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Seven Hills NSE SME IPO review (Apply)

Review By Dilip Davda on Aug 14, 2017

Seven Hills Beverages Ltd (SHBL) is in the business of manufacturing packaged drinking water for Bisleri
International Pvt. Ltd and has a dedicated Plant and Machinery for its manufacturing. It operates as “Co-packers” for “Bisleri” wherein it manufactures the bottles at its plant in order to avoid any possible contaminations and carry out the filling of purified water as well as final sealing and packaging. Company’s product “packaged drinking water” is available in 5 pack sizes: 250 ml bottles, 500ml, 1 litre, 2 litre and 20 litre jars as per the production schedule given by Bisleri International Pvt. Ltd on monthly basis. The finished products are dispatched on daily basis. As per the mutual understanding; company produces Packaged Drinking Water for Nasik, Shirdi, Aurangabad & other nearby areas of Maharashtra.

Recently, SHBL has acquired 50.49% strategic stake in Palwe Pest Control Pvt. Ltd. (“PPCPL”), making it as its subsidiary company. PPCPL is a service provider, rendering pest control and other related services to corporate, societies and household. PPCPL has been in this business since more than 16 years and is a recognized brand in services such as General Pest Control Treatment, Birds Control Treatment, Landscaping services and Export Fumigation to Vessel and Container.

To meet its working capital, general corpus fund needs, the company is coming out with a maiden IPO of 16,00,000 equity share of Rs. 10 each at a fixed price of Rs. 26 per share to mobilize Rs. 4.16 crore. Issue opens for subscription on 18.08.17 and will close on 23.08.17. Minimum application is to be made for 4000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Aryaman Financial Services Ltd and Bigshare Services Pvt Ltd is the registrar to the issue. Having issued equity at par from incorporation till 04.02.17, it raised further equity by issuing 700000 shares at a price of Rs. 18 per share in equal lots on 27.02.17 and 30.03.17. Post issue, its current paid up equity capital of Rs. 3.73 crore will stand enhanced to Rs. 5.33 crore.

On performance front, for last four fiscals it has posted turnover/net profits of Rs. 5.70 cr. / Rs. – (0.79) cr. (FY14), Rs. 6.92 cr. / Rs. –(0.11) cr. (FY15), Rs. 6.75 cr. / Rs. –(0.14) cr. (FY16) and Rs. 8.73 cr. / Rs. 1.37 cr. (FY17). For all these years other incomes were Rs. 0.11 cr., Rs. 0.17 cr., Rs. 0.36 cr. and Rs. 0.69 cr. respectively. Although it has earned profits in FY 17, it has little carried forward loss and it’s NAV as at 31.03.17 was at Rs. 8.49. Sudden jump in top and bottom line is surprising. Last three year’s average RoNW is 17.12%. If we attribute latest earnings on fully diluted equity post issue then asking price is at a P/E of 10 plus and at a P/BV of 3 plus. As per prospectus, it has no listed peer to compare with. While SHBL is mulling business growth capitalizing on brand strength of Bisleri, it is depending entirely on one customer only making it a highly risk bearing factor.

On merchant banker’s front, this is 16th mandate from its stable in last three years and out of recent 10 listings, two opened on a negative note, five at par and the rest with some premium.

Conclusion: Cash surplus Investors may consider investment for long term.


Conclusion / Investment Strategy

Cash surplus Investors may consider investment for long term.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Aug 14, 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

Seven Hills Beverages IPO FAQs

  1. 1. Why Seven Hills Beverages IPO?

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

  2. 2. How is Seven Hills Beverages IPO?

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

  3. 3. Seven Hills Beverages IPO what should investors do?

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

  4. 4. Is Seven Hills Beverages IPO good?

    Our recommendation for Seven Hills Beverages IPO is to subscribe.

  5. 5. Is Seven Hills Beverages IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Seven Hills Beverages IPO.

  6. 6. When will Seven Hills Beverages IPO allotment status?

    The Seven Hills Beverages IPO allotment status will be available on or around Aug 29, 2017. The allotted shares will be credited in demat account by Aug 31, 2017. Visit Seven Hills Beverages IPO allotment status to check.

  7. 7. When will Seven Hills Beverages IPO list?

    The Seven Hills Beverages IPO list date is not yet available. The Seven Hills Beverages IPO is planned to list on Sep 1, 2017, at NSE SME.

3 Comments

3. sanjay vora  Aug 21, 2017 9:36:36 PM
Sevenhills kevo che ane subject 2 no rate ketlu che bharay k nahi pls
2. Nitin P  Aug 18, 2017 12:21:51 PM
There is a peer available in the market... i.e. Orient Beverages.
For this share i guess, the right level to enter could be around 21-23. 26 is quite expensive.
2.1. Parkhi Nazar  Aug 18, 2017 7:10:11 PM
@Nitin Orient Beverages definitely looks like a strikingly similar peer. But it has a remarkably high PE of ~88. Why do you think 26 is quite expensive for Seven Hills?
1. mittaldatt  Aug 18, 2017 2:06:33 AM
Can I apply for it