Nova Agritech IPO: 10 things to know before subscribing to Rs 143.8 crore issue

Nova Agritech IPO: The IPO will open for subscription on January 23 and close on January 25, 2024

Nova Agritech’s Rs 143.81 crore initial public offering (IPO) will open for subscription on January 23. The offer consists of a fresh issue of 2.73 crore shares and an offer-for-sale of 77.58 lakh shares.

Here are 10 key things to know before subscribing to the offer:

1) IPO Dates

The IPO will open for subscription on January 23 and close on January 25, 2024.

2) Price Band

The price band for the issue has been fixed at Rs 39-41 per share.

3) Offer Details

Nova Agritech plans to raise Rs 143.81 crore via IPO. The public offer consists of a fresh issue of 2.73 crore shares worth Rs 112 crore and an OFS of 77.58 lakh shares worth Rs 31.81 crore. Suraksha Agri Retails (India), Malathi S and Kiran Kumar Atukuri are the promoters of the company.

Also Read: Nova Agritech IPO: Company raises Rs 43.14 crore via anchor book

The company mopped up Rs 43.14 crore from four institutional investors on January 19. AG Dynamic Funds is the biggest investor amongst them, buying nearly Rs 13 crore equity shares in the company, while Neomile Growth Fund - Series I, Saint Capital Fund, and Quantum-State Investment Fund picked more than Rs 10 crore worth of shares each.

4) Objectives of Issue

The net proceeds from the fresh issue worth Rs 14.20 crore will be used for investment in its subsidiary Nova Agri Sciences for setting up a new formulation plant, Rs 10.49 crore for funding capital expenditure by Nova Agritech and towards expansion of its existing formulation plant.

The company will also use Rs 26.65 crore for funding the working capital requirements of Nova Agritech and Rs 43.36 crore for investment in Nova Agri Sciences’ working capital requirements.

5) Lot Size

Investors can bid for a minimum of 365 equity shares and multiples of 365 after that. Hence the minimum investment by retail investors would be Rs 14,235 (365 (Lot size) x 39 (lower price band)). At the upper end, the bidding amount will increase to Rs 14,965.

Also Read: Nova Agritech IPO: Hunting for high growth capital, eyes ‘one-stop solution provider’ tag

6) Company Profile

Nova Agritech is an agri-input manufacturer offering soil health management, crop nutrition, and crop protection products focused on a tech-based farmer-driven solution approach. The company has a total dealer network comprising approximately 11,722 dealers.

The company's dealer network is currently spread across 16 states of India, namely Andhra Pradesh, Telangana, Maharashtra, Karnataka, Madhya Pradesh, Rajasthan, Chhattisgarh, Tamil Nadu, Uttar Pradesh, Odisha, West Bengal, Bihar, Gujarat, Jharkhand, Uttarakhand, and Jammu & Kashmir, and 02 in Nepal. The company has also entered into marketing, distribution, and supply agreements with certain third parties in Bangladesh, Sri Lanka, and Vietnam and is currently awaiting the necessary permission to start business in these jurisdictions.

7) Financials

In the fiscal year 2023, the revenue rose 13 percent to Rs 211 crore compared to Rs 186 crore in FY22. Net profit surged 43 percent to Rs 20.49 crore in FY23. The company reported a return on equity (RoE) and return on capital employed (RoCE) of 38.27 percent and 27.25 percent, respectively in FY23. The net debt in the same period stood at Rs 10.8 crore and debt to equity ratio stood at 1.11x.

8) BRLMs & Promoters

The book-running lead managers of the IPO are Keynote Financial Services and Bajaj Capital while Bigshare Services is the registrar. Suraksha Agri Retails (India), Malathi S and Kiran Kumar Atukuri are the promoters of the company.

9) Risks

(i)  As of November 30, 2023, the company’s total outstanding debt was Rs 44.17 crore.

(ii) The company is obligated to acquire and uphold various licenses and permits for its business operations.

Also Read: Jana Small Finance Bank IPO | TPG Asia-backed firm raises Rs 113 crore through pre-IPO placement

(iii) The strength of the company's brands is vital for its growth and success, and there is a possibility that it will face challenges in consistently maintaining and developing its brands.

10) Listing Date

The basis of allotment will be finalised by January 29, shares will be credited to demat accounts by January 30 and the stock will be listed on the NSE and BSE on January 31.