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Aditya Kondawar

Aditya Kondawar
@aditya_kondawar

Nov 25
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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

@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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