Dharmaj Crop Guard to make market debut on Thursday. GMP hints at decent listing gains

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Shares of Dharmaj Crop Guard, whose IPO of Rs 251.15 crore ran from November 28 to November 30, will make its market debut on Thursday. Last heard, the issue was commanding a gray market premium (GMP) of Rs 44 per share. The issue’s GMP has seen some decline in the recent past, yet it suggests the potential for an 18 per cent listing pop as of today.

The IPO, which was sold in the range of Rs 216-237, was a hit among investors as the issue received 35.49 times the bids, mainly due to strong participation from HNIs and qualified institutional buyers (QIBs).

Quota reserved for non-institutional investors was subscribed 52.29 times; The QIB quota was subscribed 48.21 times while the reserved quota was subscribed 21.53 times. The quota reserved for employees received 7.48 times the bids.

Dharmaj Crop Guard, an Agrochemical company engaged in the business of manufacturing, distributing and marketing a wide range of Agrochemicals such as Insecticides, Fungicides, Herbicides, Plant Growth Regulators, Micro Fertilizers and Antibiotics to B2C and B2B customers. The company exports its products to more than 20 countries.

Major customers included Heranba Industries, Atul, Meghmani Industries, Bharat Rasayan, Oasis, Innovative Agritech, Sadiq Agrochemicals and United Insecticides.

The company’s revenue from operations increased by 30.36 percent to Rs. 394.21 crores for FY22 as compared to Rs.302.41 crores in FY21, due to increase in sales of its branded products, institutional sales and adding more dealers and customers. Net profit grew by 36.88 per cent to Rs 28.69 crore in FY22, as against Rs 20.96 crore in FY21.

The IPO had ‘Subscribe’ ratings from Anand Rathi and KR Choksi Shares & Securities and ‘Neutral’ rating from SMC Global.

If one annualizes the company’s four-month FY23 EPS of Rs 7.44 (by July 2022), then at the annualized FY23 EPS of Rs 22.32, the issue was available at a PE of 10.62 times, which looks quite cheap compared to its peers. KR Choksi Shares & Securities in a pre-IPO note.

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