Nova AgriTech IPO would open for subscription on January 23, 2024. The corporate affords a one-stop answer for soil well being administration, crop diet, biostimulant, biopesticides, Built-in Pest Administration (IPM), and crop safety by way of a diversified branded product portfolio. Do you have to put money into the Nova AgriTech IPO? This text would supply insights into IPO particulars, optimistic points, damaging or danger elements, and supply an entire evaluation for buyers to know whether or not it’s a good or dangerous funding.

Additionally Learn: EPACK Sturdy IPO Assessment and Evaluation

Nova AgriTech IPO Particulars

About Nova AgriTech Devices Restricted

The corporate is an agri-input producer that focuses on soil well being administration, crop diet, and crop safety merchandise. They undertake a tech-based farmer-driven answer strategy, providing ecologically sustainable and nutritionally balanced merchandise developed by way of Analysis and Growth. The product classes embody soil well being administration, crop diet, bio stimulant, bio pesticide, Built-in Pest Administration, new applied sciences, and crop safety. Crop safety merchandise are manufactured by their subsidiary, Nova Agri Sciences Non-public Restricted.

As of November 30, 2023, the corporate has acquired a complete of 720 product registrations throughout numerous classes. They’ve a various seller community of roughly 11,722 sellers, with round 6,769 energetic sellers distributing and promoting their merchandise in the course of the present monetary yr. The seller community spans throughout 16 states in India and consists of two areas in Nepal. Moreover, the corporate has entered into advertising and marketing, distribution, and provide agreements with third events in Bangladesh, Sri Lanka, and Vietnam, pending mandatory permissions.

The vast majority of the corporate’s income comes from product distribution in three southern states of India: Andhra Pradesh, Karnataka, and Telangana. They supply particulars of income distribution for merchandise manufactured by Nova Agritech Restricted (NATL) throughout these states for numerous durations. The corporate has additionally utilized for brand new product registrations and is actively increasing its market presence in numerous areas.

Financials of the corporate

Objects of the IPO

Nova AgriTech Devices IPO Measurement is Rs 143.81 Crores which comprises each contemporary difficulty and OFS.

#1 – Provide for Sale (OFS) for Rs 31.81 Crores – This goes to the promoting shareholders and the corporate wouldn’t get any proceeds.

#2 – Contemporary difficulty of Rs 112 Crores – These funds could be used for the next:

• Funding within the subsidiary, Nova Agri Sciences Non-public Restricted for setting-up a brand new formulation plant
• Funding Capital Expenditure within the Firm, in the direction of growth of the present formulation plant
• Funding of working capital necessities of the corporate
• Funding within the subsidiary, Nova Agri Sciences Non-public Restricted, for funding working capital necessities
• Normal company functions.

Nova AgriTech IPO – Optimistic Facets

• Diversified Product Portfolio: The corporate affords a complete vary of merchandise, together with soil well being administration, crop diet, bio stimulants, bio pesticides, Built-in Pest Administration (IPM), new applied sciences, and crop safety. This diversification can contribute to secure income streams and market resilience.
• Established Distribution Community: With an unlimited seller community of roughly 11,722 sellers throughout 16 states in India and worldwide agreements in Bangladesh, Sri Lanka, and Vietnam, the corporate has a powerful distribution presence. This established community enhances market attain and potential gross sales.
• Outreach Initiatives: The corporate has applied Nova Kisan Seva Kendra to strengthen farmer outreach, offering a one-stop answer for farmers. This initiative can improve model loyalty and buyer relations.
• Know-how-Pushed Method: The corporate emphasizes technology-driven product improvement and advertising and marketing, showcasing a dedication to innovation. This could result in the creation of aggressive and cutting-edge agricultural options.
• Analysis and Growth: The corporate boasts a well-equipped Analysis & Growth facility, indicating a dedication to steady enchancment and innovation in product improvement.
• Strategic Development Initiatives: The outlined methods, akin to increasing manufacturing capacities, rising competencies, specializing in home and worldwide market growth, and deepening farmer interface, exhibit a forward-looking strategy to enterprise development.
• Monetary Efficiency: The monetary key efficiency indicators (KPIs) for the corporate, together with income development, EBITDA margin, and return on fairness (ROE), mirror optimistic monetary well being and operational effectivity. The corporate’s capability to generate working money flows additionally signifies monetary energy.
• Reasonable Debt Place: The corporate’s debt-equity ratio signifies a reasonable stage of leverage, and its web debt place exhibits a web optimistic money place. This means an inexpensive monetary construction and manageable debt ranges.
• Worldwide Growth: The corporate’s plans to broaden enterprise to newer geographies, together with export markets, signify a dedication to world growth and income diversification.
• Deal with Fashionable Applied sciences: The strategic give attention to fashionable applied sciences and options aligns with trade tendencies, indicating adaptability to evolving agricultural practices.

