Nova Agritech Limited
Know the Company
Nova Agritech Limited (NAL), founded in 2007 at Hyderabad is a pioneering agricultural stimulant company, delivering sustainable and nutritionally balanced products to farmers. The Company aims to empower farmers with advanced agricultural solutions which focuses on products for enhancing soil health, improving plant nutrition and offering effective crop protection. Through its technology-driven and farmer-centric approach, NAL plays a pivotal role in promoting ecologically sustainable agriculture solutions. The company’s subsidiary, Nova Agri Sciences Private Limited, is manufacturing crop protection products, which are the significant part of NAL’s product portfolio.
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In January 2024, NAL came out with an IPO, offering shares at a price range of Rs 39 to Rs 41 per share, with a face value of Rs 2. The IPO raised Rs 143.8 crore, including a fresh issue worth Rs 112 crore and an offer-for-sale of Rs 31.8 crore. Proceeds from the IPO are earmarked for investments in the company’s subsidiary, Nova Agri Sciences Private Limited, to construct a new formulation facility, expands existing production capacities, and meet the company’s working capital requirements. Notably, the IPO was oversubscribed by 109 times.
Products Portfolio:
Nova AgriTech Ltd has a comprehensive product portfolio designed to address various stages of agriculture, including soil health, crop nutrition, and crop protection. The company manufactures, distributes and markets a wide range of products that enhance soil fertility and structure, promoting better crop growth. Its Crop Nutrition Products provide essential nutrients to crops, ensuring optimal growth and yield. Bio-Stimulant Products of the Company enhance plant growth and contributing to healthier crops. The company’s bio-pesticides are environmentally friendly alternatives to chemical pesticides, helping farmers protect their crops without harming the ecosystem. Besides this, its Integrated Pest Management Products offer a holistic approach to control pests, combining biological and chemical methods to manage them effectively. And its Crop Protection Products include a variety of fungicides, insecticides and herbicides that protect crops from diseases.
Manufacturing and Distribution Facilities
NAL’s manufacturing facilities are strategically located in Singannaguda Village, Mulugu Mandal, Siddipet District, Telangana. This facility includes the manufacturing units as well as warehousing facilities for the storage of raw materials and finished goods.
NAL has a strong distribution network comprising of approximately 6200 dealer’s spread across 16 states in India, including Andhra Pradesh, Telangana, Maharashtra, Karnataka, Madhya Pradesh, Rajasthan, Chhattisgarh, Tamil Nadu, Uttar Pradesh, Odisha, West Bengal, Bihar, Gujarat, Jharkhand, Uttarakhand and Jammu & Kashmir. NAL has also entered into marketing, distribution and supply agreements with certain third parties in neighboring countries including Nepal, Bangladesh, Sri Lanka and Vietnam.
Strengths
Nova Agritech is a one stop solution provider for soil health management, crop nutrition, bio stimulant, bio pesticides, Integrated Pest Management and crop protection through diversified branded product portfolio. NAL also working closely with farmers to create products that are both nutritious and environmentally friendly, with the support of its robust research and development capabilities.
NAL’s Research and Development (R&D) and Quality Control facilities at its manufacturing sites to help with new product development and process improvements. The Company also collaborates with universities for knowledge sharing, technology transfer, innovation, manpower development, and more.
The company has leased 66 acres of land in Valaparla Village, Andhra Pradesh, for its R&D activities, where it tests its products on various crops. NAL’s R&D department focuses on evaluating new and existing formulations across different regions, promoting and educating consumers about new products, working with state agriculture departments, and training Agri-input dealers and farmers to ensure better productivity.
NAL is a one-stop solution for soil health management, having a robust distribution network and a state-of-the-art manufacturing facility. However, the Company’s major revenue is generated from the distribution of its products in the three southern states of Andhra Pradesh, Karnataka and Telangana. Company, now actively taking steps to strengthen its dealership strength in other agriculturally important states in India.
