Apex Frozen Foods IPO review (Subscribe)

Review By Dilip Davda on Aug 16, 2017

Apex Frozen Foods Ltd (AFFL) is one of the integrated producer and exporter of shelf stable quality aquaculture products. AFFL supplies ready-to-cook products to a diversified customer base consisting of food companies, retail chains, restaurants, club stores and distributors spread across the developed markets of USA, UK and various European countries. Company's output majorly comprises of variants of processed Vannamei shrimp (White shrimp) and are sold under the brands owned by its customers and also through own brands namely Bay fresh, Bay Harvest and Bay Premium. It has set-up own MODERN
Shrimp processing facility in the year 2004. AFFL's processing facility is located at Kakinada, Andhra Pradesh with a capacity to process approximately over 9,240 MTPA of finished products and an additional non-exclusive pre-processing and processing arrangement at a facility owned by Royale Marine Impex Private Limited located at Bapatla, Andhra Pradesh, for a capacity to process around 3,000 MTPA of finished products. Company has numerous ponds situated in a total extent of 1,337.69 acres with 105.78 acres of owned land and 1,231.91 acres of leased land. Farming at these ponds allows it to procure raw materials and ensures that business of shrimp processing is cost effective.

Further, it has entered into an addendum to lease agreement dated April 09, 2017 with Royale Marine Impex Private Limited for an additional processing capacity of 3000 MTPA of finished products. The processing facilities are supplemented by cold storage facilities located at Kakinada and Bapatla. Along with this, to further assuage company's operations, it has own fleet of vehicles with freezing capabilities. Its current capacity is around 15000 MTPA that will enhance to 30000 MTPA post expansion.

To part finance setting up of new shrimp processing unit and general corpus funds, the company is coming out with a maiden IPO of 87,00,000 equity share of Rs. 10 each via book building route with a price band of Rs. 171-175 to mobilize Rs. 148.77 cr. to Rs. 152.25 cr. (based on lower and upper price bands). Issue comprises of fresh equity issue of 72,50,000 equity shares and offer for sale of 14,50,000 shares. It has reserved 4,00,000 shares for eligible employees. Issue opens for subscription on 22.08.17 and will close on 24.08.17. Minimum application is to be made for 80 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. Issue is solely lead managed by Karvy Investor Services Ltd. and Bigshare Services Pvt Ltd is the registrar to the issue. AFFL has raised entire equity at par and has also issued bonus shares in the ratio of 1 for 3 in September 2013 and 1 for 5 in December 2014. Post issue, its current paid up equity capital of Rs. 24.00 crore will stand enhanced to Rs. 31.25 crore.

On performance front, it has posted turnover/net profits of Rs. 514.57 cr. / Rs. 13.42 cr. (FY14), Rs. 604.37 cr. / Rs. 18.36 cr. (FY15), Rs. 608.27 cr. / Rs. 19.28 cr. (FY16) and Rs. 709.68 cr. / Rs. 24.41 cr. (FY17). Thus it has posted growing performance. Its other income which was mere Rs. 0.03 cr. in FY14 rose to Rs. 10.57 cr. in FY 17. It is a 100% EOU having nearly 75% of its export earnings coming from US and the rest from other Euro zone countries. It has posted average EPS of Rs. 9.04 and RoNW of 26.62% for last three fiscals. If we attribute latest earnings on fully diluted equity post issue, then asking price is at a P/ E of 22 plus (against industry composite of 54 plus) and at a P/BV of 4.3 plus.

On merchant banker's front, this is the 4th mandate from its stable and out of last three listings, 2 opened at a discount to offer price on listing day.

Apex Frozen Foods


Conclusion / Investment Strategy

This issue being under Rs. 250 crore will get listed in "T" group for initial period eliminating speculative aspect. Certain class of investors has reservations against investments in such issue. However, looking at company's financials and expansion plans, investors may consider investment for medium to long term.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Aug 16, 2017

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at its own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda, a freelance journalist

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

Apex Frozen Foods IPO FAQs

  1. 1. Why Apex Frozen Foods IPO?

    The initial public offer (IPO) of Apex Frozen Foods Ltd offers an early investment opportunity in Apex Frozen Foods Ltd. A stock market investor can buy Apex Frozen Foods IPO shares by applying in IPO before Apex Frozen Foods Ltd shares get listed at the stock exchanges. An investor could invest in Apex Frozen Foods IPO for short term listing gain or a long term.

  2. 2. How is Apex Frozen Foods IPO?

    Read the Apex Frozen Foods IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Apex Frozen Foods IPO what should investors do?

    Apex Frozen Foods IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the Apex Frozen Foods IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is Apex Frozen Foods IPO good?

    Our recommendation for Apex Frozen Foods IPO is to subscribe.

  5. 5. Is Apex Frozen Foods IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Apex Frozen Foods IPO.

  6. 6. When will Apex Frozen Foods IPO allotment status?

    The Apex Frozen Foods IPO allotment status will be available on or around Aug 30, 2017. The allotted shares will be credited in demat account by Sep 1, 2017. Visit Apex Frozen Foods IPO allotment status to check.

  7. 7. When will Apex Frozen Foods IPO list?

    The Apex Frozen Foods IPO will list on Monday, September 4, 2017, at BSE, NSE.

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