Cholamandalam Securities IPO report on Dharmaj Crop Guard
Incorporated in 2015, Dharmaj Crop Guard Limited is an agrochemical company. The company is engaged in the business of manufacturing, distributing, and marketing a wide range of agrochemical formulations such as insecticides, fungicides, herbicides, plant growth regulators, micro fertilizers and antibiotics to the B2C and B2B customers. The company also provides crop protection solutions to the farmer to assist them to maximize productivity and profitability. Dharmaj Crop Guard Limited export products to more than 20 countries in Latin America, East African Countries, the Middle East and Far East Asia. The company's manufacturing facility is located in Ahmedabad, Gujarat, India. Dharmaj Crop Guard Limited also has a research and development ("R&D") centre at the manufacturing facility. As of September 30, 2022, they had over 118 branded formulations that are sold to farmers. They sell bulk products to our institutional customers domestically and in the international markets. Further, as of September 30, 2022, they had more than 154 institutional products that they sold to more than 600 customers based in India and in the international markets. It has exported products to more than 66customers across 25 countries.
Valuation and Outlook
DCGL has shown consistent growth on revenue and increasing its market share over the past 4 years. Healthy increase in capex over the years from the promoters shows promise and confidence in management. Constantly growing product mix and willingness of company to diversify their product lines to increase their market share is a positive. The listing will give the company an approximate P/E band of 28-31 which is, compared to its peers on the higher side. We give this IPO a “Subscribe” rating.