In February 2024, the company received recognition from the Government of India for its Telangana-based research and development (R&D) unit. The Department of Scientific and Industrial Research (DSIR) under the Ministry of Science and Technology, New Delhi, granted prestigious recognition to the company’s in-house R&D unit located in Siddipet District, Telangana. This recognition entitles the R&D unit of Nova Agritech to avail customs duty exemption as amended from time to time.
The company focuses on obtaining more product approvals for both domestic and international markets. It also aims to enter new regions and expand its export business. A key part of the company’s strategy is to strengthen relationships with farmers by offering comprehensive solutions to improve operations. Additionally, the company emphasizes using modern technologies to control the production process, raise awareness among farmers, and maintain strict quality standards.
The Company carrying out continuous capacity additions as well as product inventions and innovations. The Company’s board in its meeting on June 22, 2024 has approved an investment of approximately Rs 36 crore in its wholly-owned subsidiary, named, Nova Agri Sciences Private Limited. The investment will be made through the subscription of 35.28 lakh unsecured optionally convertible debentures of Rs 100 each. The proposed investment will be completed in the next one year in multiple phases.
Financial Result Improves
NAL has experienced steady growth in both top-line and bottom-line performance over the past couple of years. In financial year 2024, the Company’s consolidated revenue saw a notable growth of 20%, reaching to Rs 252 crore over the FY2023. In FY23, the company reported a net profit of Rs 20 crore, which increased to Rs 28 crore in FY24.
For the Q1 FY24, the company’s net sales increased by almost 18% to Rs 42 crore, and net profit grew by 24% to Rs 4.3 crore. The company achieved a return on capital employed (RoCE) of 22% for the financial year 2024.
Outlook
Changing weather patterns, unpredictable rainfall, and extreme temperatures impact soil fertility and increase the vulnerability of crops to pests and diseases. This creates opportunities for companies engaged in the crop protection and crop nutrition industry.
Not only the Government of India, but also Govts’ across the globe is increasingly focus on reducing the use of chemical pesticides and promoting organic farming for several reasons, like environmental protection, health concerns, and global commitments. Excessive use of chemical fertilizers and pesticides can degrade soil health, reduce biodiversity, and lead to environmental issues. Govt’s stricter regulations and bans on certain products could disrupt the market for conventional agrochemicals and fertilizers, forcing farmers to adapt to organic methods and bio-based alternatives, where companies like NAL have strong presence looks bright future.
Soil health management is becoming important because essential nutrients are running low, and sustainable farming is needed. With the government’s support for organic farming and programs like the Soil Health Card Scheme, there is growing demand for soil conditioners, bio-fertilizers, and organic amendments. The future looks bright for soil health, plant nutrition, and crop protection industries in India as the country aims to boost agricultural productivity and sustainability.
The plant nutrition industry is changing quickly to tackle nutrient shortages and boost crop yields. Farmers are increasingly using advanced fertilizers, micronutrients, and bio-stimulants to make the most of their resources and improve soil health. The crop protection industry in India is growing, with increasing demand for bio-pesticides and eco-friendly solutions. As the government’s focus on reducing pesticide residues and promoting sustainable agriculture is expected to increase the use of safer crop protection products.
Cause of Concern
Fluctuations in global commodity prices, changes in government subsidies and economic downturns can adversely affect the affordability and demand for soil health products, nutrition fertilizers and crop protection chemicals.
The majority of farmers, especially smallholders hesitate to adopt new technologies due to lack of knowledge and increased cost, which can limit the growth of companies offering eco-friendly farming and crop protection solutions.
Sector: Commodities
Market Price: Rs. 80 as on today
FV: Rs 2/-
Stock Name: Nova Agritech Ltd
BSE Code: 544100, NSE Code: NOVAAGRI
Market Cap.: ₹747 Crore
Book Value: Rs. 20.9
Segment: Pesticides/ agrochemical
Incorporation: 2007
Headquarters: Hyderabad
