Lucknow-based agrochemical company India Pesticides' initial public offering has seen a subscription of 3.79 times on June 24, the second day of bidding. This is the last issue in the month of June.
Investors have put in bids for 7.32 crore equity shares against the offer size of 1.93 crore equity shares, the subscription data available on the exchanges showed.
Retail investors' portion has been subscribed 5.88 times, while the portion set aside for non-institutional investors has been subscribed 91 percent.
Qualified institutional buyers have put in bids for 1.27 crore shares, i.e. 2.31 times their reserved portion of 55.17 lakh equity shares.
Also Read Moneycontrol's Exclusive Research Note On India Pesticides IPO
Up to 50 percent of the total offer is reserved for allocation to qualified institutional buyers, up to 15 percent for non-institutional bidders and the remaining 35 percent for retail individual bidders.
India Pesticides opened its Rs 800-crore public offer for subscription on June 23, which comprises a fresh issue of Rs 100 crore and an offer for sale of Rs 700 crore by the selling shareholders, including promoter Anand Swarup Agarwal.
Out of Rs 800-crore issue size, the company already garnered Rs 240 crore from anchor investors on June 22, at higher end of price band of Rs 290-296 per share.
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The company is going to utilise net proceeds from the fresh issue for its working capital requirements, and general corporate purposes.
India Pesticides is a sole manufacturer of 5 Technicals and among the leading manufacturers globally for Captan, Folpet and Thiocarbamate Herbicide, in terms of production capacity. It is also diversified into manufacturing herbicide and fungicide Technicals and active pharmaceutical ingredients (APIs), having 2 manufacturing facilities located at Lucknow and Hardoi in Uttar Pradesh through which it caters to over 25 countries.
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"We believe India Pesticides IPO gives investors a unique opportunity to invest in fastest growing agro-chemical companies in India which has strong present in the entire product value chain of the agrochemicals industry i.e. Technicals, Formulations & APIs verticals," said Mehta Equities.
The brokerage is optimistic on overall agrochemicals & API manufacturing business which has high entry barriers like registrations & licenses to manufacture for domestic as well as for export business (20+ countries), whereas India Pesticides stands strong and healthy catering to these segments.
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Considering its competitive strength like diversified product portfolio with specialized products, domestic and strong export market presence (contributing more than 50 percent to the topline), high margins, healthy return on net worth (RONW - 34.5 percent, highest in the peers) and almost zero debt business, Mehta Equities advised investors to be invested in India Pesticides for long term wealth creating business.
On valuations parse at upper price band (Rs 296), the issue is asking for a market cap of Rs 3,409 crore with PE (FY21) around 25.34x which seems the issue is reasonably priced well below the average industry (47x) when compared to its listed peers and believe there is something is left on the table for new investors coming in, the brokerage feels.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.