Sharemasterindia.com: Manpasand Beverages hit the capital market on Wednesday to raise an estimated Rs 400-crore by way of initial public offer (IPO). The issue opened on June 24 and will close on June 26.
Manpasand Beverages is offering 1.25 crore shares in the price range of Rs 290 to Rs 320. The minimum lot size is 45 shares. Post this IPO the market capitalisation of the company is likely to be between Rs 1,452-Rs 1602 crore.
This IPO is a fresh issue of equity shares, post which the promoter's holding will come down to 50.4 per cent from 67.2 per cent now. Venture capital fund SAIF holds around 30 per cent stake in Manpasand Beverages, while Aditya Birla Private Equity holds around 3 per cent in the company.
According to Manpasand Beverages, 45 per cent or 56.25 lakh shares amounting to Rs 180 crore have been allotted to anchor investors.
Company Profile:
Vadodra-based Manpasand Beverages was incorporated in 1997. Mango-based fruit drink 'Mango Sip' is its flagship brand contributing around 97 per cent to its total revenue. The company also offers fruit drinks in apple flavour (Apple Sip).
In order to diversify its revenue the company launched 'Fruits Up' brand in July 2014, which offers differentiated carbonated fruit drinks with relatively higher fruit content. The company also offers bottled water under the 'Pure Sip' brand.
Manpasand Beverages has four manufacturing facilities located across Vadodara, Varanasi and Dehradun. As of March 2015, Manpasand Beverages had a distribution network of 73 consignee agents and 654 distributors spread across 24 states in India to whom it sell directly. The company also sells directly to Indian Railway Catering and Tourism Organization ("IRCTC") approved vendors.
IPO Proceeds:
Manpasand Beverages is planning to set-up a new manufacturing facility in the state of Haryana/Punjab which would cost around Rs 152 crore. Modernising of its existing manufacturing facilities will be done at Rs 39 crore. A new corporate office at Vadodara would cost around Rs 22 crore. Manpasand Beverages is also planning to repay/prepay certain debts amounting to Rs 100 crore.
Financials & Valuation:
In the first nine months of FY15, Manpasand Beverages reported a profit of Rs 12.7 crore on revenue of Rs 239 crore, representing an annualised earnings per share of Rs 4.7.
For 2013-14, it reported a net profit of Rs 20 crore on sales of Rs 294 crore. Its revenue has registered a CAGR of 85.3 per cent during FY12-FY14.
At the upper price band of Rs 320, the company is valued at 95 times its estimated FY15 annualised earnings per share (post issue), Angel Broking said in a note.
This valuation looks much expensive compared to the valuation of its peers in the industry, the brokerage added. Manpasand Beverages' peers such as Dabur (trailing PE of 44 times) and Hindustan Unilever (trailing PE 43 times) are trading at much lower valuations.
Manpasand Beverages' return on equity of 9 per cent is also lower compared to its peers, said Angel Broking.
Key Risks in the Business
1) Heavy dependence on single brand 'Mango Sip' for revenues.
2) Established rivals in the segment like Coca-Cola's Maaza, Pepsico's Slice and Parle Agro's Frooti
3) Delay in acquisition of land & setting up of new facility may affect growth prospects of the company
4) Overall slowdown in rural markets could impact discretionary spending of consumers
Should You Buy?
Manpasand Beverages' IPO looks costly based on valuations. Angel Broking has a 'neutral' rating on IPO.
However, ICICI Securities in a note said that Manpasand Beverages's flagship brand 'Mango Sip' has a strong brand identity in the underpenetrated semi urban and rural markets in India.
The brokerage also cites the company's past revenue growth track record as an investment rational. ICICI Securities has not rated the issue.
No comments:
Post a Comment