Dhanlaxmi Crop Science Makes Impressive Market Debut with 90% Premium on NSE Emerge

Dhanlaxmi Crop Science Limited, a company that caters to the specific agricultural needs of Indian farmers, made an impressive market debut on the NSE SME platform on December 16, 2024. The shares of Dhanlaxmi Crop Science listed with a 90% premium over the issue price of ₹55, indicating robust investor interest and confidence in the company’s future growth prospects. The shares opened at ₹88 on the listing day, signaling a strong start for the company in the capital markets.

The IPO, which aimed to raise ₹23.80 Crores, consisted of a fresh issue of 43.28 lakh shares, all of which were subscribed through a Book Built Issue. The subscription period for the IPO was held from December 9 to December 11, 2024, with the allotment finalization completed on December 12, 2024. The lot size for retail investors was set at 2,000 shares, requiring a minimum investment of ₹1,10,000.

The Grey Market Premium (GMP) of Dhanlaxmi Crop Science shares showed strong potential before the listing. As of December 13, 2024, the GMP was recorded at ₹33 (approximately 60%), showcasing positive sentiments about the company's growth and the overall IPO performance. The GMP reflects strong demand in the unorganized market, even though it cannot be fully relied upon for price discovery, as it is not regulated.

Company Overview and Financials

Founded with the objective of fulfilling the specific agricultural needs of Indian farmers, Dhanlaxmi Crop Science has built its reputation by conducting intensive research and development in the field of agricultural seeds. The company operates from a well-established R&D infrastructure in Himatnagar, Gujarat, focusing on various agro-climatic regions and market suitability for agricultural products.

In the past three fiscal years, the company has seen consistent revenue growth:

• FY24: ₹6,375.08 Lakhs
• FY23: ₹4,664.17 Lakhs
• FY22: ₹3,543.08 Lakhs

The EBITDA for FY24 was ₹689.01 Lakhs, reflecting significant operational efficiency compared to the previous fiscal years. The profit after tax (PAT) for FY24 stood at ₹465.36 Lakhs, which demonstrates the company's improving profitability.

The company’s earnings per share (EPS) stands at ₹3.88 pre-issue and ₹2.85 post-issue, with a pre-issue P/E ratio of 14.18x and a post-issue P/E ratio of 19.30x, compared to the industry average of 21x. This suggests that the IPO is fairly priced relative to the sector, offering a promising return potential for investors. The return on capital employed (ROCE) for FY24 was an impressive 39.07%, while the return on equity (RoE) was 33.82%, indicating the company's ability to efficiently utilize investor capital.

IPO Proceeds and Utilization

The funds raised from the Dhanlaxmi Crop Science IPO will be used to meet various objectives, including:

• ₹2,005.77 Lakhs for meeting working capital requirements
• Funds for general corporate purposes
• Covering issue expenses

This solid use of proceeds is expected to enhance the company’s operational capacity and contribute to its long-term growth strategy in the agricultural sector.

Conclusion and Market Sentiment

Dhanlaxmi Crop Science's listing on the NSE Emerge with a 90% premium over the IPO price demonstrates strong market confidence. Investors who applied for the IPO stand to benefit from the promising listing gains and the company’s focus on research-driven growth in the agricultural sector. Given the company’s strong financials, reasonable valuations, and commitment to improving India's agricultural landscape, Dhanlaxmi Crop Science looks poised for significant growth.

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