Proventus Agrocom Limited IPO

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i. The company is an integrated health food brand that has its presence in the entire range of dry fruits, nuts, seeds, and berries and healthy snacking products across the value chain. The company’s approach in the space focuses on diversifying across the baskets and intensifying its presence across the value chain; in the end, being a ‘one-stop shop’ for healthy food products.

ii. The company strives at building the revenue stream by moving across the value chain from origination to distribution and creating an integrated business model – from “farm to homes”. The company operates through its Material Subsidiaries like Prov Foods Private Limited, and Proventus Retail Private Limited.

iii. Its Products: The company markets its products under the brand name – “ProV”. The product range of Proventus Agrocom Limited includes Nuts, Dry Fruits, Seeds, and Berries like: Almonds, Pistachios, Cashews, Walnuts, Raisins and Other Nuts, Dry Fruits, Seeds and Berries.

iv. Competitive Strengths

i. Strong sourcing capabilities and quality control measures.
ii. Diversified product portfolio and customer base.
iii. Experienced management team and skilled workforce.
iv. Robust distribution network and online presence.
v. Focus on innovation and new product development.

Objects of the Proventus Agrocom Limited IPO:

A. Fresh Issue of up to 6,71,853 equity shares (Rs 51.79 Crore) i. Funding working capital requirements of the Company; ii. Funding working capital requirements of the material subsidiary namely, Prov Foods Private Limited; iii. General Corporate Purposes. B. Offer for Sale of up to 2,30,147 equity shares (Rs 17.74 Crore) Promoter Selling Shareholder :- 1. Shree JMD Investment Advisors LLP (1,02,147 shares) 2. Shalin Sanjiv Khanna (4,998 shares) 3. Sanjiv Jagdish Khanna (8,000 shares) Other Selling Shareholder :- 1. Guruprasad Rao (95,001 shares) 2. Manish Bhagchand Jain HUF (20,001 shares)
DRHP of Proventus Agrocom Limited IPO
RHP of Proventus Agrocom Limited IPO

Proventus Agrocom Limited IPO Details:

Open Date: May 24 2023
Close Date: May 26 2023
Total Shares: 902,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Price Issue IPO
Issue Size: 69.54 Cr.
Lot Size: 160 Shares
Issue Price: ₹ 771 Per Equity Share
Listing At: NSE Emerge
Listing Date: Jun 05 2023

Promoters And Management:

i. Ranganathan Subramanian is the Chairman and Independent Director of the Company and was appointed on March 21, 2023. He is a member of the Institute of Chartered Accountant of India, Institute of Company Secretaries of India, Institute of Cost and Works Accountant of India and LLB (General Law) and B. Com from Mumbai University. He is also the Chairman of the Audit Committee of the Company. During his career, he has held various top management and leadership positions in Organisations like Citicorp Finance (India) Limited, Citibank NA, Bank of America Merrill Lynch, and Edelweiss group. ii. Durga Prasad Jhawar is the Managing Director and CEO of the Company. He has been a director on the Board of the Company since incorporation and has been last re-designated as Managing Director & CEO w.e.f. March 21, 2023. He is a member of the Institute of Chartered Accountant of India (membership is inactive as on date) and holds a bachelor’s degree in commerce from the Maharshi Dayanand University, Ajmer. He is vested with the role of creation, management and driving the growth of the Company across the gamut of company activities. His has been instrumental in creating and nourishing business operations across the value chain of various commodity baskets including retail foray of the Company through ProV Foods. As Managing Director & CEO, his core responsibilities include setting and executing the organization's strategy, allocating capital, and building and overseeing the executive team. He started his career in 1998 in the field of finance. iii. Deepak Kumar Agrawal is the Whole Time Director of the Company and also designated as Chief Business Officer of the Company. He has been on the Board of the Company since December 09, 2015 and has been last re-designated as Whole Time Director w.e.f. March 21, 2023. He holds a degree of Master of Management Science from Devi Ahilya Vishwavidyalaya, Indore. He jointly works with the CEO to chalk out a growth strategy and business plan for the company to meet the vision and goals of the Company. The CBO is responsible for defining and executing the right strategy for Proventus business development activities, including innovative products, while ensuring its fit with the company’s broader vision and ambition.v

Financials of Proventus Agrocom Limited IPO:

