Dive Deep into Divyadhan Recycling Industries IPO: A Complete Review for Potential Investors

Divyadhan Recycling Industries Overview

Divyadhan Recycling Industries Limited – a name that has also become synonymous with innovation in the recycling sector – is all set to invite investors for their initial public offering (IPO). The following blog will delve into the Divyadhan IPO review that can provide insights on why this might be the investment product of your dreams, those interested in sustainable technologies and recycling.

Divyadhan Recycling Industries Limited: In-Depth Analysis

Established in the year 2010, Divyadhan Recycling Industries has been successful in creating their niche in recycling business, especially while manufacturing Recycled Polyester Staple Fibre (R-PSF) and Recycled Pellets. Being accredited under the safety ISO 9001:2015 and ISO 14001:2015, it gives testimony to the quality consciousness of the company and environmentalism, and thus becomes prominent in the list of recycling industry IPOs .

Divyadhan Recycling Industries IPO Details

IPO Summary: Divyadhan Recycling’s IPO will collect approximately ₹24.17 crores through the issuance of 37.76 lakh equity shares. The Divyadhan IPO price band has been pegged at ₹60-64 per equity share, and a Divyadhan IPO lot size has been set at 2,000 equity shares.

Here are the major dates for Divyadhan Recycling Industries, tabulated along with information above:

Event	Date
IPO Opening Date	September 26, 2024
IPO Closing Date	September 30, 2024
Finalization of Allotment	October 1, 2024
Initiation of Refunds	October 3, 2024
Credit of Shares to Demat Accounts	October 3, 2024
Listing Date	October 4, 2024

Here is the table summarizing details regarding the Divyadhan Recycling Industries IPO, based on the information given:

IPO Details	Information
Company Name	Divyadhan Recycling Industries Limited
IPO Size	₹24.17 crore
New Issue	₹24.17 crore (37.76 lakh equity shares)
Price Band	₹60 – ₹64 per share
Face Value	₹10 per share
Listing Exchange	NSE SME
Minimum Bid Lot	2,000 shares
Minimum Investment	₹1,20,000 (at the upper price band)
Issue Type	Book-built Issue
Issue Category	SME IPO
QIB Allocation	50%
NII Allocation	15%
Retail Allocation	35%
Company Sector	Recycling Industry (Recycled Polyester Staple Fibre and Pellets)

This table reflects the specifics of the Divyadhan Recycling Industries IPO, including allocation percentages for different investor categories, which differ slightly from the general norms to accommodate SME IPOs on platforms like NSE SME.

Divyadhan Recycling Industries Financials

Summary of Financials

Metric	FY 2022	FY 2023	Change FY 22-23	FY 2024	Change FY 23-24
Assets	₹1,767.74 L	₹1,938.64 L	+9.67%	₹2,412.11 L	+24.40%
Revenue	₹5,981.52 L	₹5,815.51 L	-2.78%	₹5,912.88 L	+1.67%
Profit After Tax (PAT)	₹52.91 L	₹216.18 L	+308.56%	₹237.80 L	+9.96%
Net Worth	₹637.05 L	₹853.23 L	+33.93%	₹1,291.03 L	+51.33%
Reserves and Surplus	₹137.05 L	₹353.23 L	+157.06%	₹764.49 L	+116.43%
Total Borrowing	₹799.76 L	₹545.55 L	-31.78%	₹606.64 L	+11.20%

Revenue Comparison
Between FY 2022 and FY 2023, revenues decreased. ₹5,981.52 Lakhs came down to ₹5,815.51 Lakhs, showing it had been a bit of a challenging year for growth.
FY 2024 is only a slight enhancement with a revenue increase of 2% to ₹5,912.88 Lakhs. Some of the market conditions, along with operational efficiencies or new business developments, may have assisted it in becoming better in that regard.

Profitability

PAT The profit after tax improved significantly. From ₹52.91 Lakhs in FY 2022, it went up to ₹216.18 Lakhs by FY 2023, recording more than 300% growth.
PAT for the year ended FY 2024 increased 10% to ₹237.8 Lakhs. Such steady profit improvement, when revenue improvement is modest, indicates cost management or improved margins.

  Assets and Liabilities

Assets have grown year over year, increasing from ₹1,767.74 Lakhs in FY 2022 to ₹2,412.11 Lakhs in FY 2024, thereby indicating investment in new assets or acquisition of resources possibly for expansion or modernizing operations.
Total Borrowing has declined over the time, from ₹799.76 Lacs in the FY 2022 to ₹606.64 Lacs in the FY 2024. This would reflect that the company is effectively managing its finance or maybe using profit to service the debt or showing a cautious financing strategy.

Net Worth and Reserves

The net worth has practically doubled over two years from ₹637.05 Lakhs to ₹1,291.03 Lakhs, reflecting increased shareholder equity, mostly because of retained earnings and possibly new capital inputs.
The case is similar with Reserves and Surplus where it increased from ₹137.05 Lakhs to ₹764.49 Lakhs, hence it shows that the company is saving a significant amount of its profit either to invest or just to build up its financial position.

