IPO Size: Rs. 200 cr

• Fresh Issue of Rs. 160 cr for (i) working capital Rs. 65 cr (ii) debt repayment Rs.34 cr (iii) capex Rs. 14 cr
• Offer for Sale (OFS) of Rs. 40 cr by the promoter (97% to shrink to 69%)

Price band: Rs. 105-111 per share

M cap: Rs. 702 cr, implying 29% dilution

IPO Date: Thu 26^th Jun to Mon 30^th Jun 2025, Listing Thu 3^rd Jul 2025

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

Agro Chemicals Company

Indogulf Crop Sciences is a crop protection products manufacturer, having 4 manufacturing plants in Haryana and J&K, with an aggregate effective installed capacity of 25,720 MTPA. Besides B2B and B2C sales in India, company also exports products, which accounts for ~14% of Rs. 552 cr topline in FY24.

Listless Financials

FY24 revenue remained flat YoY to Rs. 552 cr, with 11% EBITDA margin and 5.1% net margin. Seasonally, Q2 is the strongest period for the company. 9MFY25 revenue grew 12% YoY to Rs. 464 cr, with drop in EBITDA margin to 10% and PAT to 4.7%. On an equity of Rs. 49 cr (FV Rs.10 each), EPS stood at Rs. 5.1 and 5.8 for 9MFY25 and FY24 respectively. On net worth of Rs. 265 cr, RoE is mediocre at 12%, which may slip to single digit, post equity expansion via IPO.

Unconvincing Objects

• Post IPO, debt equity ratio will halve to 0.4:1, but Rs. 170 cr debt post repayment is very large for Rs. 70 cr annual EBITDA
• Company has capital work in progress of Rs. 48 cr, more than its net fixed assets of Rs. 37 cr. And now it proposes to utilize Rs. 14 cr for capex, from the IPO proceeds, despite only 50% utilization of current capacity. This looks quite structured, merely for IPO
• Poor working capital management, with 4 months each of outstanding debtors and inventory, despite half being B2C sales

Unattractive Pricing

On expected FY25E PAT of Rs. 32 cr, m cap of Rs. 702 cr implies a PE multiple of 17x, which is seen aggressive. Peer Aries Agro with similar topline of Rs. 627 cr, 5% net margin and 12% RoE has m cap of Rs. 424 cr for Rs. 33 cr PAT in FY25, implying a PE of 12x. 

Company undertook private placement of Rs. 12 cr at Rs. 80 per share in June 2024 (3% dilution). After 1 year asking price in IPO is 39% higher, which is unjustified, as profit or topline has not risen in proportion.

Is IPO Document a Joke?

Page 129 of RHP gives Comparison with Listed Industry Peers, which includes PE ratio, of peers. Note 1 to this comparison reads -

For listed peers, the P/E ratio has been computed based on the closing market price of equity shares on the BSE website as of April 01, 2024, divided by the diluted EPS.

If RHP is dated 21^st June 2025, why is share price of peers considered 15 months prior, which may be inflating the PE ratio?

What a mockery of the entire IPO process and regulatory due diligence! Shame on company and BRLM Systematix for misleading potential investors.