Is it a Good Idea to Invest in Nova AgriTech IPO? Let’s Take a Closer Look

The IPO market is abuzz with anticipation as Nova AgriTech, a Hyderabad-based company specializing in soil health, plant nutrition, and crop protection, prepares to go public. With the IPO scheduled to begin on January 23, 2024, let’s delve into the details of this offering and assess whether it presents a worthwhile investment opportunity for discerning investors.

IPO Details and Price Band

Nova AgriTech
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Nova AgriTech has announced a price band of Rs 39-41 per share for its IPO. The bidding process will commence on January 23 and conclude on January 25, providing investors with a limited window of opportunity. The lot size for this IPO is 365 equity shares, with multiples thereafter.

Company’s Objective

Nova AgriTech aims to raise Rs 143.81 crore through its IPO, with Rs 112 crore being generated from a fresh share sale and an offer-for-sale (OFS) of up to 77.58 lakh equity shares by Nutalapati Venkatasubbarao, valued at Rs 31.81 crore. The net proceeds from the fresh issue will be channeled towards investment in Nova Agri Sciences’ subsidiary, setting up a new formulation plant, expanding the existing formulation plant, and fulfilling general corporate purposes.

Product Portfolio

The company offers a wide array of products that cover various categories, including soil health products, crop nutrition products, biostimulants, biopesticides, integrated pest management products, new technologies, and crop protection products. Nova Agri Sciences, a subsidiary of Nova AgriTech, presently focuses on the production of crop protection products.

 

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Financial Performance

Nova AgriTech has demonstrated strong financial performance, as evidenced by its net profit of Rs 10.38 crore and total revenue of Rs 103.24 crore for the period ending on September 30, 2023. Moreover, the company reported profit-after-tax (PAT) of Rs 20.49 crore and revenue of Rs 210.93 crore for the fiscal year ending on March 31, 2023, further substantiating its consistent growth trajectory.

Allocation and Listing Date

The IPO has allocated 50% of shares to qualified institutional bidders (QIBs), while non-institutional investors (NIIs) will receive a 15% allocation. The remaining 35% of shares will be allocated to retail investors. Nova AgriTech is expected to be listed on both the BSE and NSE markets tentatively on January 30, 2024, Tuesday.

Expert Opinions on Nova AgriTech IPO

Arihant Capital Markets, in their analysis, considers the company’s international presence, diverse agri-input portfolio, and focus on innovation and research as promising factors. However, they express caution due to the rich valuations and the agro chemicals sector’s prevailing headwinds, leading them to provide a neutral rating.

Swastika Investmart highlights Nova Agritech’s strong market positioning, effective marketing strategy, and robust expansion plans. They suggest investors subscribe to the IPO to reap listing benefits, while cautioning against risks linked to climatic conditions and the company’s geographical revenue concentration.

Anand Rathi Research lauds Nova AgriTech’s extensive Research and Development capabilities, on-site process improvement, and incubation center for new product technologies. They recommend subscribing to the IPO for the long term, citing fair valuations and a high return on net worth.

 

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StoxBox by BP Equities evaluates Nova AgriTech favorably, taking into account its comfortable asset turnover ratio, efficient asset utilization, and low PE ratio compared to industry peers. Based on these factors, they provide a subscribe rating.

Ventura Securities highlights the company’s extensive dealer network, strategic marketing agreements, and farmer outreach programs. They specifically note the Nova Kisan Seva Kendra (NKSK) program, which utilizes IoT-based solutions for precise farming inputs. Ventura Securities assigns a subscribe rating to the IPO.

 

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Nova AgriTech’s IPO presents an intriguing investment opportunity for those interested in the agri-input sector. With a robust portfolio, consistent growth, and positive expert opinions, discerning investors may want to consider subscribing to this IPO. However, given the cautious outlook expressed in some expert opinions and the inherent risks associated with this sector, it is essential for potential investors to perform their due diligence and seek professional advice before making any investment decisions.

 

Source:businesstoday.in

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