The initial public offering (IPO) of the agrochemical business Dharmaj Crop Guard will start on November 28. It will be the seventh public issue to open for subscriptions in November.
Here are ten essential details to consider before subscribing to the offer:
1. IPO dates
The bid period for the public offering will begin on November 28 and end on November 30, 2022.
2. Price bracket
The offer price per share has been set at Rs 216-237.
3. IPO size
The company intends to raise Rs 251.15 billion at the top of the pricing range with this offering. The transaction consists of a fresh issue of shares worth Rs 216 crore and promoter sales of 14,83 lakh shares.
According to the firm, Manjulaben Rameshbhai Talavia would sell 7.09 lakh shares, Muktaben Jamankumar Talavia will sell 6.56 lakh shares, Domadia Artiben will sell 87,500 shares, and Ilaben Jagdishbhai Savaliya will sell 30,000 shares.
The company has reserved 55,000 shares for its staff, who will receive a Rs 10 per share discount off the final offering price.
Through the anchor book, Dharmaj Crop had already accumulated Rs 75 crore.
4. Objectives of the IPO
The proceeds from the fresh offer would be utilized to establish a manufacturing plant in Saykha, Gujarat (about Rs 105 crore), fund working capital needs (Rs 45 crore), and for general corporate reasons.
The company will also settle its obligations using the proceeds from the fresh issue (10 crore rupees), while the earnings from the offer for sale will go to the promoters.
The company’s borrowings rose dramatically from Rs 36.9 crore in March 2022 to Rs 51.56 crore in July 2022.
5. Lot size
Investors are permitted to submit bids for a minimum of 60 shares and multiples of 60 shares thereafter. Retail investors can apply for a minimum of Rs 14,220 and a maximum of Rs 1,99,080 for 14 lots of shares.
The offer reserves 50 percent for eligible institutional investors, 15 percent for non-institutional investors, and 35 percent for individual investors.
6. Company profile
Dharmaj Crop is an agrochemical company that manufactures, distributes, and markets a variety of agrochemical formulations to B2C and B2B customers, including insecticides, fungicides, herbicides, plant growth regulators, micro fertilizers, and antibiotics.
The company exports to over 25 Latin American, East African, Middle Eastern, and Far Eastern Asian nations.
It holds 464 registrations for agrochemical formulations from the Central Insecticide Board and Registration Committee (CIB&RC), of which 269 formulations are for sale both in India and overseas and 195 formulations are for export only.
In addition, the company has submitted registration requests for 18 agrochemical formulations and 17 agrochemical technicals. It has 157 registered trademarks.
Dharmaj has an agrochemical formulations manufacturing facility in Ahmedabad with an installed capacity of 25,500 MT.
Through 4,362 dealers, the company sells its branded items in 17 states. It had sold over 154 institutional products to over 600 customers as of September 2022. Atul, Heranba Industries, Innovative Agritech, Meghmani Industries, Bharat Rasayan, Oasis, United Insecticides, and Sadik Agrochemicals are some of its most important clients.
7. Financials
In FY22, Dharmaj Crop’s profit was Rs 28.69 crore, up 37 percent from the previous year.
The operational revenue for the fiscal year that ended in March 2022 increased by 30 percent to Rs 394.2 crore compared to the previous year, and by 53 percent in FY21, principally due to an increase in sales of branded items, institutional sales, and the number of dealers and consumers.
Even at the operating level, EBITDA (profits before interest, tax, depreciation, and amortization) climbed by 42.4 percent to Rs 44.3 crore in FY22, and by 74% compared to FY20.
In FY22, the margin increased to 11,2 percent, up from 10,3 percent in FY21 and 9 percent in FY20.
For the four-month period ending in July of fiscal year 2023, the profit was Rs 18.4 crore on revenues of Rs 220.9 crore, with an EBITDA margin of 12.2%.
8. Promoters
Promoter Rameshbhai Ravajibhai Talavia, who is the managing director, has more than 28 years of expertise in the agrochemical sector, while Jamankumar Hansarajbhai Talavia, a full-time director, has 22 years of experience in the field.
Jagdishbhai Ravjibhai Savaliya, another full-time director, has more than 21 years of expertise in the industry, while Chief Financial Officer Vishal Domadia has more than 12 years of experience.
After the IPO, the promoters’ ownership in the company will decrease to around 73 percent.
9. Risks and uncertainties
Here are several risks and concerns that KRChoksey Research, Anand Rathi, and Swastika Investmart have identified:
a. The availability and cost of raw materials are contingent upon a number of external factors. DCGL’s ability to run its production facilities could be significantly impacted by any disruption in the supply or volatility in the prices.
b. A change in the company’s product mix will have an effect on its revenue and profit margins.
c. Foreign exchange fluctuations may harm their foreign client income.
d. The company’s ability to get required registrations and government approvals for its products could be hindered if it is unable to do so.
e. The company’s success is dependent on its customer relationships. The business could be negatively impacted by the loss of one or more clients, a worsening in their financial position or future prospects, or a decline in their demand.
f. Increasing usage of alternative pest control and crop-protection methods, such as biotechnology goods, pest-resistant seeds, and genetically modified crops, may diminish demand for their products and have a negative impact on the firm.
g. Its production facility is focused in a single region, and its incapacity to function and expand in this region could have a negative impact on its business.
h. A change in government policy regarding the agriculture industry or a reduction in subsidies and incentives for farmers could have a negative impact on the firm.
i. Customers could be lost if the company is unable to properly compete with both domestic and multinational corporations.
10. Listing date
The corporation will finalize the allocation of IPO shares by December 5. By December 6, refunds will be wired to the bank accounts of unsuccessful investors, and shares will be deposited to the demat accounts of qualified investors.
Dharmaj Crop will be listed in the markets on December 8.
Elara Capital (India) and Monarch Networth Capital are the offer’s lead managers, while Link Intime India is the IPO’s registrar.
Disclaimer: The opinions and financial advice offered by experts on Mahapragya Investments are their own and do not reflect the views of the website or its administration.