You might also like: Finest Banking Mutual Funds to put money into 2024

Nova AgriTech IPO – Dangers and Unfavourable Elements

Threat elements related to investing within the IPO of this agri-input manufacturing firm embody:

• Provide for Sale (OFS) goes to promoting share holders: IPO proceeds comprises each OFS and contemporary difficulty. OFS portion goes to promoting share holders and firm wouldn’t profit something.
• Market Worth Volatility: The supply worth, market capitalization, and price-to-earnings ratio could not precisely mirror the market worth of the Fairness Shares post-listing. There’s a danger of market worth volatility and discrepancies between the supply worth and precise market efficiency.
• Model Energy: The success and development of the corporate depend upon the energy of its manufacturers. There’s a danger that the corporate could face challenges in sustaining and growing its manufacturers, which might influence its general efficiency.
• Utilization of Internet Proceeds: The corporate plans to make use of a portion of the Internet Proceeds for funding in its subsidiary, Nova Agri Sciences Non-public Restricted, for establishing a brand new formulation plant and funding Capital Expenditure in Nova Agritech Restricted for plant growth. Delays, price overruns, or different uncertainties in implementing these plans might adversely have an effect on enterprise development, monetary situation, and outcomes of operations.
• Unfavourable Money Move Historical past: The corporate skilled damaging money circulate throughout sure fiscal years. Sustained damaging money circulate might have adversarial results on the enterprise, monetary situation, and outcomes of operations.
• Licenses and Permits: The corporate is required to acquire and preserve numerous licenses and permits for its enterprise operations. Any failure to safe or preserve these approvals could hinder the corporate’s capability to function, resulting in potential enterprise disruptions.
• Vendor Default and Receivables: Default in fee by sellers or delays in realizing receivables might have adversarial results on the corporate’s enterprise and monetary operations.
• Working Capital Necessities: The corporate has vital working capital necessities and might have extra capital and financing sooner or later. The power to entry capital at engaging prices depends on credit score scores. Operations could possibly be curtailed if the corporate is unable to acquire mandatory extra capital and financing when required.
• Authorities Insurance policies: Adjustments in authorities insurance policies associated to the agriculture sector or reductions in subsidies and incentives for farmers might adversely have an effect on the corporate’s enterprise and outcomes of operations.
• Traders ought to evaluation the entire danger elements from Nova AgriTech IPO RHP

Nova AgriTech IPO Valuation

• The IPO worth band is Rs 39 to 41 per share
• If we think about final 3 years weighted EPS of Rs 2.53, the P/E ratio works out to be 16x
• If we think about the final yr FY23 EPS of Rs 3.27, the P/E ratio works out to be 13x
• If we annualise 6 months ended Sep-23 EPS, the P/E ratio works out to be 12x
• The listed friends like Finest Agrolife Restricted buying and selling at P/E 42x (Highest) and Madras Fertilizers Restricted is buying and selling at P/E of 9.4x (Lowest) and trade common P/E is 25x. Therefore, the IPO Worth band at P/E of 12x to 16x is attractively priced.

Nova AgriTech IPO GMP (Gray Market Premium)

Among the finest methods for Nova Agritech IPO itemizing worth prediction is to verify the GMP. Whereas there isn’t any genuine solution to confirm, numerous web sites itemizing Nova AgriTech IPO GMP.

Chittorgarh web site point out GMP of Rs 41 whereas, IPO Watch signifies as Rs 20. Nonetheless as per Mint article, Nova Agritech GMP immediately is 0. Means it’s buying and selling on the higher worth band of the problem worth.

The gray market premium (GMP) represents the distinction between the unofficial market worth and the problem worth of an upcoming IPO, indicating market sentiment and demand earlier than official itemizing. A optimistic GMP suggests a premium, whereas a damaging GMP signifies a reduction.

It’s possible you’ll like: 5 Mutual Funds with 1 12 months return of 66% to 90%

Nova AgriTech IPO – Do you have to purchase or not?

After contemplating all the professionals and cons, you could be questioning whether or not this IPO is nice or dangerous.

• Investing on this agri-input producer’s IPO has deserves. The corporate boasts a various product portfolio, together with soil well being administration, crop diet, and bio pesticides, supported by a strong distribution community spanning 16 Indian states and worldwide agreements. The agency’s emphasis on technology-driven improvement and a well-equipped R&D facility showcase a dedication to innovation. Optimistic monetary metrics, akin to income development and return on fairness, point out a wholesome monetary standing. Strategic growth plans and world outreach methods additional sign a forward-looking strategy.
• Nonetheless, buyers ought to think about the dangers on this IPO. Challenges in sustaining model energy and potential delays or price overruns in tasks for brand new formulation and plant growth might influence development. Historic damaging money circulate and vital working capital wants pose monetary considerations. Dangers associated to licenses, seller receivable defaults, and potential authorities coverage adjustments within the agriculture sector add complexity. Whereas the corporate’s methods are good, uncertainties round model upkeep, undertaking execution, and monetary administration require cautious consideration.

Excessive Threat Tolerance buyers can put money into the IPO after understanding all the chance elements.

Disclaimer: This text is for academic function solely. Funding in Shares or IPOs are excessive danger. Traders ought to seek the advice of their monetary advisor earlier than investing in such IPOs.

Suresh KP is the Founding father of Myinvestmentideas. He’s NISM Licensed – Funding Adviser and NISM Licensed – Analysis Analyst. He has been analyzing monetary markets within the final 20 years.He will be reached at suresh@myinvestmentideas.com

Newest posts by Suresh KP (see all)