Godrej Agrovet IPO Review and Grey market premium

Godrej Agrovet , Incorporated in 1991, is a leading company having diverse product-portfolio of Animal Feed, Crop Protection, Oil Palm, Dairy and Poultry and Processed Foods. Godrej Agrovet is the largest crude palm oil producer in India.

Animal feed business: Cattle feed, poultry feed (broiler and layer), aqua feed (fish and shrimp) and specialty feed. These products are produced at 35 locations and sold through about  4000 distributors across India.Godrej Agrovet is the leading compound animal feed company in India, on the basis of installed capacity for the financial year 2016, according to the CRISIL Animal Feed report from 2016 Crop protection

Crop protection business: Plant growth regulators, Organic manures,  Agrochemicals and specialized herbicides. These products are sold in India and 24 other countries.The Company has more than 6000 distributors in this business line.

Oil palm business: Crude palm oil, Crude palm kernel oil and palm kernel cake. The company owns five palm oil mills where these products are manufactured

The dairy business is operated through its subsidiary: Creamline Dairy.  The company own nine milk processing units.It  has 2,500 milk-product distributors and 50 retail parlors.During FY2015-16, the company also acquired Creamline Dairy, a south India-focused milk and milk products firm along with Astec Lifesciences Ltd, an agri-chemical and pharma intermediates firm, further strengthening the company’s presence across the agri and food business value chain Company also produce processed poultry and vegetarian products under Company also produce processed poultry and vegetarian products under the its popular brands ‘Real Good Chicken’ and ‘Yummiez’.

GODREJ IPO

Godrej Industries is the largest shareholder in the company with a 63.7% stake.Godrej group enteres Capital market after  nearly a decade; the last being Godrej Properties (which went public in 2010).The calibre of promoters like the Godrej family only makes the issue more attractive to potential investors.

Godrej Agrovet today said it has raised a little over Rs 341 crore from anchor investors ahead of its initial public offer.

Institutional investors that participated in the anchor book allocation include the Reliance Capital Trustee Company, SBI Life Insurance Company, Nomura, Government of Singapore, First State Indian Subcontinent Fund, The India Fund Inc-Aberdeen, Russel Investment Co., Goldman Sachs India and Birla Sunlife Trustee Company.

Prataap Snacks Ltd. IPO Review and GMP

IPO Dates & Price Band:

  • IPO Open: 04-October-2017
  • IPO Close: 06-October-2017
  • IPO Size: Approx Rs. 1157 Crore (Approx)
  • Face Value: Rs. 10 Per Equity Share
  • Price Band: Rs. 450 to 460 Per Share
  • Listing on: BSE & NSE
  • Retail Portion: 35%
  • Equity Shares: 300 Crore + 12,300,000 Shares

Market Lot:

  • Shares: Apply for 32 Shares (Minimum Lot Size)
  • Amount: Rs. 14720

IPO Allotment & Listing:

  • Basis of Allotment: 11-October
  • Refunds: 12-October
  • Credit to demat accounts: 13-October
  • Listing: 16-October
  • The promoters :
  • Mr Nadir B. Godrej and Mr Adi B. Godrej
  • Objects of the issue are
  • The Company proposes to utilise the proceeds from the Fresh Issue towards:
  • repayment or prepayment of working capital facilities availed;
    b. repayment of commercial papers issued by the Company;

Lead Managers:

1. Axis Capital Ltd,
2. Credit Suisse Securities (India) Private Limited
3. Kotak Mahindra Capital Company Limited

Registrar to the IPO:

Karvy Computershare Private Limited

Competitive Strengths

Pan India Presence with Extensive Supply and Distribution Network.

Diversified Businesses with Synergies in Operations.

Strong R&D Capabilities.

Strong Parentage and Established Brands.

Experienced Promoters and Management Team.

Strategies

The primary elements of its business strategy are to continue to grow its existing businesses, leverage synergies between its businesses and opportunistically evaluate inorganic opportunities.

Continue to Grow its Overall Market Share by Leveraging our Presence in Existing Business Verticals.

Inorganically Grow its Business Offerings.

Consolidate its market position in existing business verticals; achieve operating leverage in key markets by unlocking potential efficiency and synergy benefits;

Strengthen and expand its product portfolio;

Enhance its depth of experience, knowledge base and know how; and increase its sales and distribution network.

Positive

Well diversified company, which has enabled them to grow their business double digit in last five years.

In last five years i.e. FY13-FY17, company’s revenue & profitability has grown at a CAGR of 15.6% and 29.8% respectively. With established Godrej brand coupled with Pan India presence, superior return ratios, and positive long-term outlook for each business verticals.

Margin are between 4.4% to 5.8% in the last 4 out 5 years.

SBI Life insurance IPO and Current GMP

Negative

Unfavourable local and global weather patterns may have an adverse effect on its business, results of operations and financial condition.

The comapny operate in five business verticals and its inability to manage its diversified operations may have anadverse effect on its business, results of operations and financial condition.

The comapny derive a significant portion of its revenue from its animal feed business and any reduction in demand or in the production of such products could have an adverse effect on its business, results of operations and financial condition.

The comapny do not have long term agreements with suppliers for its raw materials and an increase in the cost of, or a shortfall in the availability of such raw materials could have an adverse effect on its business and results of operations.

The improper handling, processing or storage of raw materials or products, or spoilage of and damage to such raw materials and products, or any real or perceived contamination in its products, could subject us to regulatory and legal action, damage its reputation and have an adverse effect on its business, results of operations and financial condition.

The company, its Directors, our Subsidiaries, Promoters and certain of its Group Companies are involved in certain legal proceedings. Any adverse decision in such proceedings may render us/them liable to liabilities/penalties and may adversely affect its business and results of operations.

The comapny utilize the services of certain third parties for its operations and any deficiency or interruption in their services could adversely affect its business and results of operations.

Certain of its businesses are subject to seasonal variations that could result in fluctuations in its results of operations.

If the comapny are unable to introduce new products and respond to changing consumer preferences in a timely and effective manner, the demand for its products may decline, which may have an adverse effect on its business, results of operations and financial condition.

Outbreaks of livestock diseases in general, and poultry and shrimp disease in particular, can significantly restrict its ability to conduct its operations.

The comapny inability to expand or effectively manage its distribution network may have an adverse effect on its business, results of operations and financial condition.

Certain of its operations are concentrated in the state of Andhra Pradesh and any adverse developments affecting this state could have an adverse effect on its business, results of operations, financial condition and cash flows.

A slowdown or shutdown in its manufacturing operations or under utilization of its manufacturing facilities could have an adverse effect on its business, results of operations and financial condition.

The company inability to effectively manage its growth could have an adverse effect on its business,results of operations and financial condition.

The comapny do not own the “Godrej” trademark and logo.

Financials:

Godrej Agrovet is well diversified company, which has enabled them to grow their business double digit in last five years. In last five years i.e. FY13-FY17, company’s revenue & profitability has grown at a CAGR of 15.6% and 29.8% respectively. With established Godrej brand coupled with Pan India presence, superior return ratios, and positive long-term outlook for each business verticals, we believe the company will maintain profitable growth in coming years. At Upper Price Band of IPO Price of Rs 460/-, company trades at 42x its FY17 EPS of Rs 10.95/-, which is fairly priced. Hence, we recommend to SUBSCRIBE to the issue on long-term basis.

Grey market premium

Grey market premium as on today at Rs.100-110 with Kostak at Rs.400-450

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 prior to making any actual investment decisions, based on information published here.

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