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M.V.K. Agro Food Product Ltd IPO: Review, Valuation, Date & GMP

  


M.V.K. Agro Food Product Ltd IPO  - Complete Overview

MVK Agro Food Product Limited, established in February 2018, is a company that makes sugar and related products. They have a manufacturing facility in Nanded District, Maharashtra, with a licensed capacity to crush 2,500 tons of sugarcane per day. The company sells its sugar by-products like Molasses, Bagasse, and Pressmud through brokers, who then supply them to companies like PepsiCo, Parle Biscuits, and Britannia Industries. They also provide commodities to export-oriented traders.

The company is environmentally conscious, running a zero-waste facility where generated waste is either sold or used for power generation. As of September 2023, they have 160 employees.

They are part of the sugarcane and sugar sector in India, which is the second-largest agro-based industry in the country. India is the leading global sugar producer. The company is looking to diversify its product portfolio by setting up a greenfield unit for manufacturing Ethanol, Bio-CNG, and Fertilizer, using waste materials like Molasses, Bagasse, and Pressmud. They plan to invest the proceeds from their IPO for this expansion.

In terms of financials, the company reported revenues of ₹6,012.52 lakhs for the six months ending September 30, 2023, and ₹9,327.65 lakhs, ₹13,067.11 lakhs, and ₹2,283.40 lakhs for the fiscal years 2023, 2022, and 2021, respectively.

M.V.K. Agro Food Product Ltd IPO Overview:

M.V.K. Agro Food Product Ltd. IPO date is slated to be open for subscription from February 29, 2024, to March 4, 2024. This NSE SME IPO follows a Fixed Price Issue IPO.

M.V.K. Agro Food Product Ltd IPO price is fixed at Rs.120 per share. 

The total issue size of this IPO amounts to Rs.65.88 Cr. The company has reserved 50% for retail investors and 50% for other investors. 

Company Financial

Compared to the previous fiscal year, MVK Agro Food Product Limited has seen growth in total assets and net worth, but a decline in total revenue. The profit after tax has increased, while total borrowings have slightly risen.

(Amount in Lakhs)

Period

Sep 30  FY 23

Mar 31  FY 23

Mar 31  FY 22

Total Assets

14,804.05

15,471.93

11,602.06

Total Revenue

6,044.36

9,393.63

13,263.56

PAT

430.07

377.45

319.81

Net worth

1,767.74

1,337.67

960.22

Reserve & Surplus

1,267.74

837.67

460.22

Total Borrowings

6,281.23

9,156.10

6,001.32

 

Revenue Distribution Product Wise

Compared to FY 22, MVK Agro Food Product Limited experienced changes in revenue distribution, with a decrease in sugar, raw sugar, ash, and dairy sales, while witnessing increases in molasses and cane seed sales.

(amount in lakhs)

Particulars

Sep 30  FY 23

Mar 31  FY 23

Mar 31  FY 22

Sugar Sale

4,186.09

2,750.46

4,984.45

Raw Sugar

-

2,663.99

5,176.62

Bagase Sale

-

87.10

96.74

Pressmud Sale

1.00

3.96

4.61

Ash Sales

-

1.38

1.45

Molasses Sales

37.03

1,812.43

1,588.38

Cane Seed Sales

1,008.53

2,004.18

1,103.62

Scrap Sale

-

4.15

111.23

Dairy Sales

779.88

9,327.65

13,067.11

Total

6,012.52

   

 

 

Revenue By Operations

Revenue from operations for MVK Agro Food Product Limited in the six months ending September 30, FY 23, is ₹6,012.52 lakhs, with an additional ₹31.84 lakhs from other income, resulting in a total revenue of ₹6,044.36 lakhs. This represents a decrease from ₹13,067.11 lakhs in FY 22.                                         
(amount in lakhs)

Particulars

Sep 30 FY 23

Mar 31  FY 23

Mar 31  FY 22

Revenue from operations

6,012.52

9,327.65

13,067.11

Other Income

31.84

65.98

196.45

Total Revenue 

6,044.36

9,393.63

13,263.56

The Objective of the Issue

The company intends to use the net proceeds for the following objectives.

  • Establishing a new unit in Nanded, Maharashtra.

  • Manufacturing Ethanol.

  • Generating and bottling Bio-CNG.

  • Producing Fertiliser.

  • General corporate purposes.

 

Peers of M.V.K. Agro Food Product Ltd IPO:

Name of the company

Face value (Rs. per share)

P/ E

EPS (Basic) (Rs.)

M.V.K. Agro Food Product Ltd

10

15.90

7.55

Ugar Sugar Works Ltd.

1.00

8.85

9.16

Dwarikesh Sugar Industries Ltd.

1.00

15.60

5.57

Balrampur Chini Mills Ltd.

1.00

28.78

13.94

Dhampur Sugar Mills Ltd.

10

10.48

72

 

 

Evaluation

The IPO is priced within the range of Rs.120 per share.

 

Evaluation of P/E Ratio

- Considering the FY23 EPS of Rs 3.77 from the last year, the resulting P/E ratio is 30.84x.

- Taking into account the weighted EPS of Rs 3.23 for the last three years, the P/E ratio amounts to 37.15x.

    

Comparative Analysis with Industry's Average

- The industry's average P/E is 18.81x.

