Moneycontrol Be a Pro
Get App
you are here: HomeNewsBusinessIPO
Last Updated : Jun 27, 2019 03:40 PM IST | Source:

Avoid KPR Agrochem: Choice Broking

Choice Broking has come out with its report on KPR Agrochem. The research firm has recommended to "Avoid'' the IPO in its research report as on June 27, 2019

Representative Image
Representative Image
  • bselive
  • nselive
Todays L/H

KPR Agrochem Limited (KPRAC), incorporated in 2007, is an agri-input company focused on manufacturing, distribution and retailing of a wide range of crop yield enhancing and protection products ranging across the agri-value chain. • The company has diversified portfolio from seeds to crop nutrients products to crop protection products and also veterinary feed supplements. The company is also ventured into the manufacturing of sulphuric acid.

Valuation and Outlook

At the higher price band of Rs61, KPRAC’s share is valued at P/E multiple of 19.9(x) (to its post issue FY19 annualized adjusted EPS). Historical track record shows weak financial performance as operating revenue witnessed -0.5% CAGR and PAT by 1.1% CAGR during FY14- FY18. While FY19 annualized figure showed 7.3% YoY revenue growth, there is concern about sustainability of this traction. Pre-issue D/E stood at 1.2x and interest cost was ~42% of FY19’s annulized EBIDTA. Post issue, D/E will reduce to 0.6x owing to partly repayment of debt (Rs300 mn) and boost to net worth, however RoE will reduce to 7.8% (10.9% pre-issue). At the higher price band of Rs61, demanded valuation of Rs7,313 mn at P/E of 19.9x (on annulized FY19 EPS of Rs3.1) seems stretched considering the weak fundamental strength. Peers such as Chambal Fertilizers at P/E of 12.3x , Dhanuka Agritech at P/E of 16.1x and Insecticides India at P/E of 10.6x have strong fundamentals and are trading at cheap valuation compared to KPRAC. Considering all these parameters, we assign ‘Avoid’ rating to the issue


For all IPO stories, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions

Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.
First Published on Jun 27, 2019 03:40 pm
Follow us on
Available On