Shares of agrochemical company India Pesticides will debut on bourses tomorrow, July 5. Experts expect the counter to list with a double-digit premium over its issue price given the strong response to its IPO as well as general bullishness around the sector. The issue price has been fixed at Rs 296.
This would be the first listing in July 2021 after 24 companies being listed in first half of the year CY21.
One of the leading agrochemicals manufacturers in India, India Pesticides closed its Rs 800-crore public issue on June 25. The issue was subscribed 15 times, receiving an overwhelming response from investors across the board.
"Considering healthy investor's response to India Pesticides IPO, we believe it would list over Rs 350 levels, which translates to 18 percent premium over the upper end of the IPO price Rs 296," Prashanth Tapse, VP Research at Mehta Equities told Moneycontrol.
"Decent listing gain seems to be justified as the issue was well priced with attractive valuation when compared to other listed agrochemicals peers and given the healthy prospects of the agrochemicals sector going forward," he said.
The issue seems to have come at the right time to tap investors demand, Tapse added.
Currently, the shares are trading at Rs 351-356, a premium of Rs 55-60 or 18.6-20.3 percent over the issue price in the grey market, the data available with IPO Watch and IPO Central showed.
The grey market is an unofficial platform. Trading in the grey market begins immediately after the announcement of the IPO price band and continues till shares getting listed on the bourses.
Also read - India Pesticides IPO share allotment: 2 options available to check the status
Astha Jain, Senior Research Analyst at Hem Securities expects India Pesticides to list at a 12-18 percent premium over its issue price.
India Pesticides is a Lucknow-based R&D driven agrochemical company incorporated in 1984. It has two manufacturing facilities through which it caters to over 25 countries. Its verticals include technical, formulations and active pharmaceutical ingredients (APIs).
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It is the sole manufacturer of five Technicals and among the leading manufacturers globally for Captan, Folpet and Thiocarbamate Herbicide. It has also diversified into manufacturing herbicide and fungicide Technicals and active pharmaceutical ingredients (APIs). It also manufactures herbicide, insecticide and fungicide Formulations.
India Pesticides' total revenue from operations increased by 90.48 percent during FY19-FY21. The company has been able to maintain its debt position as the long term debt to equity ratio was 0.09, 0.06 and 0.02 as of March 2019, 2020 and 2021. During FY21, its return on capital employed (ROCE) stood at 45.18 percent and return on equity (ROE) at 34.63 percent.
"If we look at the fundamentals and valuation of stock, fundamentals look good. Based on FY-2021 P/E of 24.5x and EV/EBITDA of 18.2x at the upper band of the IPO price, valuations are slightly better than the peer companies. We expect the listing to be at a premium of 15-25 percent," said Yash Gupta, Equity Research Associate at Angel Broking.
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