Nova Agritech IPO: Should you subscribe to this Rs 144-crore issue?

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Nova Agritech, a leading agri-input manufacturer specializing in soil health management, crop nutrition, and crop protection products, came out with an IPO. The Rs 144 crore issue, comprising fresh equity issue of Rs 112 crore and an offer-for-sale (OFS) of 77.58 lakh shares, opens today and closes on January 25.
Ahead of the IPO opening, the company has raised Rs 43 from anchor investors including Quantum- State Investment Fund, Neomile Growth Fund among others.

Nova Agritech IPO review

Most analysts gave a subscribe recommendation to the IPO over the company’s solid financial track record in a highly-competitive sector. The company has delivered an impressive return on equity (ROE) of 32.1% and boasts of robust PAT margins at 9.7% in FY23.

“The comfortable asset turnover ratio and efficient asset utilization indicate the potential for sustained profitability. Turning to valuations, the PE ratio stands at 12.3x based on the annualized diluted H1FY24 EPS which appears relatively low compared to peers in the industry. We give the issue a Subscribe rating,” said Stoxbox.

Nova Agritech IPO price band

The company has fixed a price band of Rs 39-41 for the IPO and investors can bid for 365 shares in one lot.

About 50% of the will be available for allocation to qualified institutional buyers (QIBs), 15% to non-institutional investors (NIIs), and 35% to retail investors.

Nova Agritech overview

Nova Agritech is an agri-input manufacturer that provides a one stop solution for the health of soil and crops through its diversified branded product portfolio. It has a strong presence across geographies and effective marketing strategy positions the company for continued growth.
India’s IPO market is busy. It’s also broken

As of November 30, 2023, NATL boasts a robust product portfolio with 720 registrations across categories, including soil health management, crop nutrition, bio pesticides, and crop protection.

The subsidiary, Nova Agri Sciences (NASPL), handles the manufacturing of crop protection products, contributing significantly to the company’s revenue.

In FY23, the company’s revenue from operations jumped 13% year-on-year to Rs 210 crore, while profit after tax (PAT) surged 50% to Rs 20.48 crore. In the six months ended September 2023 period, revenue stood at Rs 103 crore and profit was at Rs 10.3 crore.

Book running lead managers

Keynote Financial Services and Bajaj Capital are the book-running lead managers and Bigshare Services is the registrar to the offer.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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