A. Balance Sheet
Particuler (In Lakhs) Mar-20 Mar-21 Mar-22 Mar-23
Equity Share Capital 248.58 248.58 248.58 248.58
Reserves 4,731 4,912 5,034 5,235
Borrowings 1,729 2,941 3,444 3,795
Other Liabilities 2,229 742 1,404 1,576
Total 8,937 8,843 10,131 5,669
Net Block 79 248 254 229
Capital Work in Progress 162 0 0 0
Investments 0 0 0 0
Other Assets 810 769 747 974
Total 1,051 1,018 1,001 1,203
Receivables 1,690 1,921 1,953 4,343
Inventory 1,844 2,546 3,739 3,932
Cash & Bank 222 1,300 1,434 554
No. of Equity Shares 34 34 34 34
Face value 10 10 10 10
B. Profit & Loss Statement
Particuler (In Lakhs) Mar-20 Mar-21 Mar-22 Mar-23
Sales 89,620 30,088 40,327 42,398
Raw Material Cost 4,643 5,201 17,413 25,832
Purchases of Stock in Trade 66,820 23,950 21,791 13,395
Change in Inventory 17,341 -612 -668 1,220
Power and Fuel 0 0 0 0
Other Mfr. Exp 0 0 0 0
Employee Cost 345 328 390 496
Selling and admin 0 0 0 0
Other Expenses 2,638 909 1,052 921
Other Income 469 86 108 148
Depreciation 37 68 88 69
Interest 1,124 81 213 296
Profit before tax -2,860 248 156 317
Tax -669 60 42 64
Net profit -2,190 188 114 253
C. Cash Flow Statement
Particuler (In Lakhs) Mar-20 Mar-21 Mar-22 Mar-23
Cash from Operating Activity 1,378 1,272 21 -734
Cash from Investing Activity -562 -100 -111 -44
Cash from Financing Activity -847 -87 217 -606
Net Cash Flow -31 1,085 126 -1,384

Comparison With Peers:

Name of the Company Revenue (In Crore) PAT (In Crore) EPS ( in Rs) P/E CMP Mcap (In Crore)
Proventus Agrocom Limited 424 3 7 104 771 264
Krishival Foods Limited 52 3 2 162 271 536
*Proventus Agrocom Limited FY23 data. *Krishival Foods Limited FY22 data.

Recommendation on Proventus Agrocom Limited IPO:

Review and Recommendation of Proventus Agro SME IPO by IZ team is 2/10 1. The business model primarily revolves around the sourcing of raw materials from farmers in India, as well as importing materials from the international market. These raw materials are then packaged and sold under the brand name "Prov." 2. Apart from its own website, ProV products can be found and ordered from all leading ecommerce websites like Flipkart, Amazon and Bigbasket and are also available in retail stores like Dmart, More Retail, Metro Cash & Carry, etc as well as in the neighbourhood kirana shops. 3. ProV encompasses six distinct brand segments. These include "ProV Select," catering to economical daily consumption needs; "ProV Premium," the flagship category known for its high-quality offerings; "ProV Regal," which specializes in luxury jumbo-sized produce; "ProV Flavours," offering products infused with various flavors; "ProV Fusion," a line of exquisite trail mixes; and the recently launched "ProV Minis," providing affordable pick-and-go snacks as a healthier alternative to unhealthy junk snacks, priced at just INR 30 per pack. The consumer packs sold through retail channels are branded under "ProV" and marketed by subsidiaries ProV Foods and Proventus Retail. 4. EBITDA margins are very low in the range of 1-2%. 5. ROCE is just 3-5% in the business. It is less than the cost of the fund in India. That means business will not make money. 6. EV = 264 Cr + 30 Cr - 4 Cr = 290 Cr, EBITDA = 6 Cr, So, asking EV/EBITDA is 48x. It looks over priced. 

Lead Manager of Proventus Agrocom Limited IPO:

  1. Sundae Capital Advisor

Registrar of Proventus Agrocom Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

Proventus Agrocom Limited Unit 515, 5th Floor, C Wing, 1 MTR Cabin, Atrium, Village Mulgaon, MV Road, Andheri (East), Near Acme Plaza, Mumbai - 400 069 Phone: +91 22 6211 0900 Email: cs@proventusagro.com Website: http://www.proventusagro.com/

Discussion on Proventus Agrocom Limited IPO:

2 Comments

    Proventus Agro—-

    Very low ebitda margin (1-2%) business, ROE and ROCE is around 5-6% which is less than cost of funds, revenue in fy23 is half of fy20, operate in highly competitive business, pricing pressure if they sell in modern trade platform like Dmart etc, asking very high valuation, out of 70 Cr IPO size- 18 Cr will go selling shareholder including promoters.

    Please avoid.

    Reply

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