The initial public offering (IPO) of India Pesticides, one of India's leading agro-chemical manufacturers, had been subscribed 29.04 times by the morning of June 25, the final day of bidding. Investors had bid for 56.07 crore equity shares against the IPO size of 1.93 crore shares, the subscription data available on exchanges showed.
The IPO size was reduced to 1.93 crore shares after the company raised Rs 240 crore from anchor investors on June 22, a day before the issue opened.
The portion reserved for qualified institutional investors has been subscribed 42.95 times and that of non-institutional investors 51.88 times. Retail investors have put in bids 11.30 times their reserved portion.
Also Read Moneycontrol's Exclusive Research Note on India Pesticides
India Pesticides is the only Indian manufacturer of five technicals and among the leading manufacturers globally for Captan, Folpet and Thiocarbamate Herbicide, in terms of production capacity.
Both technicals and formulations portfolio are well diversified among fungicides, herbicides and insecticides along with active pharmaceutical ingredients (APIs) (10 percent of revenue); thus de-risking its business model.
Catch all the market action on our live blog
The company derived 57 percent of its FY21 revenue from exports, while the top 10 customers contributed to 57 percent of the sales.
The agrochemical manufacturer targets to raise Rs 800 crore through its public issue that comprises a fresh issue of Rs 100 crore and an offer for sale of Rs 700 crore by existing selling shareholders, which reduce promoters' stake to 72 percent after the issue.
Also read: India Pesticides IPO: 10 things to know before subscribing the issue
The company will use proceeds from the fresh issue to meet working capital requirements (Rs 80 crore) and for general corporate purposes.
"We like India Pesticides given its presence in fast growing agrochemical space, diversified product portfolio and robust financials. Strong research and development (R&D), long-term relations with MNCs, cost competitiveness and extensive distribution network are some of the other key positives," Motilal Oswal said.
The brokerage said expanding product portfolio, growing customer base and increasing wallet share of existing customers can help India Pesticides maintain its growth momentum.
Also read: India Pesticides IPO opens: Should you subscribe?
The brokerage said the issue is reasonably valued at 25.3x FY21 P/E on post-issue basis, vis-à-vis peers (average peer price-to-earnings (P/E) of 36.4x), while it enjoys a higher return on equity (RoE) of 36 percent (average peer RoE of 21 percent). Motilal Oswal recommends subscribing the issue.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.