Dhariwalcorp Limited engaged in the business of trading of comprehensive range of waxes, industrial chemicals, and petroleum jelly. The company is involved in processing, purchasing, selling, importing, and trading various types of wax, including Paraffin Wax, Micro Wax, Slack Wax, Carnauba Wax, Microcrystalline Waxes, Semi Refined Paraffin Wax, Yellow Beeswax, Hydrocarbon Wax, Montan Wax, Polyethylene Wax, Vegetable Wax, Residue Wax, Palm Wax, BN Micro Wax, Hydrogenated Palm Wax, Micro Slack Wax, PE Wax, Soya Wax, etc. Additionally, the Company trades in industrial chemicals such as Rubber Process Oil, Light Liquid Paraffin (LLP), Citric Acid Monohydrate, Refined Glycerin, Bitumen, Stearic Acid, and Petroleum Jelly, including Paraffin Petroleum Jelly and White Petroleum Jelly. The product range encompasses all types of heavy and light chemicals, chemical elements and compounds, petrochemicals, industrial chemicals, mixtures, derivatives, articles, compounds, by-products, and activities of a similar nature. The company serves various industries including Plywood and Board, Paper Coating, Crayon Manufacturing, Candle Production, Textiles, Pharmaceuticals, Petroleum Jelly & Cosmetics, Tube & Tire Manufacturing, Match Production, Food Processing, and Adhesive Manufacturing. The products are sold both domestically and internationally. They have a PAN India presence with 21 states and 3 Union territories for the domestic market (based on sales made for the financial years ended March 31, 2024, 2023, and 2022). They have also initiated the export division and are supplying products to one country, namely Nepal. To meet the PAN India presence and ensure timely supply of the products, they have one processing unit and three warehouses situated at Jodhpur, Rajasthan, one warehouse situated at Bhiwandi, Maharashtra, one warehouse situated at Ahmedabad, Gujarat, and one warehouse at Mundra, Dist. Kachchh, Gujarat, respectively. Company procures the products for further supply from both domestic markets and markets across the globe, including China, Egypt, Singapore, UAE, UK, and Hong Kong. The domestic market encompasses Assam, Bihar, Dadra and Nagar Haveli & Daman and Diu, Delhi, Goa, Gujarat, Jammu & Kashmir, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh, West Bengal, Uttarakhand. As per financial performance, Dhariwalcorp Limited has posted total income / net profits of Rs 159.20 Cr / Rs 1.42 Cr (FY22), Rs 195.19 Cr / Rs 0.59 Cr (FY23) and Rs 231.11 Cr / Rs 4.50 Cr (FY24). So as per previous financials data, company has shown growth, but bottom line remained zig-zag. Also sudden rise in net-profit just before IPO raises doubts. Company has posted an average EPS of Rs 4.10 and average RoNW of 46.07% for last three fiscals. Issue is priced at a P/BV of 7.95 as per NAV of 13.34 as on 31.03.24. If we attribute latest earnings of FY22, FY23 and FY24 on fully diluted equity post issue, then asking price is at a P/E of around 66.63, 158.56 and 21.06 respectively, which looks aggressively priced. As per RHP, there is no listed peers. On BRLM's front, Shreni Shares Limited is associated with this SME IPO and handled 31 IPOs in last 3 years. From last 10 IPOs, all opened above issue price or at par on the day of listing. As of now from last 10 IPOs, one is trading below issue price. ( As on 31.07.24 ) As per financials, Dhariwalcorp Limited has shown inconsistent results, RoNW is 51.50% and P/E is respectively 66.63, 158.56 and 21.06 as per FY22, FY23 and FY24 earnings. So, issue looks aggressively priced and sudden rise in net-profit just before IPO raises doubts. Company is engaged in the trading of comprehensive range of waxes, industrial chemicals, and petroleum jelly, which is highly fragmented and competitive business segment. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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