Narmada Bio Chem IPO Review

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Narmada Bio Chem IPO

7.1

Company Background

7.5/10

Price Band

7.0/10

Financial Health

6.5/10

Industry Situation

7.0/10

IPO Proceeds Usage

7.5/10

Pros

  • Effective Manufacturing Process
  • Diverse Product Portfolio
  • Wide Distribution Network

Cons

  • Average Financials
  • Dependence on Limited Suppliers

Narmada Bio Chem IPO Basic Details

Before we discuss this detailed Narmada Bio Chem IPO Review, let’s have a quick look at the IPO Summary for further reference:

 

Narmada Bio Chem IPO Background

The company is involved in making different types of chemical and organic fertilisers. Narmada Bio Chem Limited started with manufacturing various grades of NPK fertilisers and till now, have expanded their portfolio to include water-soluble fertilizers, soil conditioners, organic manure etc.

The company has 4 manufacturing facilities, out of which 2 are located at Changodar in Ahmedabad, 1 at Malarpura, Kheda and 1 at Kalyangadh, Bavla in Ahmedabad. The company’s motto is “Jamin Balwan to Kisan Dhanwan”. The company’s products are ISO approved.

The company has been recognised and awarded several honours like the “Best Manufacturer Of Organic & Bio-Chemical Fertilisers Of The Year”.

The business is coming up with an IPO in the next few days and in this detailed review, we will talk about the specific details related to this IPO. Hopefully, by the end of this review, you will be able to take a call on whether to go ahead with the investment or not.

Narmada Bio Chem IPO Data Points

Narmada Bio Chem IPO will open on (undisclosed) and close for subscription on (undisclosed).

The IPO size will be of 72 lakh Equity shares and the face value shares will be ₹10 each share. The price band has been set at ₹(undisclosed) – ₹(undisclosed) per share.

The offer price includes a premium of ₹(undisclosed) and is (undisclosed) times the face value of the equity shares. The IPO size is expected to be up to ₹(undisclosed) lakhs.

The offer consists of a fresh issue of up to 54 lakh equity shares aggregating up to ₹(undisclosed) lakhs and an offer for sale of up to 18 lakh equity shares, aggregating up to ₹(undisclosed)  by Narmada Organics Private Limited. (undisclosed) shares will be reserved for subscription by employees.

The market lot size is of (undisclosed) equity shares and the shares will be listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

Pursuant to a resolution passed on July 9, 2018, the fresh issue has been authorised by the Board of Directors and pursuant to a special resolution of the shareholders at the Extraordinary General Meeting held on July 31, 2018, the issue has been approved by them. The offer for sale was approved by the selling shareholder through a letter dated August 21, 2018.

Narmada Bio Chem IPO Financial Performance

Total income of the company reduced by 2.49% from ₹177.64 crores in the financial year ended March 31, 2017, to Rs. 173.21 crores in the financial year ended March 31, 2018, while the profit after tax increased by 62.34% during the same period. PAT increased to ₹12.31 crores.

 

As per consolidated financial statements, the return on net worth of the company for the years ended March 31, 2018, March 31, 2017, and March 31, 2016, is 12.11%, 8.45% and 15.98% respectively.

The net asset value (NAV) per equity share of the company as of March 31, 2018, is ₹64.5

Narmada Bio Chem IPO Objectives

The Narmada Bio Chem IPO consists of two parts:

The proceeds from the offer for sale of equity shares will be given to the selling shareholders. Any proceeds from the offer for sale will not be received by the company for its operations.

The main objectives of the fresh issue of equity shares are as follows –

  • For funding of the working capital requirements of the company
  • For meeting expenses related to the general corporate operations.

Other than the above-mentioned objectives, the company will also benefit in terms of enhanced corporate image, brand name and increased visibility through Narmada Bio Chem IPO.

Narmada Bio Chem IPO Events

If in case you are looking to invest in this IPO, you need to aware of some specific dates of the events that revolve around this IPO.

Here are the details for your reference:

Filing of Draft Red Herring Prospectus (DRHP)September 25, 2018
Anchor ListTBA
IPO Open Date TBA
IPO Close DateTBA
Finalization of Basis of AllotmentTBA
Credit to Demat AccountsTBA
Listing at BSE and NSETBA

 

Narmada Bio Chem IPO Recommendation

Before deciding whether to invest in Narmada Bio Chem IPO or not, let us discuss some of the important strengths and risks factors related to the business of the company.

One of their greatest strengths is that they have developed a highly efficient manufacturing process for organic fertilisers which has resulted in the company becoming one of the top players in their market.

Another strength of the business is that they have a diverse portfolio of around 19 products including water-soluble fertilisers, soil conditioners, etc.

The company has a strong distribution network including over 750 distributors spread in 10 states. They have branch offices in Madhya Pradesh and Haryana also.

The company has been delivering quality products to their clients which is reflected in the fact that they get repeat orders from the same customers.

Another major strength of the company which gives it a competitive edge is the location advantage of their manufacturing units which are located in Gujarat.

Now, let us discuss some of the risk factors of the company.

The company, its promoters, Directors, etc. are involved in certain legal proceedings which are pending at different stages and any adverse ruling in them may pose a risk to the overall profitability of the company.

There are some contingent liabilities of the company that are not provided for in the financials. If they are materialised, this could have a negative impact on the financial health of the company.

Another risk is related to the nature of business of the company’s products which is its seasonality. This could have an adverse effect on the operating results of the company.

Raw materials for the products are hazardous in nature due to which the company is exposed to the risk of life and property. Strikes, stoppages of work and demand for an increase in wages of workers may adversely affect the profitability of the company.

The sector in which the company operates is regulated by the government in terms of subsidies, incentives, etc. Any changes in these policies may have a negative impact on the business of the company. Also, the company is exposed to the risk of downgrading of its current credit rating.

The company’s dependence on only a few suppliers for its raw materials is another risk factor. The financial health of the company is exposed to the risk of foreign currency exchange rate fluctuations.

The company requires certain approvals, permits, licenses, etc. in order to operate smoothly. Any delay or failure in obtaining them may have a negative impact on the functioning of the company.

The group companies and Corporate Promoter have suffered losses in the last few financial years. If this persists, it may adversely affect the business and profitability of Narmada Bio Chem Limited.


After analysing various aspects of the company, it can be said that investors may choose to subscribe to the Narmada Bio Chem IPO for long-term gains.


In case you are looking to invest in Narmada Bio Chem IPO, let us get you moving. Just fill in some basic details in the form below and a callback will be arranged for you:

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Narmada Bio Chem IPO Advisors Information

Pantomath Capital Advisors Limited is acting as Book Running Lead Manager to the issue. Karvy Computershare Private Limited is acting as the Registrar for the Narmada Bio Chem IPO.

Messrs. Kanga and Company is acting as legal advisor to the offer.

Narmada Bio Chem IPO Management Information

Currently, there are 6 Directors on the Board of Narmada Bio Chem Limited.

Mr Dineshbhai Dhirubhai Patel is the Promoter, Chairman and Managing Director of the company. He possesses an experience of more than 18 years in the fertilizer industry.

He is responsible for making strategic decisions related to corporate and administrative functions, business development, financial operations, activities being undertaken for expansion and marketing network for the company. He takes care of the overall management of the business of Narmada Bio Chem Limited.

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