Indogulf Cropsciences IPO subscribed 93% on Day 2, retail portion fully booked: Should you apply?

Indogulf Cropsciences IPO Day 2

The maiden public issue of Indogulf Cropsciences saw decent investor interest on its second day of public bidding. The Rs 200-crore IPO was subscribed 93 percent on June 27.

The initial public offering of the crop protection products-maker received bids for over 1.25 shares, as against the offer size of 1.34 crore shares, according to data on NSE.

Retail investors have fully booked their quota, subscribing their reserved portion 1.54 times. Non Institutional Investors (NII) subscribed 85 percent of the portion kept for them. Qualified Institutional Buyers (QIB) meanwhile booked 5 percent of their reserved portion.

The public issue will remain open for public bidding from June 26 to June 30. The company aims to raise Rs 200 crore through the IPO, which comprises fresh issue of shares worth Rs 160 crore and an offer for sale of 36.03 lakh shares worth Rs 40 crore by its existing promoters.

The company has set a price band of Rs 105-111 per share. Investors can apply for a minimum of 135 shares, requiring an investment of Rs 14,985, and in multiples thereafter. The shares are likely to make their market debut on BSE and NSE on July 3.

Indogulf Cropsciences IPO GMP:

Ahead of listing, the unlisted shares of the company were trading with a grey market premium (GMP) of over 8 percent to its IPO price at Rs 120 apiece in the grey market, according to Investorgain. Notably, the GMP cited by the site has slightly decreased from the 9.9 percent quoted before the IPO opened for public bidding.

According to IPO Watch, the shares of the company were trading with 9 percent GMP.

Should you apply?

Anand Rathi has advised investors to subscribe to the public issue. "Since the industry that company caters is cyclical, highly dependent on government’s initiatives, shift in consumer preference for organic production and with its fully priced scenario we believe that, ICL is long run growth story which requires timely mass initiatives for agricultural boost, increase awareness of sustainable farming," it said.

Bajaj Broking advised investors to subscribe to the issue for the long term. Explaining the financial front of the company, Bajaj Broking said, "Indogulf Cropsciences is involved in the manufacturing and marketing of crop protection solutions, plant nutrition products, and biologicals. The company's revenue remained largely unchanged in FY23 and FY24, primarily due to fluctuations in raw material prices during these periods… Although revenue growth remained flat in FY23 and FY24, net profitability showed variability, with a decline in FY23 largely due to raw material price volatility. As input costs stabilized, financial performance improved, as seen in the FY24 results."

A day before the IPO opened for public bidding, Indogulf Cropsciences raised Rs 58.2 crore via anchor book on June 25. Nearly half of the funds contributed by Sunil Singhania's Abakkus. Abakkus Diversified Alpha Fund acquired 25.4 lakh shares worth Rs 28.2 crore, which is 48.5 percent of the total anchor book. Other investors include Viney Growth Fund, Swyom India Alpha Fund, Sunrise Investment Trust Sunrise Investment Opportunities Fund, and Rajasthan Global Securities.

Indogulf Cropsciences will utilise Rs 100 crore out of the net fresh issue proceeds for its working capital requirements, Rs 40 crore for repaying debt, and Rs 14 crore for setting up an in-house dry flowable (DF) plant at Sonipat, Haryana, besides funds for general corporate purposes.

The company competes with Aries Agro, Basant Agro Tech India, Best Agrolife, Bhagiradha Chemicals & Industries, Heranba Industries, India Pesticides, and Dharmaj Crop Guard in the listed space.

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