KPR Agrochem IPO Details, Analysis, Subscription & Discussion

KPR-agrochem-logoKPR Agrochem IPO Issue Details:

IPO date:
Issue Size:                283 Cr
Offer Price:              Rs 59 – Rs 61 Per Equity Share
Market Lot:              200 Shares & multiples
Exchange Listing:   BSE, NSE

IPO Timelines (tentative dates):

Allotment & refund:    08 July
Credit to Demat:           09 July
Listing on Exchange:   10 July

Company Promoters: Papa Reddy Kovyuri, Venkata Mukunda Karri, Satyanarayan Reddy Kovyuri

Objective of the Issue: Repayment/prepayment of loans availed by the Company, working capital requirement

IPO Registrar: Karvy Computershare Private Limited

Company Overview:

  • Incorporated in 2007, Andhra Pradesh based KPR Agrochem Limited is engaged in manufacturing, retailing and distribution activities of agriculture output enhancing and crop yield protection products.
  • KPR Agrochem is an agri-input Company with product portfolio includes crop protection, crop nutrients, seeds, veterinary feed supplements.
  • The company has 9 depots at different locations for easy connectivity with nearly 8000 dealers across India. KPR Agrochem also has a chain of Kisan Seva Kendras to directly connect to end customers.

KPR Agrochem IPO Analysis:

Financial Performance:

kpr-agrochem-ipo-financials

Valuations as on 31st Mar 2018:

1. Earning per share (EPS): 3
2. Price to Earning ratio (P/E): 20

Company category: Stagnant-growth or slow-grower

Company Strength:

  • Wide agri-input product portfolio with presence across the agri-value chain
  • Certified manufacturing facilities
  • Independent raw material sourcing capabilities
  • Strong and growing distribution network

Company Risks:

  • Has a high working capital cycle. Receivable days were at around 162 in FY 2018. Total outstanding borrowing of Rs 473.7 cr
  • Credit ratings were recently downgraded by Crisil to BB plus and Icra to BBB minus
  • Revenues are dependent on agriculture. Thus, the business is seasonal, subject to varying climatic conditions, rainfall and other weather factors.
  • Sales and profit have remained stagnant in the last four years for which financials are available.
  • Group entities had defaulted on payment of loans that eventually got classified as non-performing.
  • The company, its directors and promoters are facing litigations for criminal, civil and tax proceedings. There were violations of Companies Act in the past.

Peer Comparison:

  • Peer includes Chambal Fertilizers, Coromandal International, Rama Phosphate etc
  • Compared to the peers the KPR Agrochem IPO is aggressively priced and overvalued.

Analysis Conclusion:

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  • Stagnant sales & profit growth, higher receivable cycle, downgraded ratings, seasonal business are the negatives.
  • Also, the aggressive offer price compare to peers shows nothing left on table for listing gain.
  • So, my personal recommendation is AVOID the IPO.

KPR Agrochem IPO subscription status:

  • The IPO is withdrawn due to unknown reason.

Abbreviations:

EPS – Earning per share
OFS – Offer for Sale
P/E – Price to Earning
RoE – Return on Equity
QIB – Qualified Institutional Buyer
NII – Non-Institutional Investors
RII – Retail Individual Investor
CAGR – Compounded Annual Growth Rate

Disclaimer & Conflict of Interest:

The above analysis is based on my understanding of the company and RHP of KPR Agrochem. You should research more and consult your financial adviser before taking any decision.

Analysis by –  NISM Certified Research Analyst & Investment Advisor.

 

One comment

  1. The Rs 283.20 Cr proposed public issue of KPR Agro has been withdrawn for unknown reasons. The IPO was planned to open on June 28, 2019.

    Like

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