Rajgor Castor Derivatives IPO Review: Rajgor Castor Derivatives is coming up with its Initial public offering. This is an SME (small and medium-sized enterprise) which is going to be listed on NSE SME. The IPO will be open for subscription on 17th October 2023 and closes on 20th October 2023.

This article will provide a comprehensive review of the IPO, including an in-depth analysis of the company’s financials and the strengths and weaknesses of Rajgor Castor Derivatives. Keep reading for more details!

Rajgor Castor Derivatives IPO Review  – About The Company

Rajgor Castor Derivatives Limited, a company based in Gujarat, specialises in the manufacturing and trading of refined castor oil, castor seeds, castor oil cake, and high protein oil cake. With an annual production capacity of 148,500 MT, the company primarily operates on a B2B business model, offering customers a range of castor oil products and derivatives.

Castor oil is known for its diverse industrial applications. It is widely used in lubricants, paints, pharmaceuticals, cable insulators, sealants, inks, rubber, textiles and more. Additionally, it has therapeutic uses such as relieving constipation, promoting hair growth and eyelash growth, acting as a skin moisturizer and enhancing immune function.

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The company has established a strong presence in the domestic market, supplying its products to various states including Gujarat, Delhi, Madhya Pradesh, Maharashtra, Telangana, Uttar Pradesh, Punjab, Rajasthan and Uttarakhand.

In terms of revenue generation, 96.3% comes from the manufacturing of refined castor oil and other by-products like high protein and castor de-oiled cake. Trading activities contribute 3.67%, while the remaining 0.1% is derived from other operating revenue.

Rajgor Castor Derivatives IPO – Industry Overview

 Agriculture is a crucial sector in India, providing livelihood to about 55% of the population and contributing to 18.3% of the GDP (2022-23) at current prices. The government has taken various initiatives to improve the supply chain and enhance the productivity of the farmers, such as increasing the number of primary agriculture cooperatives, implementing the ATMA Scheme, and providing grants-in-aid for technology transfer and extension services. The Indian agricultural sector is expected to grow to US$ 30-35 billion by 2025, according to Bain & Co.

Castor oil is one of the major products derived from castor seed, which is mainly cultivated in India, China, Brazil and 30 other countries. India is the world’s largest producer of castor seed, followed by China and Brazil. Gujarat, Rajasthan, and Andhra Pradesh are the major castor-producing states in India.

Castor oil is a yellow viscous liquid that has multiple industrial applications in lubricants, paints, pharmaceuticals, cable insulators, sealants, inks, rubber and textiles etc. It is also used as a protective coating on food grains against insects and fungus. Castor de-oil cake is a fertilizer that contains high content of nitrogen, phosphoric acid, potash and moisture retention. It is an organic fertilizer that can be used as an alternative to chemical fertilizer. High protein castor de-oiled cake is an organic manure that improves the soil fertility without causing any harm or decay.

Rajgor Castor Derivatives IPO Review  – Financial Highlights

Rajgor Castor Derivatives has showcased a strong financial performance. The company’s operational revenue has witnessed a significant surge, escalating from ₹9.7 crore in March 2021 to a whopping ₹428 crore in March 2023.

Simultaneously, the Profit After Tax (PAT) has seen a positive shift, moving from  -1.8  crore in March 2021 to ₹5.5 crore in March 2023. The company’s net worth has been on a steady rise, increasing from ₹1.4 crore in 2021 to ₹23.6 crore in 2023.

On the liabilities front, the company’s borrowings have seen an uptick, rising from ₹22.8 Crore in March 2021 to ₹44.5 Crore in March 2023.

In terms of financial ratios, the company boasts a Return on Equity (ROE) of 43.19% and a Return on Capital Employed (ROCE) of 22.97%. 

Financial Metrics 

(Source: RHP of the company)

Competitors of Rajgor Castor Derivatives

The major players in the Castor Oil market include NK Industries, Gokul Overseas, Jayant Agro Organics, Adani Group etc.

Strengths of the company:

  • Rajgor Castor Derivative Company serves clients from various industries such as textiles, cosmetics, pharmaceuticals, and rubber. This broad client base provides the company with a competitive edge as it does not rely on a single industry for its revenue.
  • The company’s strength lies in its strategic approach of marketing its products. This approach is characterized by a focus on individual products and specific geographical regions. This method allows the company to tailor its sales strategies to the unique needs and opportunities presented by each product and region
  • Rajgor Castor Derivatives stands out due to its adherence to ethical trade practices, transparent business transactions, and prompt delivery of products. These attributes contribute significantly to the establishment and preservation of amicable relationships with their clients.
  • The company has a well-equipped manufacturing facility, complete with a dedicated quality control department and an in-house testing lab. Staffed by skilled professionals, these departments ensure seamless production and adherence to quality standards for both raw materials and finished products.

Weaknesses of the company: 

  •  The business is subject to seasonal fluctuations due to the availability of castor seeds, its primary raw material. This seasonality can cause revenue fluctuations.
  • The company lacks long-term contracts with its customers, making it heavily reliant on maintaining continuous relationships. Changes in the customer’s buying patterns could negatively impact the business.
  • The company’s revenue is largely dependent on operations in Gujarat, which contributes to 84% of its total income. Any financial instability in this region could significantly affect the company’s financial health.
  • Rajgor Castor Derivatives  relies heavily on a few key suppliers for its major raw materials, with the top ten suppliers accounting for around 90% of purchases. Any disruption in their production or failure to meet delivery schedules could severely hamper the company’s manufacturing process.

Rajgor Castor Derivatives IPO Review – GMP 

The  IPO for Rajgor castor derivatives  is set at a price band of ₹47-₹50. The latest grey market price stands at ₹6. The IPO is projected to list at a premium of  12%, with an estimated listing price of ₹56.

Rajgor Castor Derivatives IPO Review – Key IPO Information

PARTICULARSDETAILS
IPO Size₹47.81Cr
Fresh Issue₹44.48Cr
offer for sale ₹3.33Cr
opening date 17th october 2023
closing date20th october 2023
face value ₹10 per share
price band₹47 to ₹50 per share
lot size 3000 shares
Minimum lot 1 (3000 shares)
maximum lot 1 (3000 shares)
Investment amount ₹1,50,000
listing date 31st october 2023

Promoters: Mr Brijeshkumar Vasantlal Rajgor, Mr Vasantkumar Shankarlal Rajgor and Mr Maheshkumar Shankarlal Rajgor are the promoters of the company.

Book Running Lead Manager: Beeline Capital Advisor Private Limited 

Registrar to the Offer: Link Intime India private limited

The Objective of the Issue

The Offer Proceeds from the Fresh Issue will be utilized towards the following objects:

  • To Meet Working Capital Requirements.
  • General Corporate Purpose.
  • To meet Public Offer Expenses

In Closing

Rajgor Castor Derivatives, a company with a strong domestic presence in India, is set to expand its horizons by venturing into export operations. Their strategic move aims to meet the growing demand for castor oil and seize international market opportunities. With a diversified business model serving various industries, the company is poised to enhance its functional efficiency through technological advancements.

However, it is important to note that this is an SME IPO where the minimum investment amount is 1,50,000 which is higher than a mainline IPO. 

What do think the future holds for the company? Are you applying for the IPO? Let us know in the comments below.

Written By Niharika Jadhav

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