The initial public offering (IPO) of Dharmaj Crop Guard on Tuesday received an overwhelming response from investors on its second day of bidding. The issue, which was fully subscribed on the first day, attracted bids for 4,78,68,540 crore equity shares against the IPO size of 80,12,990 shares, was booked 5.79 times till 5 pm today.
The quota for qualified institutional buyers (QIBs) was subscribed 76 per cent, while the category for non-institutional investors saw 8.74 times subscription. The retail individual investors (RIIs) portion was subscribed 7.75 times and the employees portion was subscribed 3.75 times.
The agrochemical company has fixed the price band of the IPO at Rs 216-237 per share. The company had raised Rs 74.95 crore from anchor investors ahead of its IPO.
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gray market premium
Market participants said that Dharmaj Crops IPO gray market premium (GMP) was seen around Rs 55. The upper band price of the IPO is Rs 237 per equity share.
“The company has a diversified product set with presence in domestic as well as international markets. The operations look relatively small compared to its peers, however, revenue, EBITDA and margins are growing. At the upper band, following the latest issue of Manan Doshi of Unlisted Arena.com told Business Today, “The asking P/E post-fresh issue comes to around 27.8x based on FY22 earnings.”
Swastik Investmart: “The issue is priced at 20 P/E to FY22 earnings, which is lower than most of its listed peers, and the company has posted consistent growth in both revenue and profits. Profit margins have also been steadily expanding in a tough environment, Therefore, we give ‘Subscribe’ rating to this IPO.
Mehta Equities: “We believe that Dharmaj Crops has a clear objective of offering a wide product portfolio across the agri-value chain, and continues to expand its product portfolio by introducing new products. On the financial front, it continues to perform on both the upside and downside lines. On valuation pars, at the upper price band of Rs 237, the issue is seeking a market cap of Rs 800 crore and 14x PE (as on annualized FY23e) , which seems to be a fair price. Compared to competitors like Bharat Rasayan, Atul Ltd. etc. While on its perks, it faces constraints like licensing, climate change government restrictions and farmers’ demand supply utilization. Hence, We believe that, though there is a steady increase in margins and profitability, but being in a highly competitive segment, a small player like DCGL may struggle in the race. Hence, we ‘Subscribe for Listing Gain’ for this IPO. Only’ rating.”
KR Choksi: “Agrochemicals sector is gaining prominence and has bright prospects for the future. Dharmaj Crops enjoys a long standing relationship with its customer base. The company has good earnings visibility going forward. Valuation-wise also, DCGL in its Available at a discount to its listed industry peers. As a result of all these positive factors, we recommend investors to ‘Subscribe’ to the IPO.
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SMC Global: “The company is operating with an installed capacity of 25,500 million tonnes of agrochemical formulations, which the company plans to further increase through backward integration and setting up a manufacturing facility for agrochemical technical and its intermediates, which will be used for internal Will be done for consumption as well as production.Sales in the domestic and international market The brokerage has rated the IPO two out of five stars.
The company’s revenue from operations for FY20 grew by 30.36 per cent to Rs 394.21 crore, as against Rs 302.41 crore for FY21. Net profit grew by 36.88 per cent to Rs 28.69 crore in FY21 from Rs 20.96 crore in FY21.
Elara Capital (India) and Monarch Networth Capital are the book-running lead managers and Link Intime India is the registrar to the issue.