Jhandewalas Foods BSE SME IPO review (Subscribe)

Review By Dilip Davda on Dec 22, 2017

Jhandewalas Foods Ltd. (JFL) is currently involved in manufacturing of ghee. It is also a manufacturer of mangodi on job work basis and the marketers of Poha, Saffron and Dalia. These products are marketed under own brand names "Naman’s" and "Godhenu". JFL maintain hygienic norms and use good quality raw materials for manufacturing of products and follows a client-centric approach. The manufactured products are prepared completely under hygienic atmosphere by the professional makers. The company has been certified by Food Safety and Standards Authority of India (FSSAI) for the quality management systems of r Company in relation to its products. Currently, JFL has a one manufacturing unit, located at Jaipur, Rajasthan that is well equipped with machineries and other handling equipment to facilitate smooth manufacturing process. Along with this, the unit also has an in-house laboratory for testing the quality of products.

To part finance working capital and general corpus fund needs, JFL is coming out with a maiden IPO of 2910000 equity shares of Rs. 10 each at a fixed price of Rs. 55 per share to mobilize Rs.16.01 crore. Issue opens for subscription on 29.12.17 and will close on 04.01.18. Minimum application is to be made for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE SME. Issue is solely lead managed by Guiness Corporate Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 28.36% of the post issue paid up capital of the company. The average cost of acquisition of shares by the promoters ranging from Rs. 3.73 to Rs. 10.55 per share. Having issued initial equity at par on incorporation and in March 2009, it raised fresh equity at a price of Rs. 60 to Rs. 1000 per share between December 2010 and March 2013. It has also issued bonus shares in the ratio of 4 for 1in March 2009, 1 for 1 in December 2010, 1 for 1 on 24.12.14 / 1 for 2 on 30.12.17 and 1.35 for 1 in October 2017. Post issue, its current paid up equity capital of Rs. 7.35 crore will stand enhanced to Rs. 10.26 crore.

On performance front, JFL has posted turnover/net profits of Rs. 141.51 cr. / Rs. 1.77 cr. (FY15), Rs. 142.75 cr. / Rs. 0.94 cr. (FY16), Rs. 148.66 cr. / Rs. 2.38 cr. (FY17). For FY it suffered a setback in bottom lines as per the general trends for the industry. For Q1 of the current fiscal, it has reported net profit of Rs. 0.59 cr. on a turnover of Rs. 33.77 cr. For last three fiscals it has posted an average EPS of Rs. 5.75 and average RoNW of 14.79% on an equity base of Rs. 3.13 crore. Issue is priced at a P/BV of 1.24 on the basis of NAV of Rs. 44.35 as on 30.06.17 and at a P/BV of 1.89 on the basis of post issue NAV of Rs. 29.12. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 24 against industry average of around 113. As per offer documents its peers Prabhat Dairy, Parag Milk and Hatsun Agro are trading at a P/E of around 130, 163 and 88 (with an average P/E of 127 - as on 22.12.17). For last three years JFL’s capacity utilization remained under 50% and it hopes to raise it with ease in working capital post issue (refer page 73 of the offer document).

On merchant banker’s front, this is the 22nd mandate from its stable in past three years. Out of last 10 listings, 3 opened at a discount, 2 at par and the rest at a premium ranging from 5% to 20% to offer price on the day of listing.

Conclusion: Investors may consider investment for medium to long term as food and dairy industry is poised for bright prospects ahead. (Subscribe).


Conclusion / Investment Strategy

Investors may consider investment for medium to long term as food and dairy industry is poised for bright prospects ahead. (Subscribe).

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Dec 22, 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. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda

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

Jhandewalas Foods IPO FAQs

  1. 1. Why Jhandewalas Foods IPO?

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

  2. 2. How is Jhandewalas Foods IPO?

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

  3. 3. Jhandewalas Foods IPO what should investors do?

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

  4. 4. Is Jhandewalas Foods IPO good?

    Our recommendation for Jhandewalas Foods IPO is to subscribe.

  5. 5. Is Jhandewalas Foods IPO worth Investing?

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

  6. 6. When will Jhandewalas Foods IPO allotment status?

    The Jhandewalas Foods IPO allotment status will be available on or around [.]. The allotted shares will be credited in demat account by [.]. Visit Jhandewalas Foods IPO allotment status to check.

  7. 7. When will Jhandewalas Foods IPO list?

    The Jhandewalas Foods IPO will list on Friday, January 12, 2018, at BSE SME.








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