Fine Organic Industries Limited IPO

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(i) The Company, Fine Organic Industries Limited, founded in 1970, is the largest manufacturer of oleochemical-based additives in India and a strong player globally in this industry.

(ii) The wide range of specialty plant derived oleochemicals -based additives used in the foodplastic, cosmetics, paint, ink, coatings and other specialty application in various industries. As at December 31, 2017, they had a range of 387 different products sold under the ‘Fine Organics’ brand.

(iii) They had 603 direct customers (i.e., end -users of our products) and 127 distributors as on 31st Dec 2017 (who sold their products to more than 5,000 customers) from 67 countries. Their customers are multinational, regional and local players manufacturing consumer products, such as Hindustan Unilever and Parle Product and petrochemical companies and polymer producers globally. Their plastics additives and specialty additives are also used in the packaging of foods and other fast moving consumer goods.

(iv) The  additives are specialty products, and this industry enjoys premium margins with only a few players dominating the industry globally. Proprietary technology to manufacture these specialty additives is available with only a few global players. Fine Organic Industries Limited is one of the leading players that developed proprietary technologies to manufacture these green additives

 

 

Fine Organic Industries Limited IPO Stock Quote & Charts

1092.15

-2.33%

  • Open: 1128.05
  • High - Low: 1130.75 - 1082.00
  • Previous Close: 1118.15
  • Total Traded Volume: 1219
  • Updated On: 17-Oct-2018

Objects of the Fine Organic Industries Limited IPO:

Objective of

Fine Organic Industries Limited IPO

are: This is pure OFS vide which promoters of the company are selling up to 7,664,994 no. of shares to public. So this means that company will not get anything from this IPO.

Fine Organic Industries Limited IPO Details:

Current GMP: 38-40
Open Date: Jun 20 2018
Close Date: Jun 22 2018
Total Shares: 7,664,994
Face Value: ₹ 5 Per Equity Share
Issue Type: Book Built Issue IPO
Issue Size: 600.16 Cr.
Lot Size: 19 Shares
Issue Price: ₹ 780-783 Per Equity Share
Listing At: NSE,BSE
Listing Date: Jul 02 2018

Promoters And Management:

Promoters of Fine Organic Industries Limited Company are: 1. Prakash Damodar Kamat 2. Mukesh Maganlal Shah 3. Jyotsna Ramesh Shah 4. Jayen Ramesh Shah 5. Tushar Ramesh Shah 6. Bimal Mukesh Shah

Capital Structure:

(i) Authorized Share Capital 40,000,000 shares at FV@5) 20 Cr
(ii) Issued, Subscribed,& Paid-up Share Capital Before Issue (30,659,976 Shares at FV@5) 15.32 Cr
(iii) Present Issue OFS to public (  7,664,994 Shares at FV@5) 3.83 Cr
(iv) Reservation for QIB  (38,32,497 Shares at FV@5) 50%
(v) Reservation for HNI  (11,49,749 Shares at FV@5) 15%
(vi) Reservation for Retail  (26,827,47 Shares at FV@5) 35%
(vii) Paid Up Share Capital after the issue 15.32 Cr
The list of Promoters who are selling their Shares via IPO
Sr.no Name of the Shareholder no. of shares before IPO No. of Shares offered in IPO % of Shares offered
1 Prakash Damodar Kamat 5982840 1530005 26%
2 Jyotsna Ramesh Shah 5870862 1544976 26%
3 Jayen Ramesh Shah 4953630 1530004 31%
4 Bimal Mukesh Shah 2822436 705609 25%
5 Mukesh Maganlal Shah 2588442 824397 32%
6 Tushar Ramesh Shah 5229186 1530003 29%
Note: The Promoters are selling huge % of Shares via IPO. Generally not a good sign for any company.

