Started in 1995, K.P.R. Agrochem Limited is Balabhadrapuram - Andhra Pradesh based, an agri-input Company focused on manufacturing, distribution and retailing of a wide range of crop yield enhancing and protection products. Company's product portfolio includes crop protection, crop nutrients, seeds, veterinary feed supplements. Further, in order to secure supply of sulphuric acid, one of the key ingredients, company also ventured into manufacturing of sulphuric acid. They produce sulphuric acid as well as other sulphuric acid based chemicals like LABSA and oleum that have wider applications across industries like agrochemicals, veterinary feed supplements, pharmaceuticals, synthetic detergents etc. The range of product encompasses products across the agri-value chain viz., from seeds to crop nutrients products to crop protection products and also veterinary feed supplements. KPRAL's Majority of the sales is from branded products like 'FAST', 'MOTOX - 10G', 'SAMRAT ATRAZINE 50% WP' and 'MEGA IMIDA' brands for crop protection; 'AJAY (14-35-14)' and 'AJAY (20-20-0)' for NPK mixture crop nutrient products; 'ANNADATA SINGLE SUPER PHOSPHATE' for single super phosphate; 'ABHAYA CAL MIX' for di-calcium phosphate and 'APURVA SEEDS' for seeds. KPRAL is a part of the K.P.R. group based out of East Godavari district of Andhra Pradesh. The group has interests in agri-inputs, chemicals, rice mills and poultries. As on January 31, 2018, company has a wide product portfolio across the agri-value chain as noted below –1. Crop Protection Products – registrations of 156 formulations from CIB;2. Crop Nutrient Products - single super phosphate, 11 grades of NPK mixture fertilisers, micro nutrients and bio products;3. Seeds - 83 variety of seeds spanning various field and vegetable crops for which they have received centralised seed license certification for marketing and/or research and trial marketing;4. Veterinary Feed Supplements - di-calcium phosphate for animal feed and also for use in pharmaceutical industry; and5. Sulphuric Acid - production of sulphuric acid and sulphuric acid based chemicals like LABSA and oleum for variety of industrial applications including agrochemicals, pharmaceuticals, etc. Company operates three manufacturing facilities viz one each at Balabhadrapuram and Biccavolu in East Godavari district of Andhra Pradesh and one in Koppal district, Karnataka and the seed processing unit is located in Warangal district, Telangana which is operated under the wholly-owned subsidiary Sri Sai Swarupa Seeds Private Limited. Company has an installed capacity of 5,55,000 MTPA of crop nutrient products, 21,560 MTPA of crop protection products, 32,400 MTPA for veterinary feed supplements, 1,62,600 MTPA for chemicals and the installed capacity of the seed processing unit is 15,000 MTPA. For FY17, capacity utilisation for Crop Protection, Crop Nutrients, Veterinary feed supplements and Chemical was 56.80%, 30.28%, 98.91% and 53.16% respectively. They have also set-up a waste heat recovery plant at the manufacturing facility at Biccavolu, East Godavari as well as Koppal, Karnataka to generate power in order to optimally use the steam produced during the manufacturing of sulphuric acid. The aggregate capacity of the waste heat recovery power plants is 2.5 MW (1.5 MW at Biccavolu, Andhra Pradesh and 1 MW at Koppal, Karnataka). Company has quality control laboratory at (i) Biccavolu facility, Andhra Pradesh, (ii) Balabhadrapuram facility, Andhra Pradesh; (iii) Warangal facility, Telangana; and (iv) Koppal facility, Karnataka, which primarily monitors the quality of the major raw materials and finished goods. Company sells the products through a mix of Company operated retail outlets known as Kisan Seva Kendras and dealer network. As on January 31, 2018 they have 131 Kisan Seva Kendras based in East and West Godavari, Krishna, Srikakulam, Vizayanagaram and Visakhapatnam districts of Andhra Pradesh, Warangal district of Telangana andKoppal, Bellary, Raichur and Gadag districts of Karnataka. Further, they also sell our products through a wide distribution network of approximately 8,000 dealers spread across India to whom they sell from their 9 depots and 8 C & F Agents. As on March 31, 2019, company had a total workforce of 1332 (including 130 contract labourers) across the Registered Office, manufacturing units, depots and Kisan Seva Kendras. As per financial performance, KPR Agrochem has posted total income/net profits of Rs. 600.57 cr. / Rs. 560.35 cr. (FY15), Rs. 581.41 cr. / Rs. 24.31 cr. (FY16), Rs. 590.70 cr. / Rs. 562.99 cr. (FY17) and Rs. 600.82 cr. / Rs. 29.65 cr. (FY18). For upto Q3 of FY19, it has reported net profit of Rs. 27.59 cr. on total revenue of Rs. 483.28 cr. So company has posted static financials all these years. KPR Agrochem has posted an average EPS of Rs. 3.10 and average RoNW of 12.98% for last three fiscals. Issue is priced at a P/BV of 2.09 as per NAV of 29.14 on 31.12.18. If we annualise latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 20 and as per FY18 earnings P/E is 24.66. As per RHP, industry average P/E ratio is 24 and listed peers comparison shown in above table. So issue looks fully priced. On BRLM's front, PL Capital Markets Private Limited associated with this issue and have handled 1 SME public issues in the past three years. The only SME IPO opened below issue price and currently trading below issue price. (As on 21.06.19) As per financials, it's almost static since FY15, RoNW is 12.98% for last three fiscals and issue is priced at P/E of around 20 as per latest earnings, so its fully priced as per FY18 earnings. Government has focus on increasing farmers income to double by 2022 and for that farm output also need to be increased, so this kind of company may grow multi fold, if work with proper direction. So we give NEUTRAL rating to this IPO.
✍️ Post a Comment