Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Google
Web www.equitybulls.com
IPO News

| More

Prataap Snacks Limited - IPO Note - Angel Broking

Posted On: 2017-09-20 10:31:08

Prataap Snacks is one of the top snack food companies in India and with 27% revenue CAGR between FY13-FY17, it is also one of the fastest growing companies in its sector. It has three product lines i.e. Extruded Snacks, Chips and Namkeen and has brands such as Chulbule and Yellow Diamond. It has 3 manufacturing facilities, 218 distributors and 3,500 super stockists.

Fastest growing organized snacks player: Prataap Snacks has seen a strong revenue growth since inception and from FY13-FY17 its revenue grew at a CAGR of 27% vs. organized snack food industry growth of 14% (2010-16). This has been due to its strong distribution network and acquisition of Yellow Diamond brand which is doing well. With the focus on growth, company has gained 8% and 3% market share in organized extruded snacks and chips market respectively. Company is foraying in chocolate-based confectionary products which will benefit Prataap to report above industry growth rate going ahead.

Inconsistent profitability: With the focus on gaining the market share, its profitability has remained inconsistent. The gross margins (GM) during FY13-17 have been between 26-31% which is weak compared to its peer DFM Foods' which made GM of ~40% in FY17. With weak GM and higher depreciation, company's EBITDA margins have been consistently weak and have come down from 8% in FY13 to 4.5% in FY17. PAT margins have also shrunk to just 1% in FY17 from 4.3% in FY13 due to the potato crop related issues.

Weak return ratios: With the poor profitability, company has also seen poor set of return ratios. The highest of RoE in the last five years has been 12.6% in FY16 which declined to just 4.2% in FY17. This is weaker than its peer DFM Foods (20% in FY17). Its ROCE has also been lower than cost of capital during this period.

Valuations and outlook: At 202x of its FY17 earnings, the issue is richly valued at upper end of its price band i.e. `938. 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 Britannia (which is not an exact peer due to size and product portfolio). Its peer in exactly same industry i.e. DFM Foods, also has good margins (10% in FY17) and handsome return profile (~20%). For Prataap to justify this high valuation, remarkable improvement in profitability is required which may come at the cost of lower growth. Considering this, we rate Prataap Snacks as Neutral.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com





Other Headlines:

Initial Public Offer: Garden Reach Shipbuilders & Engineers - Kotak

Initial Public Offer: Dinesh Engineers Ltd - Kotak

Subscription for Kritika Wires Ltd IPO open

Garden Reach Shipbuilders & Engineers Ltd IPO extended, price band revised

IPO of Spectrum Electrical Industries Limited Opens on September 17, 2018

Ahlada Engineers IPO opens for subscription on Sep 11, 2018

Rajshree Polypack Ltd NSE SME IPO to open for subscription on Sep 10, 2018

Marquee investor, Sunil Singhania's Abakkus Growth Fund - 1 invests in Rajshree Polypack Limited as Anchor Investor

Equity shares of CreditAccess Grameen Limited to list on Aug 23, 2018

TCNS Clothing Company Ltd to list on July 30, 2018

HDFC AMC IPO receives subscription of 83.04 times

HDFC Asset Management Co - IPO Note - Angel Broking

TCNS Clothing Company Limited - IPO Note - Angel Broking

Rajnish Wellness Ltd IPO to hit markets on June 25, 2018

Varroc Engineering Limited IPO to open for subscription on June 26, 2018

RITES Limited IPO receives overwhelming response from investors

Fine Organic Industries Limited IPO receives subscription of 8.99 times

Varroc Engineering Ltd - IPO Note - Angel Broking

RITES Ltd - IPO Note - Angel Broking

Fine Organic Industries Ltd - IPO Note - Angel Broking

Avana Logistek Ltd files DRHP with SEBI for IPO

IndoStar Capital Finance Ltd - IPO Note - Angel Broking

IndoStar Capital Finance Limited Offer opens on May 9, 2018

IPO Note - SoftTech Engineers Ltd - Arihant Capital Markets Ltd

Hindustan Aeronautics Ltd to list on March 28, 2018

Expectations high on listing of Bandhan Bank shares tomorrow

Mishra Dhatu Nigam Limited IPO receives subscription of 1.21 times

Lemon Tree Hotels Limited - IPO Note - Angel Broking

Mishra Dhatu Nigam Ltd - IPO Note - Sushil Finance

ICICI Securities Ltd - IPO Note - Sushil Finance

Lemon Tree Hotels Ltd - IPO Note - Sushil Finance

Mishra Dhatu Nigam Ltd - IPO Note - Angel Broking

Mishra Dhatu Nigam Ltd - IPO Note - Avoid - Hem Securities

ICICI Securities Ltd - IPO Note - SSJ Finance & Securities

Mishra Dhatu Nigam Ltd - IPO Note - Subscribe - SSJ Finance & Securities

IPO Note: MISHRA DHATU NIGAM LTD - NOT RATED - Kotak

IPO Note: ICICI Securities Ltd - SUBSCRIBE - Kotak

IPO: Mishra Dhatu Nigam Ltd - IIFL

Sandhar Technologies Limited - IPO Note - Angel Broking

Hindustan Aeronautics LTD - IPO Note - HEM Securities

ICICI Securities IPO to open for subscription on Mar 22, 2018

IPO Note: Sandhar Technologies Ltd - SUBSCRIBE - Kotak

IPO Note: Hindustan Aeronautics Ltd - SUBSCRIBE - Kotak

Bandhan Bank Ltd - IPO Note - Subscribe - HEM Securities

HDFC Asset Management Company Ltd files DRHP for IPO

Bandhan Bank Ltd - IPO Note - Subscribe - SSJ Finance

Bandhan Bank Limited - IPO Note - Angel Broking

IPO of ICICI Securities Ltd to open on March 22, 2018

Bharat Dynamics Ltd - IPO Note - SUBSCRIBE - Kotak

Bharat Dynamics Ltd - SUBSCRIBE - IPO Report - HEM SECURITIES







Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2018