Sarveshwar Foods IPO Review, Should You Invest?

Sarveshwar foods Ltd. is ready to launch an initial public offering (IPO) on 5^th of March 2018. The company is planning to raise up to Rs. 54.97 Cr. for its working capital requirement and to invest in subsidiary. The Sarveshwar foods IPO is coming with a price band of Rs. 83- Rs. 85 per equity share with face value of Rs. 10 each.

Sarveshwar Foods Ltd. Business Profile

Sarveshwar foods ltd. was established in year 2004, engaged in the business of processing and marketing of branded and unbranded Basmati and non-Basmati rice.

The company has its presence in both domestic and international markets.

Company’s product portfolio comprises variety of basmati and non basmati rice including brown rice, steam rice, broken rice, and white raw rice.

Along with the conventional basmati and non basmati rice, its product portfolio also includes organic basmati and non basmati rice. Dry fruits and nuts, pulses, flours, spices etc are also in list of its organic food items.

The company markets and distributes these organic food products under brand name of “Nimbark”.

Key dates of Sarveshwar Foods IPO

Sarveshwar foods NSE SME IPO to open on 5^th March 2018 and will close on 7th March 2018. Total 64, 67,200 shares will be issued with market lot of 1,600. Minimum order quantity will be 1600 shares.

Purpose of IPO

The funds raised from the issue of IPO on the stock market will be used for the following purposes.

• Part finance of long term working capital- Rs. 30.00 Cr.
• Investment in subsidiary Himalayan Organics Pvt. Ltd- Rs. 15 Cr.
• General corporate expenses- Rs. 9.97 Cr.

Valuation Parameters

If we go through the financials of the company from FY 2014 to FY 2017, we can see revenue/net profit for FY 2014 is Rs. 241.37 cr. / Rs. 7.20 cr, for FY 2015 it is Rs.262.59 cr. / 7.78 cr., for FY 2016 Rs.355.19 cr./5.47 cr., for FY 17 it is Rs.419.88 cr./12.86 cr. For the first half of the current fiscal i.e 1HY 2018 Revenue is Rs. 259.38 cr. and net profit is Rs. 7.75 cr.

P/E ratio of the Sarveshwar foods ltd is 11.87; whereas its peer LT foods ltd. has 20.52, Chaman Lal Sethia exports ltd.has 21.96 and KRBL ltd. has 34.79 P/E.

Earning per share (EPS) of the company is 7.16 and Net asset value is 38.76.

Should you invest?

India is a country which retains its leadership in rice exports in recent years. Also, rice is a staple food for most of the Indians. Non-Basmati rice export has been boosted after the government had lifted its ban on non-basmati rice export. It means from this side company’s growth prospect is bright.

On the other hand, Sarveshwar foods is showing strong financial. The expected listing gain of this NSE SME IPO is approx. 20%.

So, looking at company’s growth prospect, investors can subscribe Sarveshwar Foods IPO for long term.

 

Disclaimer: The content is provided for informational purposes only and it is not intended to be, and does not, constitute financial advice or any other advice. You should not rely on content to make an investment decision.