JG Chemicals disappoints on market debut: Should you buy, sell, or hold the stock?

Considering all the parameters we recommend conservative investors to 'book profit' on the listing day while those who wish to add can wait and track its post-listing performance before taking any action

Investors who shelled out money for JG Chemicals' initial public offer must have had a bad start to the day after the company's shares were listed at a discount of 5.4 per cent over the issue price. While a muted listing was on the cards, a discount wasn't something market experts were expecting.

Confused if you should buy, sell or hold the stock? Here's what analysts have to say.

"Investors with a long-term view may hold their position by maintaining a stop loss at Rs 190," recommends Shivani Nyati of Swastika Investment. She also said that the zinc oxide industry's competitive nature might have dampened investor enthusiasm. "The company's heavy reliance on the rubber and tyre industry, which can be cyclical, could be a concern for investors," Nyati said.

Prathamesh Masdekar, a research analyst at StoxBox, advises investors who have received allotment to hold shares from a medium- to long-term perspective. He said that not only is the company an approved vendor to most large global tyre companies, but the favourable demand outlook in automotive, rubber, and ceramics, along with the expected revival of the chemical industry in early FY25, positions JG Chemicals for sustained growth and market leadership. "Despite high entry barriers, its certifications and global supplier base ensure continued growth," Masdekar added.

Prashanth Tapse of Mehta Equities said that given the downcast market mood and selling pressure in the mid and small-cap sectors, a muted listing is justified. "Hence, considering all the parameters we recommend conservative investors to 'book profit' on the listing day while those who wish to add can wait and track its post-listing performance before taking any action."

Following an increase in its topline and bottom line from FY21 to FY23, it experienced degrowth in FY24 due to a sharp decline in the price of zinc oxide. The company will soon be back on track, however, based on its FY24 annualized earnings, the issue looks expensive, Amit Goel of Pace 360, The stock fell further after its debut and was trading at Rs 200, down 9.3 per cent as of 11:11 am.

JG Chemicals’ Rs 251-crore initial public offering (IPO) was subscribed 27.78 times, with non-institutional investors taking the lead by subscribing 46.33 times their allotted quota of shares. Qualified institutional buyers bought 32.09 times their quota of shares, while the portion set aside for retail investors was subscribed 17.44 times.