Nirman Agri NSE SME RI review - (May apply)

•    The company is one of the organized agri input company having variety of offerings.
•    It posted spectacular numbers for FY24.
•    Based on its last traded price and the FY24 earnings, the issue appears lucratively priced.
•    Investors may park funds for the medium to long term.

PREFACE:
The company came with its maiden IPO of Rs. 20.30 cr. at a price of Rs. 99 per share in the month of March 2023. The mandate for IPO was with First Overseas Capital Ltd.at that time and now it is coming out with RI on its own to garner Rs. 48.97 cr.at a price of Rs. 239 per share. Its current tradeable market lot is 600 shares, and the market maker was NNM Securities Pvt. Ltd. For RI the market lot is of 206 shares. 

ABOUT COMPANY:
Nirman Agri Genetics Ltd. (NAGL) is one of the organized Agri-Input Company in India engaged in the business of production, processing and marketing of high-quality hybrid seeds, Pesticides, Bio-organic for different crops like corn, sunflower, cotton, paddy, grain sorghum, etc. and have recently forayed into micronutrients and bioproducts. It also produces non-hybrid seeds.

The company is currently having production, outsourced processing and R&D facilities in Maharashtra at Nashik and Nimgul and in Gujarat as well as Madhya Pradesh. Its research mainly focuses on developing superior hybrids in different crops like corn, cotton, sunflower, paddy, bajra, etc. All the seed varieties developed by its R&D team are marketed under the brand name of 'Nirman Agri Genetics'. The company expects its R&D facilities to drive the future growth of the Company.

In the year 2022, the company began to market bio-pesticides, bio-fertilizers, micronutrients, fertilizer mixtures & plant growth regulators under the name and style of "Nirman Agri Genetics". Seeds, bio-fertilizers, micronutrients etc. are related products having the same end user i.e. the farmer, and are usually sold through similar dealer networks. With a view of achieving the benefit of synergy in marketing the aforesaid products it has recently added them to products portfolio. Surprisingly, the company has given its employees data as of September 30, 2023. As of the said date, it had 40 employees on its payroll.

ISSUE DETAILS:
The company is coming out with a Rights Issue (RI) of 2049025 equity shares of Rs. 10 each at a fixed price of Rs. 239 per share to mobilize Rs. 48.97 cr. The RI has already opened for subscription on August 05, 2024, and will close on August 23, 2024. The company is offering RI in the ratio of 11 shares for every 32 shares held by eligible stakeholders as of the record date of July 29, 2024. The full amount it to be paid on application for the number of shares applied. Post allotment, shares will be listed on NSE SME Emerge. The company is spending Rs. 0.75 cr. for this RI process, and from the net proceeds, it will utilize Rs. 40.00cr. for working capital, and Rs. 8.22 cr. for general corporate purposes.

This RI is self-managed by the company itself, and Bigshare Services Pvt. Ltd. is the registrar to the issue. 

Post-RI, company's current paid-up equity capital of Rs. 5.96 cr. will stand enhanced to Rs. 8.01 cr. Based on RI pricing, the company is looking for a market cap of Rs. 191.44 cr. 

FINANCIAL PERFORMANCE:
On the financial performance part, for the last two fiscals, the company has posted a total income/net profit of Rs. 28.61 cr. / Rs. 4.01 cr. (FY23), and Rs. 63.34 cr. / Rs. 10.41 cr. (FY24). Thus it posted quantum jump in its top and bottom lines for the referred periods. 

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects. 

SCRIP PERFORMANCE: BASED ON NSE WEBSITE DATA: SCRIP CODE: NIRMAN (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 386.05 on July 26, 2024, and opened on an ex-right basis at Rs. 365.90 on July 29, 2024. Since then, it has marked a high/low of Rs. 390.15 / Rs. 346.05. The scrip last closed at Rs. 353.85 as of August 05, 2024. For the last 52 weeks' it has posted a high/low of Rs. 414.86 / Rs. 119.82. 

The promoters' holding has been constant at 66.05% for the last three quarters ended with March 31, 2024. The counter is well managed above the RI price to lure investors.