• Price Evolution: By 10:05 AM IST, some selling pressure emerged as the stock declined to ₹68.10, representing a 2.71% drop from the issue price after touching an intraday low of ₹66.50, demonstrating cautious investor sentiment in early trading.

Citichem First-Day Trading Performance 

The trading activity showed moderate participation with balanced investor interest:

• Volume and Value: Within just the first few hours, 4.12 lakh shares changed hands, generating a turnover of ₹2.85 crore. The trading activity indicated genuine market participation despite the muted price performance.
• Demand Dynamics: The stock's trading pattern showed measured pressure with sell orders for 2.26 lakh shares against buy orders for 94,000 shares, reflecting some caution after the flat listing.

Citichem Market Sentiment and Analysis

• Market Reaction: Flat opening followed by downward pressure
• Subscription Rate: The IPO had been significantly oversubscribed by 414.35 times, with retail investors leading at 543.18 times subscription, followed by NIIs at 277.88 times
• Pre-listing Expectations: The flat listing came despite strong subscription numbers, suggesting investor caution about valuations
   

Citichem Growth Drivers and Challenges

Expected drivers of future performance:

• Experienced management team
• Scalable business model
• Quality and innovation focus
• Location advantage
• Strong supplier relationships

Potential challenges:

• Revenue decline in recent periods
• Highly competitive market
• Small scale of operations
• Sustainability of margins

Utilisation of IPO Proceeds 

The ₹12.60 crore raised will be used for:

• Property acquisition
• Transportation vehicles purchase
• General corporate purposes
• Issue expenses
   

Citichem Financial Performance 

The company has shown mixed results:

• Revenue decreased by 6% to ₹19.61 crore in FY2024 from ₹20.94 crore in FY2023
• Q1 FY2025 (ended June 2024) showed revenue of ₹1.49 crore with PAT of ₹0.20 crore
• Solid financial metrics with ROE of 15.42% and ROCE of 21.47%

As Citichem India begins its journey as a listed entity, market participants will closely monitor its ability to reverse revenue decline and maintain profitability margins. The flat listing and subsequent pressure suggest investors are taking a cautious view of the company's prospects in the competitive chemical distribution sector, particularly given its recent revenue contraction despite margin improvements.