Crop Life Science Limited

As per financial performance Crop Life Science Limited has posted total income/net profits of Rs 135.31 Cr / Rs 3.23 Cr (FY20), Rs 119.50 Cr / Rs 3.70 Cr (FY21), Rs 102.38 Cr / Rs 2.81 Cr (FY22) and Rs 123.23 Cr / Rs 4.36 Cr (FY23), So company has shown average results, but sudden growth in net profit just before IPO raises doubts. Company has posted an average EPS of Rs 2.65/- and average RoNW of 10.61% for last three fiscals. Issue is priced at a P/BV of 1.33 as per NAV of Rs 39.16/- as on post issue. As per FY22 earnings on fully diluted equity post issue, asking price is at P/E of around 31.37 and as per annualized FY23 earnings P/E is 18.71. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Interactive Financial Services Ltd is associated with this SME IPO and handled 10 SME IPOs in last 3 years. From last 10 IPOs, two opened below issue price and remaining opened at par or above issue price on the listing day. As of now from last 10 IPOs, one is trading below issue price and remaining are trading above issue price. ( As on 17.08.23 ) As per financials, Crop Life Science Limited has shown average results, RoNW is 10.81% and P/E is respectively 31.37 and 18.71 as per FY22 and annualized FY23 earnings. So issue looks fully priced. But sudden rise in net profit just before IPO raises doubts and sustainability of such margins in future will be very difficult. Company is in business of agro chemicals, which is a highly fragmented and competitive segment. Performance of BRLM is good. So we are giving NEUTRAL rating to this SME IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1   Rajesh Lunagariya
• 2  Ashvinkumar Lunagaria