Manorama Industries Limited IPO

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A)  Company’s Background and Business

(i) The Manorama Group has a history of over 60 years which started off with extracting oil from Sal seed and Mango kernel and gradually forayed into exotic products and specialty fats. Today, the company is seen as one of the top global players in the food and cosmetic industries and maintains a good relationship of 4 decades with Fortune 500 companies all over the world in cosmetic, chocolate and confectionery industries.

(ii) Manorama Industries Limited is engaged in Manufacturing, Processing, and Supply of exotic and Specialty fats & oils like Sal butter, Sal fat, Sal oil, Sal Stearine, Sal olein, Mango butter, Mango fat, Mango oil, Mango Stearine, Kokum butter, Kokum oil, Mowrah fat, and several value-added tailor-made products. Apart from this company is also engaged in the business of Trading of Rice, Maize, Soya DOC.

(iii) Currently, the Company is among the leading manufacturers of Sal Oils and Stearine globally with an annual production of 3,000-4,000 tonnes. Last year, they produced 908 tonnes of Stearine resulting in approximately 1% global market share. Globally, The Company is amongst the top 10 manufacturers of Stearine.
[Source: CARE Industry Report].

(iv) As early as the 1970s, the Group had made its mark on global Oils and Fats industry with the Netherlands Government publishing special features on the Indian entrepreneur in leading Dutch newspapers publicizing the vast potential of Indian exotic fats.

B) The industry which company cater to

The Company is majorly catering to Chocolate and Cosmetic industry. The product stearine which is made out of sal or mango seeds is one of the key ingredients in the manufacturing of Cocoa Butter Equivalents (CBE), which has a demand in the Chocolate Industry. Further, the product olein is generally demanded in the cosmetic industry. The Company products also serve as a non-palm oil ingredient as there is a movement against usage of palm oil in many western countries

C) Financial of the Company From FY 2013-14 to FY 2017-18

i) Company total Revenue has shown growth from Rs. 10,532.50 lakhs to Rs. 22,189.33 lakhs, representing a CAGR of 20.46%.

ii) Company EBITDA has shown growth from Rs. 462.26 lakhs to Rs. 1,851.48 lakhs, representing a CAGR of 41.43%.

iii) Company Profit After Tax has shown growth from Rs. 89.62 lakhs to a profit of Rs. 1,035.56 lakhs representing a CAGR of 84.29%.

iv) Company RONW has grown from 10.37% to 41.89%.

Manorama Industries Limited IPO Stock Quote & Charts

184.90

-1.07%

  • Open: 181.60
  • High - Low: 184.90 - 181.60
  • Previous Close: 186.90
  • Total Traded Volume: 1200
  • Updated On: 17-Oct-2018

Objects of the Manorama Industries Limited IPO:

Objective of Manorama Industries Limited IPO are: 1. Establishing an integrated Greenfield Project for Manufacturing of CBE/Speciality fats and tailor-made products at Birkoni, Near Raipur Chhattisgarh 2. General Corporate Purposes

Manorama Industries Limited IPO Details:

Open Date: Sep 21 2018
Close Date: Sep 25 2018
Total Shares: 3404400
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue IPO
Issue Size: 64 Cr.
Lot Size: 600 Shares
Issue Price: ₹ 181-188 Per Equity Share
Listing At: BSE SME
Listing Date: Oct 04 2018

Promoters And Management:

Promoters of Manorama Industries Limited IPO Company are: Vinita Saraf, aged 47 years, is the Promoter, Chairman and Managing Director of our Company. She has been appointed as director of our Company since incorporation and has been designated as Managing Director of our Company with effect from April 01, 2017. She has completed Bachelors of Commerce from Bangalore University. She has an experience of around 12 years in this Industry. She is the guiding force behind all the strategic decisions of the Company and is entrusted with the responsibility of looking after the overall management and operations of Company.

Financials of Manorama Industries Limited IPO:

Particulars For the year/period ended (in Rs Lacs)
31-Mar-2018 31-Mar-17 31-Mar-16 31-Mar-15 31-Mar-14
Total Assets 4,676.47 2,260.94 2,022.82 1,659.75 2,120.32
Total Revenue 22,189.33 14,638.20 13,169.45 13,343.50 10,532.50
Profit After Tax 1,035.56 137.52 108.21 94.16 89.62

Comparison With Peers:

There is no peer in the industry to which comparison can be made.

Recommendation on Manorama Industries Limited IPO:

Review and Recommendation of Manorama Industries Limited IPO from IZ team is: 4/10 [ The company more into trading than manufacturing. More than 70% of the business in FY18 comes from trading of Rice, Maize etc which does not have any moat. The exceptional rise in FY18 profit raises concern. The asking P/E based on average EPS of last 4 years is 28 which is aggressively priced.]

Lead Manager of Manorama Industries Limited IPO:

  1. Pantomath Capital Advisors Private Limited

Registrar of Manorama Industries Limited IPO:

  1. Link Intime India Private Limited

Company Address:

Manorama Industries Limited F-6, Anupam Nagar, Raipur - 492 007, Chhattisgarh, India Phone No. +91-771-2283071 Email Id: info@manoramagroup.co.in Website: www.manoramagroup.co.in

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

Bid Details of Manorama Industries Limited IPO as on
25 Sep 2018 | 06:00:00 PM

Category No.of shares offered No. of shares bid
1,616,700 2,977,800
1,616,700 498,000
171,000 171,000
3,404,400 3,646,800
QIBs Yes
QIBs+HNIs Subscription 1.84X
Retail Subscription 0.31X
Total Subscription 1.07X

Discussion on Manorama Industries Limited IPO:

    Pantomath Again proves his worth as LM. The Manorama has not disappointed the investors.

