RelatedKPR Agrochem doesn’t have enough shine, can skip IPO

NEW DELHI: KPR Agrochem has withdrawn its Rs 283 crore initial public offering a day before it was to hit the primary market on Friday. The company did not give any reason. This the second IPO to be withdrawn this week after Sudarshan Pharma called off the listing of its SME IPO on the last day of subscription.

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.