Review By on August 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.
Review By on August 14, 2017
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Dilip Davda
SEBI Registered Research Analyst – Mumbai
Registration No.: INH000003127 (Perpetual)
Email: dilip_davda@rediffmail.com
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
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.
Read the Seven Hills Beverages IPO recommendations by the leading analyst and leading stock brokers.
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 mentioned in the above answer to "How is Seven Hills Beverages IPO?"
Our recommendation for Seven Hills Beverages IPO is to subscribe.
As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Seven Hills Beverages IPO.
The Seven Hills Beverages IPO allotment status will be available on or around August 29, 2017. The allotted shares will be credited in demat account by August 31, 2017. Visit Seven Hills Beverages IPO allotment status to check.
