The initial public offering (IPO) of Dharmaj Crop Guard Limited (DCGL) opened today, Monday, November 28, 2022, and will close on Wednesday, November 30, 2022. On the first day of IPO, the IPO received a healthy response from investors, and the IPO subscribed 1.79 times. The IPO received bids of 1.43 crore shares for against issue size of 80.12 lakh shares. Retail investors placed bids totalling 2.6 times the number of shares allowed to them.
According to the brokerage firm KR Choksey, DCGL IPO size is INR 2,512 mn. The price band of the issue is INR 216 - INR 237. On the upper price band of INR 237 and EPS of 11.62 for FY22, the P/E ratio works out to be 20.4x. If we annualize its 4 months FY23 EPS of INR 7.44 (till July 2022), then on the annualized FY23 EPS of INR 22.32, the issue is available at a P/E of 10.62x, which compared to its peers is quite cheap. Also, as per the prospectus, the valuation looks attractive considering the average industry P/E of 24.04x.
Objects of the Offer
The net proceeds will be utilized for the following purpose:
- Funding capital expenditure towards setting up of a manufacturing facility at Saykha, Bharuch, Gujarat.
- Funding incremental working capital requirements of the company.
- Repayment and/or pre-payment, in full and/or part, of certain borrowings of the Company.
- General corporate purposes.
Should You Subscribe?
Leading brokerage firm KR Choksey in its report has said, "We believe the company's long-term prospects are favorable, given the fact that it is an emerging player in the agrochemicals space having both B2C and B2B client base. The agrochemicals sector is gaining prominence and has bright prospects for the future. DCGL enjoys long-standing relationship with its client base. The company has good earnings visibility going ahead. Valuation wise also, DCGL is available at a discount to its listed industry peers. As a result of all these positive factors, we recommend investors to 'SUBSCRIBE'to the IPO of DCGL."
About the Company
Dharmaj Crop Guard Ltd. (DCGL) is an agrochemical company engaged in the business of manufacturing, distributing and marketing of a wide range of agrochemicals such as insecticides, fungicides, herbicides, plant growth regulator, micro fertilizers and antibiotic to the B2C and B2B customers. DCGL exports its products to more than 20 countries in Latin America, East African countries, Middle East and Far East Asia. It sells its agrochemical products in granules, powder and liquid forms. DGCL has obtained 464 registrations for agrochemical formulations from the CIB&RC (Central Insecticides Board and Registration Committee), out of which 269 agrochemical formulations are for sale in India as well as for export and 195 agrochemical formulations are exclusively for exports. It has 157 trademark registrations including branded products. Its formulations are sold as branded products to customers. As of September 30, 2022, DGCL had over 118 branded formulations that are sold to farmers.
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