Admin
13 November 2023

City Crops Agro IPO: Sowing Seeds of Investment

Introduction:

City Crops Agro IPO, a fixed price issue of Rs 15.00 crores, witnessed a compelling response from investors. The IPO, entirely comprising a fresh issue of 60 lakh shares, opened for bidding on September 26, 2023, and concluded on September 29, 2023. The allotment process was finalized on October 5, 2023, and the shares were listed on BSE SME on October 10, 2023.

Key Offering:

Priced at ₹25 per share, the IPO boasted a minimum lot size of 6000 shares, necessitating a minimum investment of ₹150,000 for retail investors. High Net Worth Individuals (HNIs) were required to invest a minimum of ₹300,000 for 2 lots (12,000 shares).

Market Performance:

As of November 9, 2023, City Crops Agro Ltd's stock was quoted at ₹23.60, indicating a decrease of 7.45%. The stock opened at ₹25.50, with the day's high and low at ₹25.50 and ₹23.60, respectively. The previous closing was ₹25.50, with a total traded value of 42,000 shares. The 52-week high and low were ₹26.00 (Nov 02, 2023) and ₹19.40 (Oct 30, 2023), respectively.

IPO Details:

The IPO included a total issue size of 6,000,000 shares, aggregating up to ₹15.00 crores, with the entire issue being a fresh one. The face value per share was ₹10, and the listing took place on BSE SME.

Ownership Landscape:

Before the IPO, City Crops Agro had a pre-issue shareholding of 10,316,760 shares, which increased to 16,316,760 shares post-issue. The market maker portion consisted of 300,000 shares, managed by Mnm Stock Broking.

IPO Reservation:

The IPO distribution allocated 5.00% to the market maker, 47.50% to Retail Individual Investors (RIIs), and another 47.50% to Non-Institutional Investors (NIIs).

Subscription Dynamics:

As of September 29, 2023, the City Crops Agro IPO witnessed a subscription of 3.47 times. The retail category was oversubscribed at 4.78 times, while NIIs subscribed 2.15 times. The total number of applications was 1,984.

Financial Highlights:

As of March 31, 2023, City Crops Agro reported total assets of ₹1,402.71 lakhs, revenue of ₹2,462.50 lakhs, and a net profit of ₹117.08 lakhs. The net worth was ₹1,194.25 lakhs, with reserves and surplus at ₹162.57 lakhs. The total borrowing was reported at ₹2.01 lakhs.

Key Metrics:

The market cap of City Crops Agro IPO was ₹40.79 crores, with a P/E (x) of 22.03. The post P/E was at 34.72, and the company demonstrated an Earnings per Share (EPS) of ₹1.13 and a Return on Net Worth (RoNW) of 9.80%.

IPO's Objectives:

The net proceeds from the IPO are earmarked for working capital requirements, general corporate purposes, and covering issue expenses.

Expert Analysis:

City Crops Agro operates in a highly competitive and fragmented segment. While it has maintained average performance, the issue is deemed as greedily priced based on FY23 earnings. Investors are advised to exercise caution and consider alternatives.

Conclusion:

City Crops Agro IPO presents an opportunity for investors seeking exposure to the agricultural product trading sector. The oversubscription in the retail category indicates a positive market sentiment. However, prospective investors should carefully evaluate the company's competitive standing and pricing dynamics before making investment decisions.

Read More IPO related blogs - JSW Infrastructure IPO