Dharmaj Crop Guard makes a stellar debut, lists at 12% premium to IPO price

In line with analyst expectations of double-digit gains, agrochemical company Dharmaj Crop Guard made a stellar debut on bourses on December 8, despite the raging volatility in the markets.

The stock listed with 12 percent premium over its issue price of Rs 237. It started trading at Rs 266 on the NSE and BSE.

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The Rs 251-crore public issue of the Ahmedabad-based company was subscribed 35.5 times, with qualified institutional buyers and high net worth individuals bidding for 48 times and 52 times their respective allotted quotas. Retail investors put in bids for 21.5 times the shares in the portion reserved for them. The price band for the offer was Rs 216-237 per share.

At the upper end of the price band, the IPO was at 20x its FY22 earnings which was a fair valuation, as per analysts.

“The valuation was reasonable when we compare with listed peers. The company has created a niche place with its B2C and B2B model,” Narendra Solanki of Anand Rathi Shares & Stock Brokers, said.

Dharmaj Crop Guard is engaged in the business of manufacturing, distributing and marketing a range of agro-chemical formulations such as insecticides, fungicides, herbicides, plant-growth regulator, micro fertilisers and antibiotics to B2C and B2B customers.

With the proceeds from the public issue, a new manufacturing facility will be set up at Saykha in Gujarat, according to the red herring prospectus.

The company clocked a 37 percent growth in profit at Rs 28.69 crore for the year ended March 2022 and 30 percent increase in revenue at Rs 394.2 crore compared to previous year. Profit for the first quarter of FY23 stood at Rs 18.4 crore on revenue of Rs 220.9 crore.

“Healthy increase in capex over the years from the promoters shows promise and confidence in management. The company is constantly growing its product mix and they show willingness to diversify their product lines to increase market share. This is a big positive,” noted Chola Securities.

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