Dharmaj Crop Guard Limited is an agrochemical company engaged in the business of manufacturing, distributing, and marketing of a wide range of agro chemical formulations such as insecticides, fungicides, herbicides, plant growth regulator, micro fertilizers and antibiotic to the B2C and B2B customers. Company also engage in the marketing and distribution of agrochemical products under brands in-licensed by their, owned by their and through generic brands, to Indian farmers through their distribution network. They provide crop protection solutions to the farmer to assist them to maximize productivity and profitability. The export their products to more than 25 countries in Latin America, East African Countries, Middle East and Far East Asia. The Company sell their agrochemical products in granules, powder and liquid forms their customers. Additionally, they manufacture and sell general insect and pest control chemicals for Public Health and Animal Health protection. As on the date of this Red Herring Prospectus, Company has obtained 464 registrations for agrochemical formulations from the CIB&RC, out of which 269 agrochemical formulations are for sale in India as well as for export and 195 agrochemical formulations are exclusively for exports. Additionally, they have also applied for registrations of 18 agrochemical formulations and 17 agrochemical technicals from the CIB&RC, which are pending at various stages. The company has 157 trademark registrations including the branded products. Company's formulations are sold as branded products to customers. As of September 30, 2022, they had over 118 branded formulations that are sold to farmers. They sell bulk products to their institutional customers domestically and in the international markets. Further, as of September 30, 2022, they had more than 154 institutional products that they sold to more than 600 customers based in India and in the international markets. As of September 30, 2022, they exported their products to more than 66 customers across 25 countries. Company classifies its product portfolio under the following categories:(a) Insecticides (b) Fungicides (c) Herbicides (d) Plant growth regulator (e) Micro Fertilizers (f) Antibiotic Company's manufacturing facility is located at Plot No. 408 to 411, Kerala GIDC Estate, Taluka Bavla, Ahmedabad, Gujarat, India. As of November 30, 2021, the aggregate installed capacity of the manufacturing facility for agro-chemical formulations was 25,500 MT. They have installed a soil bio reactor at the manufacturing facility which is used to treat waste/ sewage water and to remove pollutants. They have also installed solar power panels at the manufacturing facility with aggregate capacity of 85,320 KW per annum. They have a R & D centre and Quality Control laboratory at their manufacturing facility. The Company has installed Capacity, in FY22, of 25,500 MT in and capacity utilisation in FY22 is 34.87%. As a part of the expansion plans and in order to achieve backward integration for the operations, they have acquired around 33,489.73 sq. mtrs of land at Saykha Industrial Estate, Bharuch, Gujarat, India on leasehold basis for 99 years from GIDC to set up a manufacturing facility for Agrochemical Technicals and its intermediates which will be used for internal consumption as well as for sales in domestic and international market. They have already obtained registrations of 6 agrochemical technicals and have applied for registration of 17 agrochemical technicals from the CIB&RC, which will be manufactured in this new manufacturing facility. Company has established an extensive, pan-India distribution network for the domestic branded products business. The branded products are sold in 17 states through network comprising over 4,362 dealers having access to 16 stock depots in India supporting the distribution of the branded products, as of September 30, 2022. They also carryout institutional sales of agro chemical products across India and international markets. Company employs total 314 employees as on September 30, 2022. As per financial performance, Dharmaj Crop has posted total income/net profits of Rs 199.17 Cr / Rs 10.76 Cr (FY20), Rs 303.57 Cr / Rs 20.96 Cr (FY21), Rs 396.29 Cr / Rs 28.69 Cr (FY22) and 221.17 Cr / 18.36 (4M FY23). So as per last three years data, company has shown growth. They have posted an average EPS of Rs. 9.60 and average RoNW of 34.86% for last three fiscals. Issue is priced at a P/BV of 5.78 as per NAV of 40.99 on 31.07.22. If we attribute latest earnings of FY23 on fully diluted equity post issue, then asking price is at a P/E of around 14.56, which looks fairly priced, but if we take FY22 earnings than P/E is around 27.87. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, 2 lead managers are associated with this IPO, and have not handled any IPOs in last three fiscals. As per financials, Dharmaj Crop Guard has shown good growth, RoNW is 33.64% and P/E is respectively 27.87 and 14.56 as per FY22 and annualized FY23 earnings, which looks fairly priced. Company is in agrochemical business and the sector expected to provide good growth for next couple of years. So we expect, company will able to grow at good rate. So, we give SUBSCRIBE rating for this IPO.
✍️ Post a Comment