Dhanlaxmi Crop Science Limited, established with the goal of fulfilling the agricultural needs of Indian farmers, is launching an IPO to raise ₹23.80 Crores. The IPO is entirely a fresh issue of 43.28 lakh shares, opening for subscription from December 09, 2024 to December 11, 2024. The share price band is set between ₹52 and ₹55 per equity share, and the market capitalization at the upper price of ₹55 will be ₹89.80 Crores. The listing date is tentatively scheduled for December 16, 2024.

Dhanlaxmi Crop Science is a well-established player in the agriculture sector, focusing on producing high-quality agricultural seeds tailored to different agro-climatic regions. With an emphasis on intensive research and development, the company is positioned to meet the specific needs of farmers in India. The company operates out of Himatnagar, Gujarat, where it continues to improve its products for diverse market demands.

Financial Overview

The company’s financial performance for the past three years has shown significant growth:

• Revenue for FY 2024: ₹6,375.08 Lakhs
• EBITDA for FY 2024: ₹689.01 Lakhs
• Profit After Tax (PAT) for FY 2024: ₹465.36 Lakhs

For FY 2024, Dhanlaxmi Crop Science reports a pre-issue EPS of ₹3.88 and a post-issue EPS of ₹2.85. With a pre-issue P/E ratio of 14.18x and a post-issue P/E ratio of 19.30x, the IPO seems reasonably priced compared to the industry average P/E of 21x. The company’s ROCE stands at 39.07%, and RoE at 33.82%, indicating strong financial health.

Grey Market Premium (GMP) and Listing Trend

As of now, the Grey Market Premium (GMP) for Dhanlaxmi Crop Science IPO is expected to be ₹9, indicating a potential listing gain of 12.72%. However, GMP is not always an accurate indicator of market performance as it reflects unorganized trading before the IPO is listed on the stock exchange.

Here’s the IPO GMP trend:

• 5 December 2024: ₹13 (GMP at ₹62 expected listing price)
• 4 December 2024: ₹9 (GMP at ₹62 expected listing price)

These fluctuations reflect market sentiment but should be considered with caution.

IPO Subscription and Allotment Process

As of December 09, 2024, the Dhanlaxmi Crop Science IPO has been subscribed 3.99 times on the first day of subscription. This shows strong investor interest, particularly in the agricultural sector.

To check the Dhanlaxmi Crop Science IPO allotment status on December 12, 2024, investors can:

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The Current active IPO is Dhanlaxmi Corp and Emerald Tyre Manufacturers.

1. Visit the IPO allotment status page on the registrar’s website.
2. Select Dhanlaxmi Crop Science Limited IPO.
3. Enter application number, PAN, or DP Client ID.
4. Submit the details to view the status.

Objectives of the IPO

The funds raised from the fresh issue will be used for:

1. Working capital requirements: ₹2,005.77 Lakhs.
2. General corporate purposes.
3. To cover issue expenses.

IPO Review

Despite the promising financials, the Dhanlaxmi Crop Science IPO is priced at a higher valuation compared to its earnings potential. The pre-issue EPS of ₹3.88 and post-issue EPS of ₹2.85 give it a relatively low P/E ratio, suggesting it is fairly priced within the sector. However, the high post-issue P/E ratio and the uncertain market conditions for agricultural stocks make it a risky investment for those seeking short-term listing gains or long-term growth.

The Grey Market Premium (GMP) indicates potential listing gains, but investors should be cautious due to the inherent risks in the SME IPO market. We recommend avoiding the Dhanlaxmi Crop Science IPO for short-term listing gains but suggest holding off on long-term investments until the company shows consistent growth beyond its current market pricing.

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