Nirman Agri Genetics IPO is an SME IPO on the NSE, with subscriptions commencing on March 15, 2023. The company was founded in 2020 as a specialized agri-input provider with a focus on hybrid seeds and agricultural yield boosting systems. Nirman Agri Genetics Ltd produces, processes, and sells high-quality hybrid seeds, insecticides, and bio-organic goods. The company's goods are utilized in a variety of cash crops, such as corn, sunflower, cotton, paddy, grain sorghum, etc.
The company has its own production, processing, and R&D facilities in Maharashtra, specifically in Nashik and Nimgul. Their research focuses on developing better hybrid seeds for various crops, such as corn, cotton, sunflower, paddy, and bajra. These seeds are sold under the brand name 'Nirman Agri Genetics,' and the company expects its R&D facilities to drive future growth.
Nirman Agri Genetics Ltd. has recently expanded into micronutrients and bioproducts. In addition to hybrid seeds, the company also manufactures non-hybrid paddy seeds (rice cultivation). It works through its production , processing, and research and development facilities in Nashik and Nimgul, Maharashtra, in addition to its presence in Gujarat and Madhya Pradesh. Nirman Agri Genetics Ltd. endeavors to become a leading provider of crop solutions to farmers. This involves the distribution of high-yield hybrid seeds and crop management through micronutrients and by-products.
Nirman Agri Genetics has been a very profitable company and has shown excellent growth in its financials every year. The agricultural sector has always been supported by the government with the help of different PLI schemes and Kissan Yojnas, the Indian seed industry has a long history, beginning with the trading of vegetable and flower seeds over a century ago. Today, the Indian seed market is one of the world's top ten largest, with an estimated value of around US$5.5 billion in 2022.
The company is issuing 20.508 lakh shares at Rs. 99 per share, raising a total of Rs20.30 crore. Half of the issue is allocated to retail investors, with a minimum investment of Rs. 118,800 and maximum investment of the same amount. The other 50% is allocated to HNI/NII investors, who can invest a minimum of 2 lots, with no upper limit on investment. The issue includes a market-making portion of 104,400 shares, with Rikhav Securities acting as market maker.
The table below captures the key financials of Nirman Agri Genetics Ltd for the last 3 completed financial years. The flow figures like sales and profits for FY23 are only available for 7 months, so they have been annualized for being able to compare with the previous two years data.
| Details | FY23 | FY22 | FY21 |
| Total Revenues | Rs 30.93 cr | Rs13.49 cr | Rs3.82 cr |
| Revenue growth | 129.28% | 253.14% | N.A. |
| Profit after tax (PAT) | Rs 3.95 cr | Rs2.56 cr | Rs0.06 cr |
| PAT margins (%) | 12.77% | 18.98% | 1.57% |
| Net Worth | Rs4.48 cr | Rs2.64 cr | Rs0.07 cr |
| Return on Net Worth (%) | 88.17% | 96.97% | 85.71% |
| Asset Turnover Ratio (X) | 1.97X | 2.26X | 2.33X |
Data Source: Company DRHP filed with SEBI
The IPO is coming at a very attractive valuation with the lowest P/E in the industry. Nirman Agri Genetics has a P/E ratio of 12.58 whereas the industry’s lowest P/E ratio is 38. The company has shown a remarkable growth in both Revenue and profit after tax. The networth of the company and the assets of the company have doubled in the one year. The company has been successful in generating a good cash flow from its core business operations since day 1.
The company plans to invest approximately ₹2 crores in either an acquisition or a joint venture with a company in the agri inputs industry. The aim is to expand their customer base, reach new markets, and achieve inorganic growth. The management intends to use around 10% of the gross proceeds for this purpose and is looking for companies with similar business lines that can help them expand through backward or vertical integration. They are seeking to identify companies that can add value to their products, increase their brand value, and ultimately improve their profitability.
Profitmart securities stated, “The revenue growth is excellent considering the company is 3 years old. PAT and RONW margins are attractive and they will mature overtime. Asset turnover does indicate adequate use of assets for the growth of the company in the long run. The IPO is coming at a P/E of 12.58 which makes it look more attractive and fair valued. This is a high growth sector where there is a lot of potential, especially with the government putting a major thrust on the agricultural sector thus the IPO is certainly suitable for Long Term Gains.”
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