Dharmaj Crop Guard Ltd IPO - 7 things to know

Dharmaj Crop Guard Ltd, a leading manufacturer of agrochemicals, had filed its draft red herring prospectus (DRHP) in January 2022 and SEBI is yet to give its observations and approval for the IPO.

Normally, the IPOs are approved by SEBI within a period of 2 to 3 months unless there are other queries or clarifications that the regulator has. In this case, the approval is expected to come around end of March or in the next month.

The Dharmaj Crop Guard Ltd IPO will be a combination of a fresh issue and an offer for sale but the next step will be for the company to finalize on its issue date and issue price once the IPO approval from SEBI is through.
 

7 important things to know about the Dharmaj Crop Guard Ltd IPO

1) Dharmaj Crop Guard Ltd has filed for an IPO with SEBI and is awaiting SEBI approval to go ahead with the IPO. The IPO comprises of a fresh issue of Rs.216 crore and an offer for sale of 14.83 lakh shares taking the total issue size to approximately in the range of Rs.250 crore to Rs.300 crore.

The final size of the issue will predicate on the price band that is decided upon. The IPO may most likely hit the market after the LIC IPO is done by the second week of May so that the crowing out of capital can be avoided.

2) Let us talk about the offer for sale (OFS) portion of the IPO first. A total of 14.83 lakh will be sold by the promoters as part of the offer for sale. Promoters of Dharmaj Crop Guard; Manjulaben Rameshbhai Talavia, Muktaben Jamankumar Talavia, Domadia Artiben and Ilaben Jagdishbhai Savaliya will sell shares via the OFS.

The OFS component will not result in any fresh fund infusion or dilution of the capital or the EPS. However, the selling of stake by the promoter will increase the free float of the company and facilitate listing of the stock. There is also expected to be a special reservation for the employees of the company in the IPO.

3) The fresh issue portion of Rs.216 crore will issue fresh shares in the quantum based on the total price of the offer as decided. Let us not look at how the funds raised via fresh issue will be utilized by Dharmaj Crop Guard.

It will use the funds predominantly to fund capital expenditure towards the setting up of a manufacturing facility at Saykha Bharuch in the state of Gujarat. In addition, the fresh issue portion will also be used to bankroll its working capital needs as well as for general corporate purposes..

4) The company, Dharmaj Crop Guard, is engaged in the business of manufacturing, distributing and marketing a wide spectrum of agricultural chemical formulations. These are meant to protect the crop sand enhance output.
 

These products include insecticides, fungicides, herbicides, plant growth regulator, micro fertilisers and antibiotics. The company will sell such products to its retail based B2C customers or farmers directly and also to the institutional market by targeting B2B customers.

5) Apart from catering the B2B and the B2C markets in India, Dharmaj Crop Guard also has a large global clientele and it currently exports its products to more than 20 countries across the world including the region of Latin America, East Africa, Middle East and Far East Asia.

6) Dharmaj Crop Guard, the Gujarat-based agrochemical company, has already clocked impressive growth in profit that doubled to Rs.20.96 crore in FY21 as compared to just Rs.10.76 crore in FY20.

During the same period (FY21 over FY200, the revenues of the company also jumped by 52.6% from Rs.198.22 crore to Rs.302.41 crore. If you look at the first 7 months of FY22, i.e. up to October 2021, then the company has recorded net profits of Rs.18.66 crore on revenues of Rs.227.26 crore. This translates into net profit margins of 8.21%

7) The IPO of Dharmaj Crop Guard Ltd will be lead managed by Elara Capital and Monarch Networth Capital. They will act as the book running lead managers or BRLMs to the issue. Link Intime will be the registrar to the IPO. The stock will be listed on the BSE and the NSE.
 

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