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Dharmaj IPO Subscribed 35.33 Times; Retail Portion Booked 21.3 Times on Final Day

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The IPO of agrochemical firm Dharmaj Crop Guard was 35.33 times subscribed on November 30, the last day of bidding, with investors bidding 28.31 crore shares out of an issue size of 80.12 lakh shares.

The size of the issue was reduced to 80.12 lakh shares from 1.05 crore shares after the company raised Rs 75 crore through fixed books on November 25.

Retail investors bought 21.3 times their quota, and employees paid 7.45 times the portion of the offer reserved for them. The company has reserved 55,000 shares for its employees, who will get them at a discount of Rs 10 per share.

High net-worth individuals (non-institutional investors) also supported the offer, bidding 52.11 times the portion reserved for them. Qualified Institutional Buyers (QIBs) bought 48.21 times their quota. Half of the offer is reserved for QIB, 35% for retail investors and the remaining 15% for HNI.

The agrochemical manufacturer and distributor is looking to raise Rs 251.15 crore in an IPO, a new issue of Rs 216 crore and a sale offer of about Rs 35.15 crore. The price range for the offer is fixed at Rs 216-237.

Most brokerages gave the offer a “subscribe” rating. Their ratings are based on reasonable valuations, strongly branded offerings, solid relationships with institutional clients, and healthy financial performance.

The upward trend in agrochemical production is expected to continue, supported by expected population growth leading to increased food consumption in the domestic market, government support for agriculture, export markets, and demand in horticulture and flower markets, they said.

Low penetration of pesticides and agrochemicals in India offers growth opportunities for agrochemical producers.
Experts say the government’s goal of reducing reliance on China and increasing self-sufficiency is expected to support backward integration in the industry, thereby boosting its growth.

Swastika Investmart said Dharmaj Crop had developed a strong distribution channel and a stable, diversified product portfolio.

The broker said that the price of this issue was 20 times the price-earnings ratio in FY20, which is lower than most listed peers, and the company’s revenue and profits were growing steadily.

Swastika Investmart said margins were also improving amid the tough environment and gave the IPO a “subscribe” rating.

KRChoksey Research said the company’s long-term outlook is positive as the agrochemical industry develops. Dharmaj Crop has good earnings visibility.

“Valuation-wise, Dharmaj Crop is also listed at a discount to its peers. Due to all these positive factors, we recommend investors to subscribe for the IPO,” the brokerage said.

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