What You Must Know About Dhariwalcorp IPO: Price Band ₹102 to ₹106 per Share

About Dhariwalcorp Limited

Dhariwalcorp Limited is a company engaged in the business of trading a comprehensive range of waxes, industrial chemicals, and petroleum jelly. The company processes, purchases, sells, imports, and trades various types of wax, including Paraffin Wax, Micro Wax, Slack Wax, Carnauba Wax, and many others. Additionally, Dhariwalcorp trades in industrial chemicals such as Rubber Process Oil, Light Liquid Paraffin (LLP), Citric Acid Monohydrate, and more.

The company serves various industries, including Plywood and Board, Paper Coating, Crayon Manufacturing, Candle Production, Textiles, Pharmaceuticals, Petroleum Jelly and cosmetics, Tube and tire Manufacturing, Match Production, Food Processing, and Adhesive Manufacturing. Dhariwalcorp has a PAN India presence, operating in 21 states and 3 Union territories for its domestic market. The company has also initiated its export division, which supplies products to Nepal.

Dhariwalcorp maintains one processing unit and five warehouses in Jodhpur, Rajasthan, two warehouses in Bhiwandi, Maharashtra, one warehouse in Ahmedabad, Gujarat, and one warehouse in Mundra, Gujarat. The company follows an outsourcing model for running its warehouses in Bhiwandi, Ahmedabad, and Mundra to ensure timely delivery of products across geographies.

The company is promoted by Mr. Manish Dhariwal and Ms. Shakshi Dhariwal, who have more than fifteen and ten years of experience in the Waxes and Industrial Chemicals Industry. Dhariwalcorp attributes its success to sustained efforts in key aspects of its business, such as product portfolio expansion, process improvements, and increased scale of operations.

Highlights of the Dhariwalcorp IPO

Dhariwalcorp IPO is launching on the National Stock Exchange (NSE) SME segment. Here are the key details of the IPO:

•    The issue opens for subscription on August 1, 2024, and closes on August 5, 2024.

•    Dhariwalcorp IPO a face value of ₹10 per share. The price band for this book-built issue is set at ₹102 to ₹106 per share.

•    The IPO consists only of a fresh issue component, with no offer for sale (OFS) portion. The company will issue a total of 23,72,400 shares (23.72 lakh shares), which, at the upper price band of ₹106 per share, aggregates to a fresh fundraising of ₹25.15 crore.

•    As there is no OFS portion, the fresh issue size is also the overall IPO size.

•    The issue includes a market-making portion with an allocation of 1,23,600 shares. Shreni Shares will serve as the market maker for the issue, providing two-way quotes to ensure liquidity post-listing.

•    The company's pre-issue shareholding stands at 65,79,000 shares, which will increase to 89,51,400 shares post-issue.

•    Shreni Shares Limited is the lead manager of the issue, and Bigshare Services Pvt Ltd is the registrar. Shreni Shares will also act as the market maker for the issue.

Dhariwalcorp IPO: Key Dates

Here are the key dates to remember:
 

IPO Allocation & Minimum Investment Lot Size

Dhariwalcorp Limited has announced the market maker allocation at 1,23,600 shares as inventory for market making. Shreni Shares will serve as the market maker for the IPO. The breakdown of the overall IPO allocation to various categories is as follows:

The minimum lot size for IPO investment is 1,200 shares. Retail investors can invest a minimum of ₹127,200 (1,200 x ₹106 per share at the upper price band) in the IPO. This is also the maximum that retail investors can invest. HNI/NII investors can invest a minimum of 2 lots, comprising 2,400 shares with a minimum lot value of ₹254,400. There is no upper limit on what the QIBs and HNI/NII investors can apply for. The table below shows the break-up of lot sizes for different categories:

Financial Highlights: Dhariwalcorp Limited

The table below presents the key financials of Dhariwalcorp Limited for the last three fiscal years:
(₹ in Lakhs, unless stated otherwise)

Source: NSE: Dhariwalcorp Limited DRHP
 

Dhariwalcorp has shown significant growth in its revenue from operations, increasing from ₹15,857.73 Lakhs in FY2022 to ₹22,880.29 Lakhs in FY2024. This represents a compound annual growth rate (CAGR) of approximately 20.14% over the two years.

The company's EBITDA has shown substantial improvement, rising from ₹237.88 Lakhs in FY2022 to ₹668.73 Lakhs in FY2024. The EBITDA margin has also improved, increasing from 1.50% in FY2022 to 2.92% in FY2024.

Profit After Tax (PAT) has grown significantly, from ₹142.41 Lakhs in FY2022 to ₹450.63 Lakhs in FY2024. The PAT margin has also improved, reaching 1.97% in FY2024 compared to 0.90% in FY2022.

Return on Equity (ROE) has fluctuated over the three years, reaching a high of 74.33% in FY2022, dropping to 23.80% in FY2023, and then recovering to 51.50% in FY2024. This indicates volatility in the company's profitability relative to its equity.

The Debt-Equity ratio has improved significantly, decreasing from 2.98 in FY2022 to 1.00 in FY2024, indicating a reduction in the company's leverage and potentially lower financial risk.
The Current Ratio has improved from 1.09 in FY2022 and FY2023 to 1.62 in FY2024, suggesting an improvement in the company's short-term liquidity position.

Overall, Dhariwalcorp Limited demonstrates strong revenue and profitability growth, with improving financial metrics across most areas. The company has shown its ability to scale operations while maintaining and improving margins. The reduction in the debt-equity ratio is a positive sign, indicating better financial stability.

The IPO price band of ₹102 to ₹106 per share translates to a price-to-earnings (P/E) ratio of approximately 17 to 18 times based on FY2024 earnings. Considering the company's growth trajectory and improving financial metrics, this valuation appears reasonable.

The Dhariwalcorp Limited IPO offers an intriguing opportunity for investors interested in the wax and industrial chemicals trading sector. With its strong growth, improving financials, and potential, the industry may attract significant interest. However, as with any investment, particularly in the SME segment, carefully considering the risks and potential rewards is essential.