Incorporated in 2009, Prataap Snacks is Indore, MP based Indian Snack Food Company. Prataap Snacks sell products under the brand name "Yellow Diamond". Company is among the top 6 Indian organized snack market.
22th SEP,2017 - 26 th SEP ,2017
Prataap Snacks Limited Company business lines:
Prataap Snacks has a diversified product portfolio including traditional and western snacks. Company manufacture and sell it's snacks under three major savory snack food categories:
- Extruded Snacks: Processed, reconstituted and shaped potato or cereal based snacks. This includes Puffs, Rings, Pellets and Chulbule products.
- Chips: Fried, sliced chips or crisps made from potatoes, hummus, lentils.
- Namkeen: Traditional savoury Indian snack which includes products such as moong dal, masala or fried nuts, sev and bhujia.
In Fiscal 2017, revenue from Extruded Snacks, Chips and Namkeen represented 62.99%, 23.85%, and 12.23%, respectively Company has pan-India distribution network supported by strategically located manufacturing facilities. Company's distribution network included 205 super stockists and over 3,400 distributors. Prataap Snacks own and operate three manufacturing facilities, one located at Indore and the other two located at Guwahati, Assam.
The Promoters of the Company are Arvind Mehta, Amit Kumat, Apoorva Kumat, Rajesh Mehta, Naveen Mehta, Arun Mehta, Kanta Mehta, Rita Mehta, Premlata Kumat, Swati Bapna, Rakhi Kumat, Sandhya Kumat and SCI Growth Investments II.
- Issue Open: Sep 22, 2017
- Issue Closes on: Sep 26, 2017
- Issue Type: Book Built Issue IPO
- Issue Size: Fresh Issue of [.] Equity Shares of Rs 5 aggregating up to Rs 200.00 Cr › Offer for Sale of 3,005,770 Equity Shares of Rs 5 aggregating up to Rs [.] Cr
- Face Value: Rs 5 Per Equity Share
- Issue Price: Rs 930 - Rs 938 Per Equity Share
- Market Lot: 15 Shares
- Minimum Order Quantity: 15 Shares
- Listing At: BSE,NSE
Tentative timetable in respect of the Offer:
- Bid/Offer Opens On: September 22, 2017
- Bid/Offer Closes On: September 26, 2017
- Finalisation of Basis of Allotment: On or about September 29, 2017
- Initiation of refunds: On or about October 03, 2017
- Credit of Equity Shares to demat accounts: On or about October 04, 2017
- Commencement of trading of the Equity Shares on the Stock Exchanges: On or about October 05, 2017
The 482 crore initial public offer (IPO) by Prataap Snacks kicked off on Friday. The company is offering shares in Rs 930-Rs 938 range. It is offering a discount of Rs 90 per share to its eligible employees.
The snacks company on Thursday sold Rs 143 crore worth of shares to 15 anchor investors including Goldman Sachs India Ltd, HDFC Trustee Company, Smallcap World Fund Inc and Fidelity Funds at the upper limit of the price band. Analysts noted that the company's profitability has remained inconsistent due to its focus on gaining the market share. They are neutral to positive (on the long-term basis) on the issue.
Angel Broking said that the issue looks richly valued at 202 times of its FY17 earnings.
"Ignoring its lower profitability in FY17 and valuating the issue on FY16 EPS still yields a high P/E of 73.0x. FMCG companies commanding such high P/Es have a very strong profitability and returns profile such as BritanniaBSE -1.66 %. Its peer in exactly the same industry i.e. DFM FoodsBSE -4.21 %, also has good margins (10 per cent in FY17) and handsome return profile (20 per cent cent)," the brokerage said.
For Prataap Snacks to justify this high valuation, remarkable improvement in profitability is required which may come at the cost of lower growth, the brokerage said.
The company is into three product lines. Extruded Snacks, Chips and Namkeen. It own brands Chulbule and Yellow Diamond. Prataap Snacks has three manufacturing facilities, 218 distributors and 3,500 super stockists. Sharekhan said that while GST implementation bodes well for branded snacking players, the offer by the the company is at significant premium to its peers.
"In addition, operating profit margin (OPM) of 4.5 per cent and return on equity (RoE) of 4.3 per cent are much lower than industry peers. Though the company is expanding its capacity and enhancing its distribution reach, we believe it will take some time for margin profile and return ratios to improve," it said.
Hem Securities said that even as the company has diverse product portfolio with pan India distribution network, the issue's valuation looks overpriced, which led the brokerage give a Long term susbcribe rating to the issue.
"The company’s EBITDA margins have been consistently weak and have come down from 8 per cent in FY13 to 4.5 per cent in FY17. PAT margins have also shrunk to just 1 per cent in FY17 from 4.3 per cent in FY13 due to the potato crop related issues. Analysts say if an investor is looking to participate in the issue, he should not expect listing gains and rather look for long-term growth.
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