     25 सितंबर को मनोरामा इंडस्‍ट्रीज के IPO का आखिरी दिन है। मनोरामा इंडस्‍ट्रीज इस IPO के जरिए 61-64 करोड़ रुपये जुटाना चाहती है। यह IPO बीएसई के एसएमई प्‍लैटफॉर्म पर लाया गया है। मनोरामा इंडस्‍ट्रीज के प्रमोटर आशीष सराफ के अनुसार वर्तमान के कंपनी का कारोबार 222 करोड़ रुपये का है जिसे अगले तीन साल में बढ़ाकर 2,500 करोड़ रुपये करने की योजना है।

    आदिवासियों से कच्‍चा माल खरीदकर कोको मक्‍खन बनाती है कंपनी
    मनोरामा इंडस्ट्रीज मुख्य रूप से छत्तीसगढ़, मध्य प्रदेश, उड़ीसा और झारखंड के आदिवासियों से अपने हर तरफ फैले 18,000 संग्रह केंद्रों से साल और आम के बीज यानी गुठलियां खरीदती है। गुठलियों की प्रोसेसिंग के बाद जो उत्पाद बनता है उसकी आपूर्ति चॉकलेट और कॉस्मेटिक उत्पादों की बड़ी निर्माता कंपनियों की जाती है। सराफ के चॉकलेट ग्राहकों में फेरेरो रोशर और मोंडलीज जैसी कंपनियां हैं साथ ही पर्सनल हाइजीन कंपनियां जैसे बॉडीशॉप भी हैं।

    बहुराष्‍ट्रीय कंपनियों की मांग पूरी करेगी कंपनी
    सराफ के अनुसार, उन्‍होंने मनोरामा इंडस्ट्रीज के लिए एक विशिष्ट बाजार बनाया है जो बहुराष्ट्रीय कंपनियों के लिए काफी ज्यादा मांग वाला बाजार है और जल्द ही वे इसमें प्रवेश करेंगे। कंपनी का सबसे ज्‍यादा फोकस क्‍वालिटी पर है। इस आईपीओ में संस्थागत निवेशकों के की अच्‍छी दिलचस्‍पी देखी गई है।

    Manorama IPO domestic Financials Institutions bid of 1,59,600. Should be a good news. Let us wait for the subscription on the final day to see the response.

    In manufacturing, they are taking a help of the third party at Chhattisgarh to do extraction process which required for manufacturing the companies product. The quality can be hampered if the third party does not handle the process of extraction carefully resulting in low-quality products.

    In short, the company is dependent upon third-party for the quality of their products.

    It is more of a Trading Company then Manufacturing. In FY16, FY17 and FY18 the company has generated 62%, 61% and 72% of the business from Trading of Rice, Maize, and Soya Doc.

    The Profit has increased (655%) from 1.37 Cr to 10.35 Cr in FY18 as compared to last year and in the same period, revenue has increased by only 51% this creates a lot of doubts.

    If you see carefully, the Expense/Revenue percentage from FY13 to FY17 it was in the range of 98.59% to 98.90%. However, somehow just before the IPO in FY18, that percentage somehow has come down drastically to only 92% which has resulted in an unbelievable profit.

    As on FY18, the company has piled up an inventory close to 18 Cr which has resulted in Negative Operational cash. However,

    As per management view as India has opened up for 5% CBE(cocoa butter equivalents) from 2018 onwards, due to which the demand from multinational companies has gone up and to cater the demand the higher production was done. Thereby inventory has piled up from 1 Cr to FY17 to 16 Cr in FY18. Such inventories have started dispatching from April 2018 onwards.
    If demand anticipated not able to convert into sales this inventory will give pain to the company.

    The Company’s Advances has also increased to 49 Lakh in FY18 as compared to just 15 Lakhs in FY17.

    If you calculate the Average EPS of FY15, FY16, FY17, and FY18 it is close to 6.57. So P/E based on this is 28.61 which is very high for any SME.

    Debt Story based on FY18 Financials( D/E and Interest Coverage Ratio)

    (i) Debt= 17.82 Cr
    (ii) Equity= 24.82 Cr
    (iii) EBIT= 17.83 Cr
    (iv) Interest Expense= 1.81 Cr
    (v) D/E= 0.72
    (vi) Interest Coverage Ratio= 9.85

    Conclusion: The Company has a manageable debt and a decent interest coverage ratio.

    EPS story (Pre-Issue) based on FY18 Financials
    (i) PAT= 10.35 Cr
    (ii) Outstanding Shares= 75.49731 Lakh
    (iii) EPS= 13.70
    (iv) P/E= 13.722

    EPS story (Post-Issue) based on FY18 Financials
    (i) PAT= 10.35 Cr
    (ii) Outstanding Shares= 1.112791 Cr
    (iii) EPS= 9.3
    (iv) P/E= 20.21

    The Company has issued 1,73,779 No.of Shares to Cipher- Plexus Capital Advisor Private Limited via preferential allotment at RS. 198.71 in April 2018 and issue is priced at 188 at Upper Band. This looks quite interesting.

    About Cipher-Plexus

    (i) Cipher-Plexus was formed with the integration of Cipher Capital Advisors and Plexus Capital Ventures.

    (ii) Cipher-Plexus is a vibrant mid-market Investment Bank headquartered in Mumbai, India and focussed on Private Equity Advisory, Mergers and Acquisitions Advisory, Debt Advisory and Special Situations Funding.

    (iii) The firm has a presence in Bengaluru, Delhi and Chennai and a network of close associates across India. Its valuable cross-border relationships in Japan, Europe, and the US help provide a wide global reach to its clients.