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• The company is engaged in the business of manufacturing and marketing of spices, flour and other food products, in Telangana and Andhra Pradesh.
• If has D2C, and B2B model of business, that keeps it busy meeting the rising demand.
• The RI appears fully priced, even though it is at a lucrative discount to its current market price.
• Investors may park moderate funds for long term.
ABOUT COMPANY:
Srivari Spices & Foods Ltd. (SSFL) is engaged in the business of manufacturing spices and flour (chakki atta) and market & sell it in and around Telangana and Andhra Pradesh. It handpicks raw materials from various parts of the country and processes its products with utmost care without the use of artificial preservatives or chemicals, thereby creating a product portfolio of organic spices and flour, which carry the freshness and goodness of each ingredient. Its unique business model has helped penetrate the niche segment of market and establish a customer base in and around Telangana and Andhra Pradesh.
Its goal since incorporation was to manufacture quality spices and other food products which are organic and do not contain any artificial preservatives or chemicals, and in order to achieve goal it has created a unique business model, wherein it manufactures and packages products in quantities which can sustain a customer until the shelf life of product, in order to avoid wastage and deliver a wide range of products which carry the freshness and goodness of each ingredient. SSFL's business has two model first is direct to customer ("D2C") in nature, wherein it delivers products directly at the doorstep of customers using approximately 15,000 retail stores. Secondly, it also works in business to business ("B2B''), wherein it delivers products to the suppliers.
Its business model has helped it create a strong customer base as the quantity of products packed and delivered in directly proportional to the shelf life of products, therefore, once the product is consumed by customers, they place an order for the product and this helps it maintain a cyclic and continuous relationship with customers. Its business model and products are completely sustainable in nature. It sources raw materials directly from farmers to ensure that it uses absolutely natural ingredients in products. Its business model ensures that the farmers receive complete benefit of their produce without having to share their revenue with market intermediaries. Since, the company sources raw materials directly from the farmers, it is able to offer products at a lower range than competitors, thereby having a unique pricing model.
The company sources raw materials from across the country to ensure that the products it manufactures has an authentic taste without artificially disturbing the natural taste of the spices or other food products. As of March 31, 2024, it had 67 employees on its payroll.
ISSUE DETAILS:
The company is coming out with its Rights Issue (RI) of 1428400 equity shares of Rs. 10 each at a fixed price of Rs. 175 per share to mobilize Rs. 25.00 cr. The RI opens for subscription on September 24, 2024, and will close on October 03, 2024. The company is offering RI in the ratio of 1 for 5 to its eligible stakeholders as of the record date of September 04, 2024.The full amount is to be paid on application for number of shares applied. Post allotment, shares will be listed on NSE SME. The company is spending Rs. 0.43 cr. for this RI process, and from the net proceeds, it will utilize Rs. 8.64 cr. for capex on setting up of new plant, Rs. 1.90 cr. for repayment of unsecured loans, Rs. 10.00 cr. for working capital, and Rs. 4.02 cr. for general corporate purposes.
While the issue is self-managed by the company and Bigshare Services Pvt. Ltd. is the registrar to the issue. GYR Capital Advisors Pvt. Ltd. is the advisor and underwriter to the issue.
Post-RI, company's current paid-up equity capital of Rs. 7.14 cr. (will stand enhanced to Rs. 8.57 cr. Based on the RI pricing, the company is looking for a market cap of Rs. 149.98 cr. Market lot for this RI shall be 100 shares and in multiples thereon, thereafter.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last two fiscals, the company has posted a total income/net profit of Rs. 35.82 cr. / Rs. 3.09 cr. (FY23), Rs. 78.28 cr. / Rs. 7.03 cr. (FY24). Its current market lot is 500 shares for trading.
DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy post listings of RI shares based on its financial performance and future prospects.
SCRIP PERFORMANCE: BASED ON NSE WEBSITE DATA: SCRIP CODE: SSFL (FV Rs. 10).
The scrip last closed on cum-right basis at Rs. 333.00 on September 03, 2024, and opened on an ex-right basis at Rs. 310.00 on September 04, 2024. Since then, it has marked a high/low of Rs. 315.70 / Rs. 252.00. The scrip last closed at Rs. 271.50 as of September 23, 024. For the last 52 weeks' it has posted a high/low of Rs. 383.44 / Rs. 98.07.
The promoters' holding has been constant at 69.94% for the last three quarters ended on March 31, 2024. The counter is well managed above RI pricing, to tempt investors.
Review By Dilip Davda on September 24, 2024
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. My reviews do not cover GMP market and operators game plans. Readers must consult a qualified financial advisor before making any actual investment decisions, based the on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the recent past, SME IPOs drew the attention of investors across the board and lead to seer madness. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at their own risk. The above information is based on information available as of date coupled with market perceptions. The Author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The Srivari Spices And Foods Rights Issue 2024 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered Rights Issue Analysts tells you if Srivari Spices And Foods Rights Issue 2024 worth investing. The Srivari Spices And Foods Rights Issue 2024 Note sets the Rights Issue expectations in systematic way which tells you if Srivari Spices And Foods Rights Issue 2024 good to buy (good or bad / yes or no). The Rights Issue Forecast tells you weather to invest in Srivari Spices And Foods Rights Issue 2024 by providing Rights Issue recommendations i.e. subscribe, avoid and neutral.
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