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Manpasand Beverages IPO review (May apply)

Review By Dilip Davda on Jun 17, 2015

Manpasand Beverages Ltd (MBL) is a fruit drink manufacturing company with a primary focus on mango fruit. Its mango based fruit drink, “Mango Sip”, is a flagship brand, which is strategically focused towards customers primarily based in semi urban and rural markets. With a view to expand MBL’s product portfolio, it has launched two new brands, “Fruits Up” and “Manpasand ORS”. Under the “Fruits Up” brand, it offers fruit drinks and carbonated fruit drinks in different flavors, and under the  “Manpasand ORS” brand, it offers fruit drinks with energy replenishing qualities with a primary focus on North East India. Currently the company offer fruit drinks in mango and other flavors and carbonated fruit drinks, in different packaging types and sizes.

“Mango Sip”, is a mango fruit based drink with approximately 12-14% mango pulp content. Available in tetra pack, PET bottle and tin can in varied sizes at competitive prices across 24 states in India, with an especially strong outreach in the under penetrated semi urban and rural markets. In addition, it also presently offer fruit drinks in apple flavor under the “Sip” brand, as “Apple Sip”. MBL’s “Fruits Up” fruit drink is presently available in mango, apple, guava, litchi, orange and mixed fruit flavors, and “Fruits Up” carbonated fruit drink is presently available in grape, orange and lemon flavors.

Further, with a view to also gain a foothold in the growing bottled water market, the company also commenced marketing in July 2014 the “Pure Sip” brand of bottled water. Processed at a third party facility, it currently selectively distribute free bottles of “Pure Sip‟ along with “Mango Sip‘. In addition to fruit drinks, it has in the past also selectively manufactured and distributed premium fruit juice drink under the “Fons” brand, with a relatively high fruit content in different flavors, as well as carbonated drinks under the “Sip” brand.

MBL currently manufacture its products at facilities located at Vadodara, Gujarat (2 Facilities¡¬) and Varanasi, Uttar Pradesh. New second facility located at Vadodara, Gujarat commenced commercial production from April 2015. Further, pursuant to a memorandum of understanding dated June 18, 2014 and a sale deed dated October 30, 2014, both entered into with U.K. Agro, it has acquired the facility at Charba, Vikas Nagar, Dehradun, Uttarakhand (Dehradun Facility¡¬). Currently the company is not carrying out production activities at Dehradun Facility. The combined installed capacity for its manufacturing facilities is 40,000 Tetra Pak Cases per day and 65,000 PET Bottle Cases per day for fruit drinks and 15,000 PET Bottle Cases per day for carbonated fruit drinks.

To part finance its modernization of Vadodara and Varanasi facilities and setting up of new unit at Haryana, setting up of new office at Vadodara and repayment of part debt and general corporate fund needs the company is coming out with a book building process IPO to raise Rs. 400 crore. The company is issuing approx 12500000 equity shares of Rs. 10 each (approx 25% dilution based on upper price band). This book building process IPO has a price band of Rs. 290-320. The issue is opening for subscription on 24.06.15 and will close on 26.06.15. Minimum application is to be made for 45 shares and in multiples thereon, thereafter. Post issue shares will be listed on BSE and NSE. Issue is jointly lead managed by Kotak Mahindra Capital Co. Ltd, IIFL Holdings Ltd and ICICI Securities Ltd and Karvy Computershare Pvt Ltd is the registrar to the issue.

After initial MoA contribution at par, the company issued shares/CCPS at a price of Rs. 500 per share in 2011 and then at a price of Rs. 2058/Rs. 2333.33 in August 2014.  It also issued bonus shares/CCPS in the ratio of 9 for 1 during 2014 that raised its equity capital to Rs. 37.55 crore which will stand at Rs. 50.05 crore post this IPO.

MBL’s turnover/net profits for fiscal 2012, fiscal 2013 and fiscal 2014 were Rs. 85.73 crore/ Rs. 6.07 crore, Rs. 240.42 crore/22.42 crore and  Rs. 294.31 crore/Rs. 20.43 crore. For the nine month period ended December 31, 2014, its turnover was at Rs. 239.10 crore with a net profit of Rs. 12.68 crore. According to company management, their major business comes in 1st and 4th quarters as they have seasonality business.


Conclusion / Investment Strategy

However, if we annualized these earnings and attribute to its post IPO equity then asking price is at a P/E of 85 and is at a P/BV of 6 plus making it aggressively priced offer. Although it has no listed peers and is the first to go for listing with this kind of business module, it might attract fancy, but based on its pricing, it appears to be “High Risk/Low return” bet. Management has claimed that there are very few organized players in this segment that is growing at rate of 20% plus annually and MBL has a minor market share hence it hopes for bright prospects going forward.

This IPO’s BRLMs’ mandates have mixed trends on performance post listing.

 

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 prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at own risk. Author has no plans to invest in this offer.

 

(Email: dilip_davda@rediffmail.com)

 

Review By Dilip Davda on Jun 17, 2015

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

Manpasand Beverages IPO FAQs

  1. 1. Why Manpasand Beverages IPO?

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

  2. 2. How is Manpasand Beverages IPO?

    Read the Manpasand Beverages IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Manpasand Beverages IPO what should investors do?

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

  4. 4. Is Manpasand Beverages IPO good?

    Our recommendation for Manpasand Beverages IPO is to subscribe for long term.

  5. 5. Is Manpasand Beverages IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe for long term to the Manpasand Beverages IPO.

  6. 6. When will Manpasand Beverages IPO allotment status?

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

  7. 7. When will Manpasand Beverages IPO list?

    The Manpasand Beverages IPO will list on Thursday, July 9, 2015, at BSE, NSE.