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Sheetal Cool BSE SME IPO review (Apply)

Review By Dilip Davda on Oct 12, 2017

Sheetal Cool Products Ltd. (SCPL) is currently involved in producing and processing of milk and milk products, snacks and bakery items. Its diversified product portfolio enables it to cater to a wide range of taste preferences and consumer segments, including adults and children. Company sells its products under the brand name “Sheetal” to a number of distributors and super stockists. Currently, SCPL has a manufacturing unit spread over an area admeasuring around 5314.66 square meters (approximately) at Amreli, Gujarat and registered office is also situated at the same location. Its unit is well equipped with wide range of machineries and other handling equipment to facilitate smooth manufacturing process. As on date of this Prospectus, Company has employed 22 employees (including skilled, semi-skilled) and 275 personnel on contract basis. SACPL is ISO 22000:2005 & ISO 9001:2015 certified in respect of manufacture of Ice-cream, milk & milk products, mango juice, lassi, curd, flavored milk, masko, wafers, namkeen, fryums and bakery products.

To part finance its plans for purchasing additional plant and machineries, working capital and general corpus funds needs, SCPL is coming out with a maiden IPO of 3000000 equity shares of Rs. 10 each with a fixed price of Rs. 80 per share to mobilize Rs. 24 crore. Issue opens for subscription on 16.10.17 and will close on 18.10.17. Minimum application is to be made for 1600 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 Karvy Computershare Pvt. Ltd. is the registrar to the issue. Issue constitutes 28.57% of the post issue paid up capital of the company. Since inception, SCPL has issued all equity shares at par and a bonus issue in the ratio of 1 share for every 2 shares held in September 2017. Post issue, its current paid up equity capital of Rs. 7.50 crore will stand enhanced to Rs. 10.50 crore. Cost of acquisition of shares by promoters ranges from Rs. 7.39 to Rs. 9.85 per share.s

On performance front, SCPL has reported turnover/net profits of Rs. 6.44 cr. / Rs. –(0.96) cr. (FY14), Rs. 44.90 cr. / Rs. 0.13 cr. (FY15), Rs. 125.28 cr. / Rs. 1.96 cr. (FY16) and Rs.154.63 cr. / Rs. 2.06 cr. (FY17). For Q1 of current fiscal, it has posted net profit of Rs. 0.58 cr. on a turnover of Rs. 49.35 cr. Thus it has posted rising trends for top and bottom lines for all these years. It has posted an average EPS of Rs. 3.47 and average RoNW of 25.08% for last three fiscals on an equity base of Rs. 5 crore. Asking price is at a P/BV of around 6.83. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 36 plus. Peers are trading at a P/ E of 47 plus. Thus issue is priced reasonably. Surprisingly in offer documents reference is made for Amrit Corp and Lakshmi Energy on page 62 for P/E compare but on page 63 it has taken Prabhat Dairy and Hatsun Agro as peer groups (which is legitimate). However, despite such confusions pricing comparison is justifiable.

On merchant banker’s front, this is the 19th mandate in past three years. Out of 10 recent listings, 3 opened at discount, 1 at par and the rest with a premium of 3 to 20% on the day of listing.

Conclusion: Considering bright prospects for dairy and packaged food industry in coming years, investment in this issue may be considered for medium to long term.


Conclusion / Investment Strategy

Considering bright prospects for dairy and packaged food industry in coming years, investment in this issue may be considered for medium to long term.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Oct 12, 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

Sheetal Cool Products IPO FAQs

  1. 1. Why Sheetal Cool Products IPO?

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

  2. 2. How is Sheetal Cool Products IPO?

    Read the Sheetal Cool Products IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. Sheetal Cool Products IPO what should investors do?

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

  4. 4. Is Sheetal Cool Products IPO good?

    Our recommendation for Sheetal Cool Products IPO is to subscribe.

  5. 5. Is Sheetal Cool Products IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the Sheetal Cool Products IPO.

  6. 6. When will Sheetal Cool Products IPO allotment status?

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

  7. 7. When will Sheetal Cool Products IPO list?

    The Sheetal Cool Products IPO will list on Monday, October 30, 2017, at BSE SME.