The initial public offering (IPO) of Dharmaj Crop Guard on Wednesday received a stellar response from investors on the final day of bidding. The issue, which was fully subscribed on Day 1, attracted bids for 28,43,51,820 crore equity shares against the IPO size of 80,12,990 shares, booked 35.49 times by 5 pm today.
The quota for qualified institutional buyers (QIBs) got subscribed 48.21 times, while the category for non-institutional investors witnessed 52.29 times subscription. The portion for retail individual investors (RIIs) received 21.53 times subscription and that for employees got subscribed 7.48 times.
The agrochemical company’s IPO price band was fixed at Rs 216-237 per share. The company had raised Rs 74.95 crore from anchor investors ahead of its IPO.
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Grey market premium
Market participants said Dharmaj Crop IPO grey market premium (GMP) was seen around Rs 48. It implied that the grey market expected the company to list around Rs 285 (Rs 237 + Rs 48), a little over 20 per cent higher than the IPO’s upper band price of Rs 237 per equity share.
“The company has a diversified product set with a presence across domestic as well as international markets. The operations look relatively small compared to its peers, however, revenues, EBITDA and margins are on the rise. At the upper band, post-fresh issue, the asking P/E post-fresh issue comes around 27.8x based on FY22 earnings. Given the growth and small issue size, huge demand is anticipated for the issue,” Manan Doshi, UnlistedArena.com, dealing in unlisted & pre-IPO shares, told Business Today.
Brokerage view
Swastika Investmart: “The company has posted steady growth in both revenue and profit. Profit margins also improved continuously in a tough environment.” The brokerage assigned a ‘Subscribe’ rating to this IPO.”
KR Choksey: “The agrochemicals sector is gaining prominence and has bright prospects for the future. The company has good earnings visibility going ahead.” KR Choksey also recommended a ‘subscribe’ call to the IPO.
Mehta Equities: In terms of risks, the company “faces hurdles like licensing, climate change government restrictions, and farmers’ demand supply utility. Hence, we believe that, although there is consistent growth in margins and profitability, but being in the highly competitive segment, a small player like DCGL may struggle in the race. The brokerage gave a ‘Subscribe For Listing Gain Only’.
The company’s revenue from operations grew 30.36 per cent to Rs 394.21 crore for FY22 against Rs 302.41 crore for the fiscal FY21. Net profit was up 36.88 per cent at Rs 28.69 crore in FY22 from Rs 20.96 crore in FY21.
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Elara Capital (India) and Monarch Networth Capital were the book-running lead managers to the issue.