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Tasty Dairy Specialties IPO review, Should you Invest?

Tasty Dairy Specialties IPO review, Should you Invest?

Tasty dairy specialties ltd is ready to raise capital by issuing Initial public offering (IPO), opens on 7th Feb., 2018. The company has planned to raise Rs 24.44 cr. Tasty dairy specialties IPO on BSE SME is a fixed price issue type.  

Tasty Dairy Specialties Profile

Tasty dairy specialities incorporated in year 1992, which is engaged in the business of processing milk along with bulk milk procurement and handling as well especially during peak season time, which primarily caters to bulk and marquee institutional customers. Apart from this, Tasty dairy is involved in skimmed milk powder, butter, ghee, concentrated milk etc.

They have wide range of quality dairy products. They are in the market under different brand names like “UJJUAL”, “SHIKHAR”, “VERYFRESH”, “SIMA” AND “MITHAI MASTER”.  The products of the company are available in Uttar Pradesh, Madhya Pradesh and Bihar.

Customer base of the company includes Mother dairy, Delhi milk scheme, Parle products, Kwality dairy limited etc.

Key dates of Tasty Dairy Specialties IPO

Tasty dairy BSE SME IPO opens on 7th of Feb. and will close on 12th of Feb. 2018. Price band of Tasty dairy specialist IPO is INR 45 per share. Total 5,430,000 shares will be issued with market lot of 3,000. Face value is INR 10 per share. Post allotment share will be listed on BSE SME.

Purpose of Tasty Dairy Specialties IPO

It is very common practice for any start up to issue shares for expanding business, and the main reason is to fund day to day business expenses.

Therefore, Tasty dairy BSE SME issue objective is

  • To meet working capital requirement
  • General corporate purpose

Valuation parameters

If we go through financials of the company, we can see Turnover/net profit for FY 2014 is Rs. 251.90 cr. / Rs. 5.43 cr, for FY 2015 it is Rs.307.95 cr./ 4.48 cr., for FY 2016 Rs.334.88 cr./4.63 cr., for FY 17 it is Rs.239.00 cr./4.52 cr.

For the first half of the current fiscal i.e 1HY 2018 turnover is Rs. 137.40 cr. and net profit is Rs. 2.43 cr. showing somewhat consistency in its result. If we talk about EPS, then it has posted average EPS of Rs.2.51 for last three fiscals.

If we annualize its latest earnings and attribute it on fully diluted equity post issue then we will get P/E around 19, whereas its peers Kwality has 16 and Prabhat dairy has 76.

Should you invest?

Based on valuation Parameters Tasty dairy appears fully priced. Also the business of company has bright future but at the same time, company will face strong competition from mega players which already exist in the market.

So, considering its fully priced offer investors can go for a long term investment.

 

Disclaimer: This article helps you in building base of your research. Do consult your registered investment adviser before investing.

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