Financials of Fine Organic Industries Limited IPO:

1. Assets and Liabilities Key Parameters
Year Asset(Cr) Liabilities(Cr) Net Worth(Cr) Book Value D/E [<1.5] RONW Receivable days
FY13 255.3 157.80 97.50 202 1.6 21.33% 41
FY14 340.20 180.90 159.30 330 1.1 38.73% 49
FY15 374.70 181.10 193.60 401 0.9 29.44% 53
FY16 418.90 164.50 254.40 527 0.6 29.91% 48
FY17 448.50 144.30 304.20 630 0.5 25.51% 52
9MFY18 481.10 118.50 362.60 118 0.3 21.00% 54
2. Profit n Loss Key Parameters
Year Revenue(Cr) PAT(Cr) EBITDA Margins Profit Margins
FY13 497.50 20.80 10% 4%
FY14 574.10 61.70 20% 11%
FY15 616.50 57.00 18% 9%
FY16 667.60 76.10 23% 11%
FY17 792.60 77.60 18% 10%
9MFY18 594.70 58.50 18% 10%
3. Cash Flow Statement(all figures in Cr)
Particulars FY17 FY16 FY15 FY14 FY13
(i) Net Cash Generated from Operation 47.70 113.50 79.50 2.08 48.90
(ii) Net Cash Generated from Investment -11.42 -27.96 -65.21 -29.18 -10.36
(iii) Net Cash Generated from Financing Activity -58.41 -55.62 -20.13 28.38 -32.83
(iv) Total[ (i)+(ii)+(iii) ] -22.12 29.92 -5.84 1.29 5.71
Key Notes: a) The Revenue is growing at CAGR of 12.35% from FY13 to FY17. b) The PAT is growing at CAGR of 38.98% from FY13 to FY17. c) The Annualized EPS for FY17-18 would be 25 d) P/E= 30 at Cutoff price of 783( on higher side) e) P/B= 6.63 at cutoff price of 783.( on higher side) f) The company is almost debt free. The long term debt is Nil. The short term debt is around 35 Cr.- Big Positive. g) Mcap/Sales(ideally <2)= The company has a M.Cap of 2400 Cr and Annualized sales of FY7-18 is around 792 Cr. So M.cap/Sales is 3( on higher side). h) The Company's EBITDA Margins are almost stagnant around 10% in last 4 years not a encouraging sign though. However, the company is looking for expansion in coming years which may drive the margins higher. i) The Company is generating positive cash flows from operations in last 5 years- Big Positive.

Comparison With Peers:

There are no comparable listed peers in India. Accordingly, it is not possible to provide an industry comparison in relation to our Company

Recommendation on Fine Organic Industries Limited IPO:

Review and Recommendation of

Fine Organic Industries Limited IPO

from our side is: Rating: 4/10. 1-5: Fair 5-7: Good 7-10: Excellent

Lead Manager of Fine Organic Industries Limited IPO:

  1. Edelweiss Capital Limited
  2. JM Financial Consultants Private Limited

Registrar of Fine Organic Industries Limited IPO:

  1. Karvy Computershare Private Limited

Company Address:

Fine Organic Industries Limited Fine House, Anandji Lane, Ghatkopar (East), Mumbai 400 077 Phone No. 91 22 2102 5000 Fax No. 91 22 2102 8899 E-mail id: investors@fineorganics.com Website: www.fineorganics.com Next IPO => IRCON IPO

25th Sep 2018 - 27th Sep 2018 => Aavas Financiers IPO

Bid Details of Fine Organic Industries Limited IPO as on
22-Jun-2018 22:30:01 IST

No.of shares offered No. of shares bid No. of total times
1,532,999 19,706,705 12.86
1,149,750 24,154,092 21.01
2,682,748 4,357,783 1.62
- - -
- - -
5,365,497 48,218,580 8.99
No.of shares offered No. of shares bid No. of total times
1,532,999 8,083,759 5.27
1,149,750 19,342,475 16.82
2,682,748 3,384,603 1.26
- - -
- - -
5,365,497 30,810,837 5.74
No.of shares offered No. of shares bid No. of total times
1,532,999 11,622,946 7.58
1,149,750 4,811,617 4.18
2,682,748 973,180 0.36
- - -
- - -
5,365,497 17,407,743 3.24

Discussion on Fine Organic Industries Limited IPO:

    Goldman Sach has bought 2.79Lacs shares in fine organics at 815. This is very good news for investor. Keep on holding this share for long term.

    7,664,994 Total IPO Shares.
    2,682,748 Total Retail shares.
    2,668,093 Shares Got Delivered Today.
    i.e. 34.8% shares got new owners.
    If we assume all the retailers sold their allotments then it means 99.45% retailers are out now.

    As per new SEBI guidelines, the company coming up with an IPO now have to show only 3 years Financial statements in the DRHP. This will lead more companies to raise funds via IPO. However, this will have negative from the perspective of the investor as less numbers means less interpretation about the company’s performance.

