IPO closes on 3 Oct'25
Advance Agrolife Ltd
Minimum Investment
₹ 15,000 / 150 shares
Our Verdict:
Avoid
- Advance Agrolife Ltd (AAL) has delivered strong revenue and earnings growth over the past three years. Valuations also appear reasonable, with the IPO priced at a P/E multiple of 17.5.
- That said, there are important risks to consider. Rising debt levels and fluctuating return ratios point to underlying financial stress. Revenue streams, though robust, are highly concentrated among a few clients and heavily skewed towards the domestic market. Exports have also declined sharply—from 8.45% in FY23 to just 1.95% in FY25.
- In terms of industry positioning, AAL lacks meaningful competitive differentiation. The growing adoption of alternative crop protection techniques—such as biotechnology-based solutions, genetically modified crops and natural farming practices—poses a long-term threat to demand for traditional agrochemicals.
- Furthermore, the company’s fortunes remain closely tied to government policies and subsidies for farmers. Any adverse regulatory changes could materially impact operations and profitability.
- Considering these factors, it is prudent to avoid this IPO at this stage.
About the company
Founded in
27 Feb'02
Managing director
Om Choudhary
- AAL is a B2B agrochemical manufacturer offering a comprehensive range of products that cater to the entire crop lifecycle. Its portfolio includes insecticides, herbicides, fungicides, plant growth regulators, as well as micronutrient and bio-fertilizers.
- AAL operates three manufacturing facilities in Jaipur, Rajasthan, with a combined production capacity of 89,900 MTPA, spread across 49,543 sq. meters. It holds 410 registrations in total, comprising 380 for formulation-grade and 30 for technical-grade agrochemicals.
STRENGTHS
- Impressive Growth: AAL has delivered impressive performance from FY23 to FY25, recording a CAGR of 12% in operating revenue, 38% in EBITDA and 31% in net profit.
- Solid Return Ratios: With industry-leading return metrics— Return on Equity (ROE) of 29% and Return on Capital Employed (ROCE) of 27% in FY25—AAL demonstrates superior capital efficiency and shareholder value creation.
- Diverse Client Base: AAL partnered with 849 corporate clients in FY25, of which 94 have maintained relationships for over three years and 26 for over 5 years. Notable clients include DCM Shriram, IFFCO MC, Indogulf Cropsciences, Mankind Agritech and HPM Chemicals.
RISK FACTORS
- Client Concentration: A significant portion of AAL’s revenue is dependent on a small group of clients. In FY25, the top 10 clients accounted for 69.47% of the total revenue, with the top 5 accounting for 51.70%. A loss or reduction in business from any of these key clients could substantially impact the company’s financial performance.
- High Trade Receivables: Trade receivables rose from Rs 104.48 crore in FY23 to Rs 163.07 crore in FY25, forming 32.5% of sales. Debtor days increased from 78 to 111 over the same period. In adverse conditions, the company faces higher exposure to bad debts, which could weaken financial health and profitability.
- Financial Pressures: In FY25, both net profit margin and RoCE declined compared to FY24, while the Debt-to-Equity ratio increased, reflecting pressure on profitability and balance sheet strength.
- Limited Track Record in Technical Grade Segment: AAL began producing technical-grade agrochemicals in September 2024. With limited operating history in this segment, there are uncertainties regarding its ability to scale and sustain growth.
- Ongoing Legal Proceedings: AAL, its promoters and key managerial personnel are involved in 10 criminal cases. Any unfavorable outcome could adversely affect business operations, reputation and financial results.
Financials
All Values are in Cr.
Issue details
Issue type
Mainstream
Issue size
₹ 192.86 crore
Fresh Issue
₹ 192.86 crore
OFS
₹ -
Price range
₹ 95 - 100
Lot size
150 shares
Issue Objective
The net proceeds from the fresh issue will be utilized for the following purposes:
- Meeting the company’s working capital requirements; and
- General corporate purposes.
Dates
Bidding open
30 Sep'25
Bidding close
3 Oct'25
Allotment date
6 Oct'25
Refund date
7 Oct'25
Listing
8 Oct'25
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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