Financial Health Indicators

Profitability Ratios: The surge in PAT, while revenues have not been rising significantly, might be a result of better efficiency in operations or perhaps some one-time gains, though that would need some additional information about the income statement.
Liquidity : Although the asset growth is positive, the cash conversion ability of these assets or the firm’s short term obligation management capability can’t be directly derived from the data given but has much to do with the health of liquidity.
Debt Management : Decline in total borrowings along with enhancement of reserves can imply a plan towards lessening financial leverage; this will be attractive to conservative investors.
Growth: Even though the revenue growth rate is meager, the lines in profit and net worth are growing considerably, which indicates that internal strategies for growth are working well, with possible motives by these companies to focus on profitability rather than just generating revenue.

Conclusion
From the details, Divyadhan Recycling Industries Limited appears to be on a very robust avenue of financial strengthening, with the focus on profitability and reducing debt even as the revenues are growing gradually. It would appeal to investors looking for stable and expansionary recycling business sectors, more so if it places importance on profitability as well as mentions issues on health of their finances. Of course, there are several other factors one should look into prior to making any vital decision, namely market conditions, sector-specific challenges, and general competitive landscape.

Divyadhan Recycling Industries IPO GMP and Subscription

Based on the information available till September 28, 2024, here’s the overview of Divyadhan Recycling Industries IPO in terms of its Grey Market Premium or GMP and subscription status:

GMP: The GMP for the Divyadhan Recycling Industries IPO was 0₹. Note that GMPs are speculative and not an official form of predicting the movement of the stock once it is listed.
Subscription Status:
Day 1: The issue is subscribed 0.65 times on the first day of opening.
Day 2: The issue was subscribed 4.89 times on September 27, 2024. Day-wise categorised issue subscription details stand at:
Retail category subscribed 7.99 times.
QIB (Qualified Institutional Buyers) category subscribed 1.87 times.
NII (Non-Institutional Investors) category subscribed 1.70 times.

This data reflects the strong interest coming in from the retail investors as compared to other categories. The overall subscription rate, at least on the two days, turns out to be decent and particularly shows more interest on the last day as against the first day.

IPO Details Recap:

 IPO Size: ₹24.17 crore.
 Price Band: ₹60 - ₹64 per share.
 Issue Period: September 26 to September 30, 2024.

Allotment Date Expected to be 1 October 2024, and shares will be listed on 4 October 2024.

The strength in retail subscription along with stable GMP in the vicinity of zero, coupled together, may indicate that despite investor interest, the grey market for the IPO is not over-enthusiastic or speculative in nature. It can actually reflect the kind of cautious optimism or well-balanced view of the company’s future prospects by potential investors.

Don’t forget that GMP and subscription levels can be affected by a myriad of factors ranging from market sentiment, company fundamentals, sector performance, to broad economic conditions. Never forget to take into account such data in the light of broader market conditions and investment analysis.

Divyadhan Recycling Industries IPO EPS and PE Ratio

According to the information available until September 28, 2024, regarding Divyadhan Recycling Industries Limited’s IPO, EPS have not been specified directly to the actual time of the IPO of Divyadhan Recycling Industries. However, taking the financial performance from the last year of available data, the profit after tax has climbed from ₹52.91 Lakhs FY2022 to ₹216.18 Lakhs FY2023 and once more to ₹237.80 Lakhs FY2024. Taking the total shares issued by the company post-IPO, if one were to calculate a very rough EPS on the profitability for the last year of available data: Assuming we consider the face value of share at ₹10 and take approximate number of shares after the IPO by considering the size of the issue and the existing base of shares, the EPS may be approximated as follows:

EPS=PAT/Number of Shares

This estimation does not make any sense without knowing the exact number of shares after the IPO.
Price to Earnings Ratio (P/E Ratio): Not explicitly given but can be derived from the IPO price band and estimated EPS. If we take:
The IPO price band was ₹60 to ₹64 per share.

Now assuming an EPS based on FY 2024 profits, if we estimate an EPS for simplification:
If we take a notional EPS of say ₹1 per share (a speculative figure based on profit growth trends without exact share count), the P/E ratio would be :

P/E ratio = Share Price/EPS = (₹60−₹64)/₹1 = 60 to 64
The above calculation is a high P/E ratio and investors must be expecting a high return in the future or keeping a premium valuation of the stock based on qualitative factors like market positioning, sustainable practices, or trends in the industry.

Such valuations may not be uncommon for companies in growth phases or have great stories to tell with respect to sustainability and innovation, like recycling industries. Usually, given the industry practice or looking at similar IPOs, we wouldn’t find anything unusual in such valuations.

Expert Opinions and Recommendations

Market analysts such as Dilip Davda have also been positive. Thus, investors can now subscribe to Divyadhan IPO for long-term prospects in the recycling business. However, a broader analysis of markets calls for a balanced view by considering growth prospects as well as inherent risks.

It is in a good position for growth in the future because of a focus on increased production capacity and new innovations in recycling technology. With the continued growth of the global focus on plastic waste reduction, Divyadhan Recycling is well-poised to grow.

Conclusion

IPO of Divyadhan IPO is that great combination of technology, sustainability, and market demand. For investors who can look beyond a short-term return, this IPO may make a lot of money with investment in this company that will align with global sustainability.