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Aditya Kondawar

Aditya Kondawar

Nov 25, 2022
19 tweets

Dharmaj IPO opens on November 30 It is an Agrochemical company Let's find out everything about the business in the thread below - Do Retweet for a wider reach :)

1/n About Dharmaj – - Incorporated January 2015 - An agrochemical company - Manufacturing, distributing, marketing a range of agrochemical formulations - insecticides, fungicides, herbicides, plant growth regulators, micro fertilizers, and antibiotics to B2C & B2B customers
2/n - Also does marketing and distribution of agrochemical products under brands in-licensed by them, owned by them, and through generic brands, to Indian farmers - As of Sept 30, 2022- 154+ institutional products, 600+ customers based in India and in the international markets
3/n - Exports to 66 customers+ across 25 countries in LATAM, East African Countries, Middle East, and Far East Asia. - Products sold in 17 states through 4,362 dealers, 16 stock depots Manufacturing - - Only one manufacturing plant at Kerala GIDC, Estate, Ahmedabad
4/n - The aggregate installed capacity of their manufacturing facility for agrochemical formulations was 25,500 MT. - As a part of their expansion plans and to achieve backward integration for their operations, they have acquired land at Saykha Estate, Bharuch, Gujarat.
5/n Products - - 464 registrations for agrochemical formulations from the CIB&RC - From the above, 269 formulations - For India and export and 195 formulations exclusively for exports - 157 trademark registrations +118 branded formulations that are sold to farmers
6/n Clients - - Some of their Institutional clients include Atul Ltd, Heranba, Meghmani Industries, Bharat Rasayan, etc. About the IPO - Total IPO size – 251.15Cr Fresh issue – 216cr OFS – 35.15cr Mcap post listing - 750-800cr 37% dilution happening due to fresh issue
7/n Risks - - No long-term agreements with the majority of its customers which exposes it to the risk of losing clients - Delay in certain approvals and licenses from the Central Insecticides Board may impact production plans - Receivables high
8/n - 1.50% of trade receivables were pending beyond a period of 180 days in 4MJuly2022 - Alternative pest management & crop protection measures - biotech products, pest-resistant seeds, or genetically modified crops may reduce demand for their products Promoters –
9/n Financials - - For Dharmaj ~32% is through net cash and hence its working capital requirements are lower. (in contrast to other players who have relatively stretched cycles) Balance Sheet - - Trade receivables high - D/E comfortable at 0.5x (will be lower post issue)
10/n P&L - - Good Growth and good margins Cash Flows - - Cumulative CFO = 29 cr - Cumulative FCF = minus 40 cr, bad Peers -
11/n Valuations - - 4M EPS is 7.44 Rs, FY23e EPS - 22.32 - Post Diluted FY2e EPS - 14.1 - 1.21x P/S | 16.8x P/E (Lower than industry PE)
12/n Industry – - The evolution of pesticides in India was led by Green Revolution. - In 1943, India saw one of the worst food disasters during the Bengal famine - Food shortages had resulted in the death of around 40 lakh people in the eastern part of India
13/n - Around the 1960s, the Green Revolution was launched by the government of India with the support of M.S. Swaminathan, a geneticist, who is now referred to as the father of the Green Revolution in India
14/n - The revolution started in 1967 & lasted till 1978 - The Green Revolution in India resulted in growth in agricultural production, primarily in the states of Haryana, Punjab, and UP
15/n Aspects of the Green Revolution in India - - High Yielding Varieties (HYV) - Mechanization of agriculture - Use of chemical fertilizers and pesticides - Irrigation In the global agrochemicals market, India is the 4th largest producer led by the USA, Japan, and China
16/n - India is a net exporter of agrochemicals and has emerged as the 13th largest exporter of pesticides globally Growth Drivers - - Government support: - Growth in food demand: - Increase in demand & awareness - Increase in awareness of Bio-pesticides - Exports
17/n The Thread should not be construed as a recommendation, kindly do your own due diligence. End of thread. Thanks for reading :)
Edit - IPO opens on Nov 28th :)
Aditya Kondawar

Aditya Kondawar

Partner, Vice President - Key Accounts @Compcircle Tracks - IPOs, Pre-IPO/Unlisted, FMCG, Telecom I post threads on the above topics and many others!
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