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Nova Agritech IPO subscribed over 5x on Day 1: What should investors do? What analysts have to say

Nova Agritech IPO

: Nova Agritech, a player in the agri-input manufacturing sector, specialising in soil health management, crop nutrition, and crop protection products, has recently launched its Initial Public Offering (IPO).
The issue, valued at Rs 144 crore, consists of a fresh equity issue of Rs 112 crore and an offer-for-sale (OFS) of 77.58 lakh shares. The IPO

subscription

window is currently open and will close on January 25.
The Nova Agritech IPO attracted strong interest from both retail and High Net Worth Individual (HNI) investors, achieving full subscription on the first day of bidding. As of Tuesday, the overall subscription reached 5.4 times, with the retail category oversubscribed at 8.1 times. The Non-Institutional

Investors

(NII) portion also received bids 6.1 times the allotted shares.

In the unlisted market, Nova Agritech’s GMP is currently at Rs 20. They are willing to pay a premium of nearly 70% compared to the upper price band, according to an ET report.
Pre-IPO funding and investor interest
Prior to the IPO opening, Nova Agritech secured Rs 43 crore from anchor investors, including Quantum- State Investment Fund and Neomile Growth Fund, indicating a positive outlook from institutional investors.

Nova Agritech IPO review: Analysts’ perspective
Analysts have largely recommended subscribing to the Nova Agritech IPO, citing the company’s robust

financial performance

in a competitive sector. Nova Agritech has demonstrated an impressive Return on Equity (ROE) of 32.1% and maintains robust

Profit After Tax

(PAT) margins at 9.7% as of FY23.
Stoxbox, a financial analysis entity, said that the company’s comfortable asset turnover ratio and efficient asset usage as indicators of sustained profitability. With a Price-to-Earnings (PE) ratio of 12.3x, based on the annualised diluted H1FY24 EPS, the valuation appears relatively attractive compared to industry peers.

Nova Agritech IPO price band and lot size
The IPO is priced in the range of Rs 39-41 per share, and investors can bid for 365 shares in one lot. Allocation distribution is set at 50% for qualified institutional buyers (QIBs), 15% for non-institutional investors (NIIs), and 35% for

retail investors

.
About Nova Agritech
Nova Agritech stands out as an agri-input manufacturer offering comprehensive solutions for soil and crop health. Its diversified branded product portfolio has garnered 720 registrations across various categories, including soil health management, crop nutrition, biopesticides, and crop protection. The company’s effective marketing strategy and a strong presence across geographies position it for sustained growth.
Financial performance and operations
As of November 30, 2023, Nova Agritech recorded a robust product portfolio with significant revenue contributions from its subsidiary, Nova Agri Sciences (NASPL), specialising in crop protection products.
In FY23, the company witnessed a 13% YoY increase in revenue to Rs 210 crore, with PAT surging by 50% to Rs 20.48 crore. For the six months ending September 2023, revenue reached Rs 103 crore, and profit stood at Rs 10.3 crore.
Key players in the offering
Keynote Financial Services and Bajaj Capital are serving as the book-running lead managers for the IPO, while Bigshare Services is appointed as the registrar to the offer.

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