KPR Agrochem was looking to raise money partly through fresh issue and party an offer for sale by promoters. The fresh money raised was to be used to cut debt.
Economic Times in an IPO review on Thursday advised investors to skip the issue given its listless revenue growth in last four years, weak financial position of promoters and rich valuation compared with peers.
At the higher end of the price band, the stock was asking a price-to-earnings or P/E multiple of 19.9 and enterprise value (EV) of 8.8 times the operating profit before depreciation (EBITDA) based on post-issue capital and annualised earnings.
The company’s listed peers Dhanuka Agritech and Insecticides India trade at lower P/Es despite having better return on equity and higher revenues.
The company’s promoters have weak financial strength and one of the promoter group companies, KPR Industries, was declared as a non-performing account after it defaulted on payment obligations. The promoters’ focus on a caustic soda project built through KPR Industries has capped their ability to infuse money in KPR Agrochem.
