India Glycols soars 19% as FPI buys stake, Ind-Ra upgrades credit ratings

 On Friday, October 1, 2021, WHV-EAM International Small Cap Equity Fund purchased 186,947 equity shares or 0.60 per cent stake of IGL at a price of Rs 830.22 on the NSE via a bulk deal

Shares of India Glycols (IGL) soared 19 per cent to Rs 999 on the National Stock Exchange (NSE) in Monday’s intra-day trade after the foreign portfolio investor (FPI) bought a stake in the company via the open market. Further, credit rating agency, India Ratings & Research (Ind-Ra), has also upgraded the company's long-term issuer ratings to 'IND A/Stable' from 'IND A-/Stable' while resolving the Rating Watch Positive (RWP).

The stock of commodity chemicals was trading at its record high level. In past one week, it has rallied 30 per cent, as against a 1.3 per cent rise in the Nifty50 index. At 10:15 am; the stock was trading 17 percent higher at Rs 986, as against a 0.98 per cent gain in the benchmark index.

On Friday, October 1, 2021, WHV-EAM International Small Cap Equity Fund purchased 186,947 equity shares or 0.60 per cent stake of IGL at price of Rs 830.22 on the NSE via bulk deal, the exchange data shows. The name of the seller not ascertained immediately.

IGL divested 51 per cent of its stake through the issuance of subscription share in its previously wholly-owned subsidiary Clariant IGL Specialty Chemicals Private Limited (CISCPT) to Switzerland-based Clariant International Limited (Clariant), which resulted in CISCPT becoming a joint venture (JV) in the ratio of 51:49.

As per the JV agreement, IGL has transferred its bio-ethylene oxide derivatives (bio-EOD) business, to CISCPT and Clariant has infused INR5.88 billion in CISCPT as a consideration for the same. Out of the total consideration received, CISCPT has paid Rs 450 crore to IGL upfront and the balance is held in the CISCPT as 10 per cent interest-bearing shareholders loan, which will be repayable to IGL in three years.

With a significant reduction in debt; recovery in demand in chemical segments and the limited impact of divestment on profits on account of income streams from the JV, Ind-Ra expects IGL’s credit metrics to improve over the near-term, despite the company’s ongoing capex of around Rs 320 crore over FY22-FY23 to set up two grain-based distilleries, Ind-Ra said in rating rationale.