Hemani Industries Limited files DRHP with SEBI.
DRHP Link: https://investmentbank.kotak.com/downloads/hemani-industries-limited-DRHP.pdf
Key pointers of the IPO as per DRHP:
(1) The Issue – Hemani Industries Limited (“Hemani” or “Company”), which manufactures a range of agrochemicals and specialty chemicals, has filed its Draft Red Herring Prospectus (“DRHP”) with market regulator Securities and Exchange Board of India (“SEBI”). The IPO consists of a fresh issue of shares aggregating up to Rs. 500Cr and an Offer for Sale aggregating up to Rs. 1,500Cr (the “Offer for Sale”), by the selling shareholders from the Promoter and Promoter Group. The total IPO size is Rs. 2,000Cr.
(2) About the Company: Hemani Industries is an agrochemicals and specialty chemicals manufacturer, which caters to the crop protection, wood protection, veterinary sciences, household health, and public health industries. The Company is highly backward integrated, with most of its raw material being produced in-house. In addition to its products, the Company also engages in contract research and manufacturing services (CRAMS).
(3) Product Leadership: Hemani is present across the entire value chain – Technicals, Formulations and Intermediates. According to Frost & Sullivan, was is a leading player in the Indian pyrethroid market in Fiscal 2021. In CY2020, it was also the largest global producer by volume of Meta Phenoxy Benzaldehyde (“MPBD”) and the second largest producer by volume of Cypermethrin Acid Chloride (“CMAC”). It holds leadership position in Technicals as well – in CY2020, it was the largest global producer by volume of Cypermethrin Technical, the second largest global producer by volume of Alpha Cypermethrin, the third largest global producer by volume of Permethrin Technical and the third largest manufacturer by volume of Dicamba in India. (Source: Frost & Sullivan).
(4) Export: The Company is predominantly focused on exports, with presence in high-growth regions such as Asia Pacific, Latin America, the United States, Russia, Africa and Australia. The Company derives 60-70% of its revenue from exports.
(5) Customer Relationships: Hemani has catered to over 1,700 customers in the last 10 years. Some of its marquee clients include Alchemie Overseas, Arysta LifeScience Benelux, Bayer Vapi, Dhanuka Agritech, Jiangsu Yangnong Chemical, Shandong Rainbow Agrosciences and UPL Limited. The Company has a track record of customer retention. Out of its 1,700+ total customers over the past ten years, it has enjoyed business relationships for more than five years with 31% of these customers.
(6) Financials: The Company has grown from FY19-FY21, at a CAGR of 15.2% for FY19-FY21. Its operating EBITDA margins have expanded significantly over the same period – operating EBITDA margin has grown from 15.92% in FY19 to 21.14% in FY21. Its PAT margin has also expanded from 8.49% in FY19 to 14.31% in FY21.
The Company operates three strategically located manufacturing facilities at Dahej, Ankleshwar and Saykha. The Company intends to use the proceeds of the IPO to fund the capacity expansion at its Saykha facility, along with prepayment/repayment of debt, and working capital.
JM Financial Limited and Kotak Mahindra Capital Company Limited are the Book Running Lead Managers to the IPO.