    SEBI has reduced the no. of days from 5 to 2 to announce the price band of IPO. Previously it was announced 5 days prior to opening of IPO for Public subscription which has now reduced it to 2. We will have to see how it will impact the grey market as now we have only 2 days to do all the grey business.

    Final Closing Figures (Around 11PM, 22nd June)
    QIBs: 12.86X
    RII: 1.62X
    NII: 21.01X
    Application wise: 1.45X
    Total: 8.99X

    The issue has subscribed only 12% on day one.

    The company has allotted 22,99,497 equity shares to 15 anchor investors at Rs 783 per scrip, garnering Rs 180.05 crore, Fine Organic Industries said in a statement.Among the anchor investors are Goldman Sachs India, HDFC Small Cap Fund, SBI Magnum Comma Fund, DSP BlackRock Equity & Bond Fund and IDFC Equity Opportunities Fund – Series 5.

    FINE ORGANIC INDUSTRIES LIMITED

    Fine Organic Industries Limited allots Rs. 180 crore to 15 anchor investors at Rs. 783 per equity share

    Anchor investors include Goldman Sachs, Kuwait Investment Authority, Citi, Principal, Reliance, Aditya Birla, DSP Blackrock, SBI MF,

    Mumbai, June 19, 2018: Fine Organic Industries Limited (the “Company” or the “Issuer”) has allotted 22,99,497 equity shares at Rs. 783 (upper end of the Price Band) aggregating to Rs. 180.05 crore to 15 anchor investors. The anchor book has a good mix of investors including sovereign wealth funds, long only FIIs as well as top domestic mutual funds and life insurance companies.

    The anchor investors include: 1. GOLDMAN SACHS INDIA LIMITED  (10%); 2. HDFC SMALL CAP FUND (10%); 3-A. SBI LONG TERM ADVANTAGE FUND – SERIES V (3.61%); 3-B. SBI EQUITY OPPORTUNITIES FUND SERIES I    (0.28%); 3-C.   SBI MAGNUM COMMA FUND (5.00%); 3-D. SBI TAX ADVANTAGE FUND SERIES II (0.56%); 3-E.  SBI TAX ADVANTAGE FUND SERIES III     (0.56%); 4A. DSP BLACKROCK EQUITY FUND (2.66%); 4B. DSP BLACKROCK EQUITY & BOND FUND  (7.34%); 5A. IDFC LARGE CAP FUND (1.94%); 5B. IDFC EQUITY OPPORTUNITIES FUND – SERIES 5 (7.67%); 5C IDFC EQUITY SAVINGS FUND (0.39%); 6. RELIANCE CAPITAL TRUSTEE CO. LTD-A/C RELIANCE SMALL CAP FUND (10.00%); 7. KUWAIT INVESTMENT AUTHORITY FUND 224 (7.78%); 8. WHITE OAK INDIA EQUITY FUND  (4.04%); 9. INDIA ACORN FUND LTD (3.73%); 10. NEW HORIZON OPPORTUNITIES MASTER FUND (7.78%); 11. ADITYA BIRLA SUN LIFE INSURANCE COMPANY LIMITED (5.55%); 12. PRINCIPAL TRUSTEE CO. PVT LTD. – PRINCIPAL MUTUAL FUND – PRINCIPAL EMERGING BLUECHIP FUND (2.78%); 13. EDELWEISS TRUSTEESHIP CO LTD AC- EDELWEISS MF AC-EDELWEISS BALANCED ADVANTAGE FUND  (2.78%); 14. CITIGROUP GLOBAL MARKETS MAURITIUS PRIVATE LIMITED (2.78%); and 15. DB INTERNATIONAL (ASIA) LTD  (2.78%).

    Fine Organic Industries Limited (the “Company”) proposes to open on Wednesday, June 20, 2018*, an initial public offering of 7,664,994 Equity Shares through an offer for sale by the promoter group selling shareholders

    ****************GMP Latest Updates***************************
    RITES 37/39
    Fine organics 40/45

    The Company valuations are not comfortable both in terms of P/E and P/B. So one can look to invest for long term as company business is unique and they are doing lot of expansion work in coming years which will ultimately boost revenue and margins.

    The company uses vegetable oils, including rapeseed oil, palm oil, palm kernel oil, sunflower oil, castor oil, soybean oil, rice bran oil as a raw material and it represents around 62% of the total expense. The company primarily import raw materials derived from palm and palm kernel oil. Recently , in Nov 2017, the govt of India has increased the tax on crude palm oil to 30% from 15%, and increased import tax duty on refined palm oil imports to 40% from 25%. This will dampens the margin further from next fiscal.

