Rajgor Castor Derivatives IPO: Riding the Wave of Castor Oil Demand

Introduction:

Rajgor Castor Derivatives IPO has marked its presence in the financial realm with a book-built issue of Rs 47.81 crores. Comprising a fresh issue of 88.95 lakh shares, amounting to Rs 44.48 crores, and an offer for sale of 6.66 lakh shares, totaling Rs 3.33 crores, this IPO has garnered attention. The bidding process, commencing on October 17, 2023, and concluding on October 20, 2023, received substantial interest. With allotments finalized on October 26, 2023, the shares made their debut on NSE SME on October 31, 2023.

Pricing Dynamics:

The IPO set a price band of ₹47 to ₹50 per share. The minimum lot size for an application was 3000 shares, requiring a retail investment of ₹150,000. High Net Worth Individuals (HNIs) had the option to invest in 2 lots (6,000 shares), totaling ₹300,000.

Market Performance Overview:

As of December 15, 2023, Rajgor Castor Derivatives Limited (RCDL) stood at ₹47.15, indicating a 1.98% decrease. The stock opened at ₹47.75, with a high and low of ₹48.10 and ₹47.15, respectively. The previous close was ₹48.10, and the day saw a total traded value of 45,000 shares, providing insights into recent market trends.

Key IPO Highlights:

• - IPO duration: October 17, 2023, to October 20, 2023
• - Listing Date: October 31, 2023
• - Face Value: ₹10 per share
• - Price Band: ₹47 to ₹50 per share
• - Lot Size: 3000 Shares
• - Total Issue Size: 9,561,000 shares, aggregating up to ₹47.81 Cr
• - Fresh Issue: 8,895,000 shares, aggregating up to ₹44.48 Cr
• - Offer for Sale: 666,000 shares of ₹10, aggregating up to ₹3.33 Cr
• - Issue Type: Book Built Issue IPO
• - Listing At: SME, NSE

Equity Transition:

Pre-IPO, Rajgor Castor Derivatives had 15,020,852 shares in circulation. Post the IPO, this figure increased to 23,915,852 shares, indicating a substantial shift in market dynamics.

IPO Reservation Dynamics:

Strategically, the IPO allocated 9,439,000 shares, with a significant portion for various investor categories:

• - QIB: 1,722,000 shares (18.24%)
• - NII: 1,362,000 shares (14.43%)
• - RII: 3,142,000 shares (33.29%)
• - Anchor Investors: 2,712,000 shares (28.73%)

Anchor Investors and Lock-In Period:

Rajgor Castor Derivatives IPO raised Rs 13.56 crore from anchor investors. The anchor bid date was October 16, 2023. The anchor lock-in period for 50% of shares ends on December 11, 2023, and for the remaining shares, it ends on March 5, 2024.

IPO Timeline Snapshot:

• - IPO Open Date: Tuesday, October 17, 2023
• - IPO Close Date: Friday, October 20, 2023
• - Basis of Allotment: Thursday, October 26, 2023
• - Initiation of Refunds: Friday, October 27, 2023
• - Credit of Shares to Demat: Monday, October 30, 2023
• - Listing Date: Tuesday, October 31, 2023
• - Cut-off time for UPI mandate confirmation: 5 PM on October 20, 2023

Promoter Holdings:

The company's promoters, Mr. Brijeshkumar Vasantlal Rajgor, Mr. Vasantkumar Shankarlal Rajgor, and Mr. Maheshkumar Shankarlal Rajgor, held 100% of shares pre-issue.

Company Profile:

Incorporated in 2018, Rajgor Castor Derivatives Limited focuses on manufacturing castor oil-based products for the Indian market. Their product portfolio includes:

• - Refined Castor Oil First Stage Grade (F.S.G.): Used in Lubricants, Paints, Pharmaceuticals, Cable insulators, Sealants, Inks, Rubber, Textiles, and more.
• - Castor De-Oiled Cake: Used as a fertilizer due to its high content of Nitrogen, Phosphoric Acid, Potash, and moisture retention.
• - High Protein Castor De-Oiled Cake: An organic manure enhancing soil fertility without causing damage. The manufacturing unit is located in Banaskantha, and as of July 31, 2023, the company employs over 60 professionals. Clients include manufacturers in various industries and farmers.

Financial Performance Overview:

As of June 30, 2023, Rajgor Castor Derivatives reported significant financial growth:

• - Assets: ₹9,847.95 Lakhs
• - Revenue: ₹11,276.10 Lakhs
• - Profit After Tax: ₹192.57 Lakhs
• - Net Worth: ₹2,558.24 Lakhs
• - Reserves and Surplus: ₹2,343.54 Lakhs
• - Total Borrowing: ₹5,178.96 Lakhs

Key Performance Indicators:

• - Post P/E (x): 15.48
• - Market Cap: ₹119.58 Crores
• - ROE: 43.19%
• - ROCE: 22.97%
• - Debt/Equity: 1.88
• - EPS (Rs): 30.06
• - RoNW: 23.44%

Objects of the Issue:

The fresh issue's proceeds are earmarked for:
1. Meeting Working Capital Requirements. 2. General Corporate Purpose. 3. Public Offer Expenses.

IPO Review:

Financial expert Dilip Davda notes that RCDL, in the business of castor oil-related derivatives, has experienced substantial growth, especially post the pandemic. Based on FY 24 annualized earnings, the IPO seems fully priced, making it a potential consideration for well-informed investors eyeing long-term rewards.

IPO Subscription Status:

The Rajgor Castor Derivatives IPO witnessed a remarkable subscription rate, reaching 107.43 times on October 20, 2023. Notably, the retail category subscribed 80.70 times, QIBs 35.52 times, and NIIs a staggering 260.01 times, reflecting a robust market interest.

Note: All financial figures are in INR (Indian Rupees), and market-related data is as of December 15, 2023.

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