As a result, the IPO price range, with a P/E ratio ranging from 30.84x to 37.15x, seems slightly overvalued in comparison to the industry average of 18.81x.

 

IPO's Strengths

  • Diverse product range.

  • Integrated operations with economies of scale.

  • Strategic location for manufacturing unit.

  • Strong relationships with sugarcane farmers.

  • Captive power plant.

IPO's Weaknesses

  • Uncertain timeline for operationalizing the new manufacturing unit

  • Potential inefficiencies in unit operations

  • Lack of obtained approvals, clearances, and permissions

  • Limited experience in manufacturing Ethanol, Bio-CNG, and Fertilizer

  • Challenge in evaluating past performance and prospects outside existing product portfolios.

 

 

 

IPO GMP Today

The Latest GMP of M.V. K. Agro Food Product Ltd IPO is Rs.5.

M.V.K. Agro Food Product Ltd IPO timetable (Tentative):

M.V.K. Agro Food Product Ltd IPO is scheduled from February 29 to March 4, 2024, with allotment on March 5, refund initiation on March 6, and listing on March 7, 2024.

Events

Date

IPO Opening Date

29 February 2024

IPO Closing Date

4 March 2024

IPO Allotment Date

5 March 2024

Refund initiation

6 March 2024

IPO Listing Date

7 March 2024


M.V.K. Agro Food Product Ltd IPO Details:

M.V.K. Agro Food Product Ltd IPO, with a face value of Rs.10 per share, opens on February 29 and closes on March 4, offering 5,490,000 shares at Rs.120 per share, with a lot size of 1200 shares, aiming to raise Rs.65.88 Cr, and will be listed on NSE SME.

IPO opening & closing date

29 February to 4 March 

Face value

Rs.10 per share

Issue Price

Rs. 120 per share

Lot Size

1200 Shares

Price of 1 lot

Rs. 1,44,000

Total Issue Size

5,490,000 shares (aggregating up to Rs.65.88 Cr)

Offer for sale

shares (aggregating up to Rs. Cr)

Fresh issue

5,490,000 shares (aggregating up to Rs.65.88 Cr)

Listing at

NSE SME

Issue Type

Fixed Price Issue IPO

Registrar

Mas Services Limited

 

M.V.K. Agro Food Product Ltd IPO Lot Details:

For M.V.K. Agro Food Product Ltd IPO, the retail investor minimum and maximum lot investments are both 1 lot (1200 shares) at Rs.1,44,000, while for HNI investors, the minimum investment is 2 lots (2400 shares) at Rs.2,88,000.

Application

Lot

Shares

Amount

Minimum Lot Investment (Retail)

1 lot

1200

Rs. 1,44,000

Maximum Lot Investment (Retail)

1 lot

1200

Rs. 1,44,000

Minimum Lot Investment (HNI)

2 lot

2,400

Rs.2,88,00

 

M.V.K. Agro Food Product Ltd IPO Reservation:

QIB Shares Offered

50% 

Other Shares Offered

50% 

 

Promoters and Management of M.V.K. Agro Food Product Ltd IPO:

1. Sagarbai Marotrao Kawale.

2. Ganeshrao Vyankatrao Kawale.

3. Marotrao Vyankatrao Kawale.

4. Kishanrao Vyankatarao Kawale.

5. Sandip Marotrao Kawale.

Pre-issue Promoter Shareholding

100.00%

Post-issue Promoter Shareholding

64.56%



M.V.K. Agro Food Product Ltd IPO Lead Managers:

  • Horizon Management Private Limited

 

Dividend Policy

The company hasn't paid dividends in past fiscal years. Whether we can pay them in the future depends on factors like profits, past dividend trends, capital needs, legal restrictions, and other relevant considerations evaluated by our Board.

 

 

Conclusion

In conclusion, M.V.K. Agro Food Product Ltd, with its established presence in the sugar and related products sector, presents an interesting investment opportunity through its upcoming IPO. The financial performance, though showing a decline in total revenue, reveals growth in net worth and profitability. However, investors must carefully weigh the strengths and weaknesses of the IPO.

The IPO valuation, with a P/E ratio ranging from 30.84x to 37.15x, appears slightly overvalued compared to the industry average of 18.81x. Investors should assess whether the premium is justified based on the company's growth prospects and industry positioning.

 

Finowings IPO Analysis

Hope you enjoyed the Finowings IPO Analysis. We tried our best to give every required detail about the company that you should know before applying to the IPO. 

You must consult your financial advisor before making any financial decisions. 

To Apply for the IPO, Click Here.

 

To Read the Prospectus of the Company Click Here to Download the DRHP.

 

 

 

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Frequently Asked Questions

+

The IPO is scheduled to open for subscription on February 29, 2024.

+

The fixed issue price for M.V.K. Agro Food Product Ltd IPO is Rs.120 per share.

+

The total issue size of the IPO is Rs.65.88 Cr, with 50% reserved for retail investors.

+

The IPO is set to close on March 4, 2024.

+

The net proceeds from the IPO will be utilised for establishing a new unit, manufacturing Ethanol, generating Bio-CNG, producing Fertiliser, and general corporate purposes.



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Viewer's Thoughts

BS GUPTA | Posted on 08/05/2024

Worst IPO I had ever allotted. Full investment is eroded due to these analysis ( appears slightly overvalued)and GMP . It listed below 30 % and currently over 60% eroded

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