    As on 31.12.2017, the company has total debt of 34.5 Cr on books( long term debt=0 & Short Term Debt=34.5 Cr). The company has total equity 362 Cr. So Debt/Equity is almost nil. It is a debt free company.

    Fine Organic Industries Limited Strengths
    1. Largest Producer of Oleochemical-based Additives in India and One of the Few Large Players in the Oleochemicalbased Additives Industry in the World
    2. Diversified Product Portfolio Catering to a Variety of High Growth Industries
    3. Specialised Business Model with High Entry Barriers
    4. Flexible and Strategically Located Production Facilities with In-house Development Capabilities
    5. Strong R&D Capability with a Focus on Innovation
    6. Diversified Customer Base with Long-Term Relationships with Marquee Customers

    Fine Organic Industries Manufacturing Units and Expansion plans

    (a) They  currently have three production facilities: one in Ambernath , one in Badlapur, and one in Dombivli all are in Maharashtra with combined installed capacity of approximately 64,300 tonnes per annum.
    (b) The Company is looking to acquire Olefine Organics partnership firm and a Promoter Group entity, at a manufacturing facility in Ambernath in the fourth quarter of Fiscal 2018.
    (c)  They are also  planning to set up an additional production facility in Ambernath with a planned installed capacity of 32,000 tonnes per annum (the “ Third Ambernath Facility ”).They expect it to commence operations in the fourth quarter of Fiscal 2019. In addition, they are currently planning to set up a new production facility in Leipzig, Germany with a planned initial installed capacity of 10,000 tonnes per annum (the “German Facility”) and they expect it to commence operations in the third quarter of Fiscal 2020. This facility will be owned and operated by a joint venture company in which they will have 50% equity interest.
    (d) They are also in the preliminary stages of planning the development of two additional production facilities: one in Patalganga (Maharashtra) with a planned initial installed capacity of approximately 10,000 tonnes per annum (the “Patalganga Facility ”); and one in Ambernath (Maharashtra)
    (e) They have a dedicated R&D facillity Mahape, Navi Mumbai.

    Fine Organics IPO – Issue Information *(TENTATIVE)*

    Issue Opens on: 20 June 2018
    Issue Closes on: 22 June 2018
    Issue Type: Book Built Issue IPO
    Issue Size: 76,64,994 Equity Shares
    Face Value: Rs 5 per Equity Share
    Issue Price: Rs.775 – Rs.785 per Equity Share
    Market Lot: 19 shares
    Listing At: NSE, BSE

    Equity Shares outstanding prior to the Issue = 3,06,59,976 Equity Shares
    Offer for Sale of 76,64,994 Equity Shares @1000 = Rs.766.50 Crores
    Equity Shares outstanding after the Issue = 3,06,59,976 Equity Shares

    Category-wise Break up:.
    Anchor – 22,99,497 Shares = 180.51Crs
    QIB – 15,32,999 Shares = 120.34Crs
    NII – 11,49,750 Shares = 90.26Crs
    RII – 26,82,748 Shares = 210.60Crs (Lot size: 19 = 1,41,197 Forms)
    Total Issue – 76,64,994 Equity Shares = 601.70Crs.

    Subscription required for 1X
    RII = 1,41,197 Forms
    NII = 90.26 Crs

    Interest cost @5%p.a. for 7days = 75.274paise for 1X

    Fine Organics IPO – Financial Information (Basis of Valuation)

    EPS for FY14-15 >>> Rs.19.70 (Page #92 of DRHP)
    EPS for FY15-16 >>> Rs.24.85 (Page #92 of DRHP)
    EPS for FY16-17 >>> Rs.25.33 (Page #92 of DRHP)
    EPS for 9M17-18 >>> Rs.25.34 (Page #92 of DRHP)

    RoNW for FY14-15 >>> 29.46% (Page #93 of DRHP)
    RoNW for FY15-16 >>> 31.35% (Page #93 of DRHP)
    RoNW for FY16-17 >>> 26.51% (Page #93 of DRHP)
    RoNW for 9M17-18 >>> 16.64% (Page #93 of DRHP)

    NAV as on December 31, 2017 was Rs.114.76 (Page #94 of DRHP)

    Listed Industry Peer Group (Page #94 of DRHP): NONE