Nova AgriTech Limited is an agri-input manufacturer offering soil health management, crop nutrition and crop protection products focused on tech-based farmer driven solution approach, wherein they mainly offer ecologically sustainable and nutritionally balanced products based on the Research and Development. They manufacture, distribute and market a wide range of product categories consisting of (a) soil health management products; (b) crop nutrition products; (c) bio stimulant products; (d) bio pesticide products; (e) Integrated Pest Management products; (f) new technologies; and (g) crop protection products. Currently, the crop protection products are manufactured by the subsidiary Nova Agri Sciences Private Limited. As on November 30, 2023, they have received a total of 720 product registrations comprising of 7 registrations in the soil health management category, 176 registrations in the crop nutrition category, 4 registrations in bio pesticide category, 7 registrations under Technical Indigenous Manufacture and 526 registrations in the crop protection category. All of the 526 registrations in the crop protection category are in the name of Nova Agri Sciences Private Limited. Further, they have applied for 14 registrations for new products across various categories in the name of Nova Agri Sciences Private Limited (NASPL) and 22 new registrations in the name of Nova Agritech Limited (NATL). Company have a total dealer network comprising of approximately 11,722 dealers out of which approximately 6,769 dealers are active to whom they have distributed and sold the products during the current financial year. The dealer network is currently spread across 16 states of India namely Andhra Pradesh, Telangana, Maharashtra, Karnataka, Madhya Pradesh, Rajasthan, Chhattisgarh, Tamil Nadu, Uttar Pradesh, Odisha, West Bengal, Bihar, Gujarat, Jharkhand, Uttarakhand and Jammu & Kashmir and in Nepal. They have also entered into marketing, distribution and supply agreements with certain third parties in Bangladesh, Sri Lanka and Vietnam and are currently awaiting the necessary permission to start business in these jurisdictions. They intend to import and distribute Technicals, which will be a prominent factor in the growth of the agriculture sector in India in the near future. Considering the same NASPL has entered into Registration and Distribution Agreements for import and distribution of Technicals with a Taiwanese entity on April 15, 2022 to act as the distributor for sales and formulation of Butachlor 85% Tech in India for a period of 5 years and a Chinese entity on April 15, 2022, to act as the distributor for sales and formulation of Emamectin Benzoate Technical 95% in India for a period of 5 years. They run a farmer outreach program called Nova Kisan Seva Kendra program (NKSK) through which they educate farmers on various crop management practices. As on November 30, 2023, the NKSK team compromises of 24 NKSK Coordinators who are all agri-graduates and are on the payrolls of the Company. Apart from the NKSK Coordinators, the Company also have arrangements with individuals across various states who provide their services to the Company as Kisan Mitras, and Kisan Sevaks catering to the need of the farmers. As on November 30, 2023, the Company is associated with 96 Kisan Mitras and 142 Kisan Sevaks at a grass root level. The key objective of NKSK is to provide farmers with need-based solutions, products, technologies, methodologies, knowhow and usage skills, thereby enhancing farm yield. The advantage of these dedicated teams is that they can understand the local language of the farmers and are trained to identify the problems in field and are skilled to give solutions, thus creating an emotional connect with the local farmers and providing ease of solutions. They also provide farming inputs to farmers regarding the appropriate amount of dosage and application of the products through the IOT based solutions such as the soil health scanning device called “NOVA BHUPARIKSHAK” and also the drones called as “NOVA AGRIBOT”. As per financial performance, Nova AgriTech Limited has posted total income / net profits of Rs 160.93 Cr / Rs 6.30 Cr (FY21), Rs 185.61 Cr / Rs 13.69 Cr (FY22), Rs 210.93 Cr / Rs 20.49 Cr (FY23) and Rs 103.24 Cr / Rs 10.38 Cr (Q2 FY24). So as per previous financials data, company has shown good growth. Company has an average EPS of Rs 2.53 and average RoNW of 30.17% for last three fiscals. Issue is priced at a P/BV of 4.02 as per NAV of 10.19 as on 31.03.23. If we attribute latest earnings of FY22, FY23, and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 27.71, 18.51 and 18.27 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Three lead managers are associated with this IPO, and have handled around 2 IPOs in last one fiscal year. Keynote Financial Services Limited : This is 2nd IPO from this BRLM. From last 1 IPO, one opened above issue price on the day of listing. As of now, from last 1 IPO, one is trading below issue price. ( As on 16.01.2024 ) Bajaj Capital Limited : This is 2nd IPO from this BRLM. From last 1 IPO, one opened at per issue price on the day of listing. As of now, from last 1 IPO, one is trading above issue price. ( As on 16.01.2024 ) As per financials, Nova AgriTech Limited has shown good growth, RoNW is 32.08% and P/E is respectively 27.71, 18.51 and 18.27 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced. Company is in business of manufacturing agri input, which is highly competitive and fragmented segment. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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