Nova Agritech IPO to open on January 22, price band fixed at ₹39-41/sh

• The issue, with a face value of ₹2 per equity share, comprises a fresh issue of equity shares valued at up to ₹112 crore.
• The proceeds of the fresh issuance will be used to invest in its subsidiary Nova Agri Sciences and funding the company’s capital expenditure, among others.
• Nova Agritech's revenue from operations increased by 13.47% to ₹210.55 crore for the financial year 2022-23 from ₹185.56 crore for the financial year 2020-21.

Nova Agritech, a manufacturer of agricultural inputs, is introducing its maiden initial public offer with a price range set at ₹39 to ₹41 per equity share.

The Initial Public Offering will be open for subscription from Monday, January 22, 2024, to Wednesday, January 24, 2024. Investors can bid for a minimum of 365 equity shares and in multiples of 365 equity shares thereafter.

The company intends to raise as much as ₹143.81 crore via the public issue.

The issue, with a face value of ₹2 per equity share, comprises a fresh issue of equity shares valued at up to ₹112 crore and an offer-for-sale (OFS) of up to 77,58,620 equity shares by Nutalapati Venkatasubbarao, the sole selling shareholder.

The proceeds of the fresh issuance will be allocated as follows: ₹14.20 crore for investment in its subsidiary, Nova Agri Sciences, aimed at establishing a new formulation plant. Additionally, ₹10.49 crore will be utilised for funding the company's capital expenditure, specifically for expanding its current formulation plant.

Another ₹26.65 crore will be earmarked to meet working capital requirements, while ₹43.36 crore will be allocated for investment in its subsidiary, Nova Agri Sciences, to support working capital needs and general corporate purposes.

Financials and risk factors

Nova Agritech's revenue from operations increased by 13.47% to ₹210.55 crore for the financial year 2022-23 from ₹185.56 crore for the financial year 2020-21. This growth was primarily driven by an increase in business volumes due to technical import registrations, expansion into new states like Tamil Nadu, and the consolidation of business in existing states, namely Telangana, Andhra Pradesh, and Karnataka.

The profit after tax also witnessed a significant rise, increasing by 49.69% to ₹20.49 crore for the financial year 2022-23 from ₹13.69 crore for the financial year 2021-22.



Source: Press release, DRHP *All figures in Rs cr

For the six months ending on September 30, 2023, revenue from operations stood at ₹103.22 crore, and profit after tax stood at ₹10.38 crore.

The company believes that having strong brands is crucial for its growth and success. However, they recognize that it's not easy to keep these brands strong and develop them further. This uncertainty poses a challenge for the company in maintaining success in this aspect.

To address this, the company plans to use part of the money earned from the offer to invest in its subsidiary, Nova Agri Sciences. The goal is to build a new formulation plant. Despite this plan, the company knows there might be challenges like delays and increased costs.

Another important plan is to give funds to Nova Agri Sciences to create a new formulation plant and help expand the existing one at Nova Agritech. However, at this point, the company hasn't ordered the necessary machinery, which could lead to delays affecting future growth and financial stability.

Understanding the value of its people, the company stresses the importance of its leaders, the promoters, and senior management. They know that if key people leave, it could affect the business. So, they want to attract and keep these important team members for long-term success.

The company also sees managing and growing its dealer network as crucial. While they are working on these aspects, they admit there might be challenges that could affect sales and make it harder to reach expected profits.

About Nova Agritech

Nova Agritech operates as an agri-input manufacturer specialising in soil health management, crop nutrition, and crop protection products. The company adopts a technology-driven, farmer-centric approach, emphasising ecologically sustainable and nutritionally balanced solutions developed through its research and development initiatives.

The company engages in the manufacturing, distribution, and marketing of various product categories, including soil health management, crop nutrition, bio stimulants, bio pesticides, Integrated Pest Management (IPM), new technologies, and crop protection. Currently, its subsidiary, Nova Agri Sciences, handles the production of crop protection products.

As of November 30, 2023, Nova Agritech holds a total of 720 product registrations, spanning diverse categories such as soil health management, crop nutrition, bio pesticides, technical indigenous manufacturing, and crop protection. These registrations include 7 in soil health management, 176 in crop nutrition, 4 in bio pesticides, 7 in technical indigenous manufacturing, and 526 in crop protection.