Diksha Greens IPO Review

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Diksha Greens IPO

6.8

Company Background

7.0/10

Price Band

7.0/10

Financial Health

6.5/10

Industry Situation

6.0/10

IPO Proceeds Usage

7.5/10

Pros

  • Long Standing Business Relationships
  • Proven Business Strategies

Cons

  • Okayish Financial Health
  • High Dependency on Technology
  • Seasonal Business

Diksha Greens Background


The company was originally founded by Mr Rajesh Kumar Pirogiwal on  July 21, 2004, by the name of M/s Diksha  Timber Private in West Bengal, Kolkata.

The main business of Diksha Greens has been in the trading of timber, wooden logs, sawn timber and manufacturing of veneer sheets.

The company had got an Importer – Exporter Code (IEC) from Dy. Director General of Foreign Trade, Ministry of Commerce, Government of India and also imports wooden logs and timber from different countries like Malaysia, Vietnam, and Burma in Asia, Nigeria, Ghana and Ivory Coast in  Africa, Ecuador, Salvador, and Costa Rica in America, Solomon Island, Papua and Guinea etc.

They have a godown cum Factory located in Baidyabati, Hooghly, West Bengal where the imports of logs are transferred and sold in raw form as well as sawn timber and veneer sheets to cater to customised requirements of their customers.

They have acquired a multi-commodity cold storage located at Hooghly which has a capacity of 5000 MT with two pre-cooling chambers and reefer vans towards storage of seasonal produce.

The business is now going to launch an IPO in the next few days and in this detailed review, we will see whether you should be investing in this IPO or not.

Diksha Greens Management Information

Currently, there are 5 Board of Directors of the company.

Mr Rajesh Pirogiwal is the Managing Director, Mrs Sunita Pirogiwal is the Whole Time Director, Ms Tanvi Pirogiwal is Non – Executive Director, Mr Sreejita Chowdhury and Mr Vikash Kedia are the Independent Directors of Diksha Greens Limited.

Rajesh Pirogiwal, Managing Director

Rajesh Pirogiwal holds a Bachelor’s Degree in Commerce from H.A. Commerce College. He is taking care of initiation, planning and implementation of marketing strategies for the company. He is an expert in handling land acquisitions, clearances and relationship management.

Diksha Greens IPO Data Points

Diksha Greens IPO will open on (undisclosed) and close for subscription on (undisclosed).

The IPO size will be of 44.4 lakh Equity shares and the face value of each share will be ₹10. The fixed price per share or price band has been set at ₹30, which is 3 times the face value of each equity share and includes a share premium of ₹20 per equity share.

Out of the total issue of up to 44.4 lakh equity shares, 2.24 lakh shares aggregating up to ₹67.2 lakhs will be reserved for market makers and the rest 42.16 lakh shares aggregating up to ₹1264.8 lakhs will be issued to investors. The IPO size is expected to be up to ₹13.32 crores.

The market lot size is of 4000 equity shares and the shares will be listed on the SME Platform of Bombay Stock Exchange Limited (BSE).

The Board has authorised the IPO at their meeting held on July 27, 2018. Diksha Greens IPO got the approval from its shareholders also in an EGM of the company held on August 9, 2018.

Diksha Greens Financial Performance

The total revenues of the company increased from the fiscal year 2016 to 2017 but showed a drop from ₹544.67 million in the financial year ended March 31, 2017, to around ₹418.3 million in the financial year ended March 31, 2018.

 

On the account of decrease in revenues, the Profit after tax also fell from ₹6.34 million to ₹5.5 million in the same period.

The EPS increased from ₹9.32 in the fiscal year 2016 to ₹12.93 in the fiscal year 2017. However, this number also decreased in fiscal 2018 to ₹11.16.

The return on net worth numbers of the company for the fiscal years ended March 31, 2016, 2017 and 2018 is 4.51%, 5.88% and 4.83%, respectively.

Diksha Greens IPO Objectives

There are two main objectives of Diksha Greens IPO which are to meet expenses related to working capital requirements of the company and to meet the expenses related to the issue.

Other than these objectives, the company will benefit in terms of better brand image, enhanced visibility and brand name from the IPO.

Diksha Greens IPO Events

Diksha Greens filed the Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) on August 21, 2018, for the Fixed Price IPO. The offer will open on (undisclosed) and close on (undisclosed).

The finalisation of basis of allotment is expected to happen by (undisclosed) and the initiation of refunds is expected to start by (undisclosed). The transfer of shares to demat accounts is expected to start on (undisclosed) and the expected listing date will be (undisclosed).

Diksha Greens IPO Recommendation

Before deciding whether to invest in Diksha Greens IPO or not, let us analyse some of the strengths of the company and risks related to its business.

One of the biggest strength of the company is its experience of around a decade. Their knowledge about the market and regulatory environment is sound which helps them in the identification of new opportunities arising in the market.

Their management and promoters are also quite experienced in this industry enabling them to understand and cater to the clients’ requirements in a better and more efficient manner.

They share good long-standing relationships with their customers as their quality has been always their focus. They also share a good relationship with their employees which is an added strength for any company.

Their strategies to improve themselves in project execution, enhancing effectiveness and efficiency of operations, etc. are quite good.

Now, let us discuss some of the risks related to the business of Diksha Greens Limited.

The company and its Directors/ Promoters are involved in some litigations and any adverse ruling in them may affect the business negatively. Inability to gain, renew or maintain required statutory and regulatory permits and approvals for the smooth functioning of the business of the company may adversely affect the company’s overall financial health.

Technical failures of important infrastructure facilities like power, water or machinery, etc. can have significant problems for the company as the cold storage facility is highly dependent on them.

The business is seasonal in nature due to the seasonality of harvesting of fruits and vegetables. Because of this, operating results of different periods may not be comparable which may have an effect on the valuation and prices of our equity shares in the future.

Reliance on third-party labour and inadequate insurance coverage are another important risk factors for the business of Diksha Greens. Also, the company has no long-term contracts with dealers/ retailers/ distributors for their products which may affect the profitability of the company in long term.

Dependence on third-party providers of transport, and inadequate labour or strikes and labour problems may affect the business quite significantly.

Changes in technology may affect cost, efficiency and timely delivery of the products in comparison with their competitors.

Some discrepancies in ROC information filled by the company have been identified which may have a negative effect on the cash flow of the company.

Any interruption of operations in any of the existing manufacturing /Storage facilities may have an effect on the financial health of Diksha Greens.

Competition from organized as well as unorganized players in the industry also poses a potential threat to the company’s revenues. Also, the decrease in PAT, revenues and total assets in the last financial year are a matter of concern.

After discussing the above factors, it may be said that investors must remain cautious, read and analyze different aspects of the Draft Red Herring Prospectus filed by the company on August 21, 2018, carefully before investing in Diksha Greens IPO.

In case you are looking to invest in this IPO or in stock market investments in general, let us assist you in taking next steps forward:

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Diksha Greens IPO Advisors Information

Finshore Management Services is acting as Book Running Lead Manager to the issue. Cameo Corporate Services is acting as the Registrar for the Diksha Greens IPO. J Mukherjee & Associates is acting as the Legal Advisor and HDFC Bank is acting as the banker to the Issue.

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Diksha Greens IPO
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