Established as a partnership firm in 1999 and subsequently incorporated as a company in 2009, Gopal Snacks Limited is a fast-moving consumer goods company in India, offering ethnic snacks, western snacks and other products in ten States and two Union Territories as of September 30, 2023. They offer a wide variety of savoury products under the brand 'Gopal', including ethnic snacks such as namkeen and gathiya, western snacks such as wafers, extruded snacks and snack pellets, along with fast-moving consumer goods that include papad, spices, gram flour or besan, noodles, rusk and soan papdi. Over the years, they have leveraged the experience and understanding of the preferences and tastes of the consumers, and target markets to develop a wide range of products, which has enabled to strengthen the foothold in the Indian snacks industry. As of September 30, 2023, the product portfolio comprised 84 products with 276 SKUs across the various product categories, thereby addressing a wide variety of tastes and preferences. They have expanded the footprint across India, with the products being sold over 523 locations in ten States and two Union Territories as of September 30, 2023. The distribution network comprised three depots and 617 distributors, complemented by the sales and marketing team comprising 741 employees, as of September 30, 2023. They also rely on channels such as e-commerce, modern trade and exports for sale of the products. They have implemented a distribution management system that helps them coordinate with the distributors and provides visibility on the inventory levels and distributor sales, enabling to optimise the distribution network. It also offers real-time insights on demand for the products, allowing them to make data-driven decisions, plan the operations and meet demands of the consumers in a timely and effective manner. In addition, as of September 30, 2023, they owned a fleet of 263 logistics vehicles to support the distribution network. They operate six manufacturing facilities comprising three primary manufacturing facilities and three ancillary manufacturing facilities. The three primary manufacturing facilities are located at Nagpur, Maharashtra; Rajkot, Gujarat; and Modasa, Gujarat and these facilities primarily focus on the manufacturing of the finished products. The three ancillary manufacturing facilities primarily focus on producing besan or gram flour, raw snack pellets, seasoning and spices which are primarily used for captive consumption in the manufacturing of finished products such as gathiya, namkeen and snack pellets. Of the three ancillary manufacturing facilities, two ancillary manufacturing facilities are located at Rajkot, Gujarat and one ancillary manufacturing facility is located at Modasa, Gujarat. As of September 30, 2023, the aggregate annual installed capacity of the six manufacturing facilities was 404,728.76 MT, of which the aggregate annual installed capacity of the three primary manufacturing facilities (including the annual installed capacity for papad which is manufactured at one of the ancillary manufacturing facilities located in Rajkot, Gujarat) was 303,668.76MT and the aggregate annual installed capacity of the three ancillary manufacturing facilities (excluding the annual installed capacity for papad) was 101,060.00 MT. Capacity utilisation of primary facilities for FY21, FY22, FY23 and H1 FY24 is respectively 40.08%, 32.36%, 27.56% and 28.64%, and for ancillary facilities is respectively 62.33%, 58.91%, 52.39% and 51.10%. The manufacturing operations are vertically integrated which include in-house manufacturing capabilities of certain key ingredients such as besan or gram flour, raw snack pellets, spices and seasoning, as well as the ability to tailor machines to the specific needs for manufacturing of the product portfolio. Further more, they have an engineering and fabrication facility at Rajkot, Gujarat to manufacture customised containers which are mounted on vehicles for transportation of the products to distributors. They also have a cold storage within the primary manufacturing facility at Modasa, Gujarat, with a capacity of 40,000MT as of September 30, 2023. The vertically integrated manufacturing operations allow to control the production process enabling to manage costs, achieve increased operational efficiency and exercise better control over the quality and source of the ingredients. As per financial performance, Gopal Snacks Limited has posted total income / net profits of Rs 1,129.84 Cr / Rs 21.12 Cr (FY21), Rs 1,356.48 Cr / Rs 41.54 Cr (FY22), Rs 1,398.54 Cr / Rs 112.37 Cr (FY23) and Rs 677.97 Cr / Rs 55.57 Cr (Q2 FY24). So as per previous financials data, company has shown average sales growth, but net-profit increased and its mainly due to low raw material (food grains & oil) prices. Company has an average EPS of Rs 5.90 and average RoNW of 29.70% for last three fiscals. Issue is priced at a P/BV of 14.43 as per NAV of 27.78 as on 30.09.23. If we attribute latest earnings of FY22, FY23, TTM and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 120.29, 44.47, 43.08 and 44.96 respectively, which looks fairly priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, three lead managers are associated with this IPO, and have handled around 106 IPOs in last three fiscals. 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As of now, from last 10 Main Board IPOs, three are trading below issue price and remaining are trading above issue price.( As on 01.03.2024 ) As per financials, Gopal Snacks Limited has shown good results, RoNW is 38.63% and P/E is respectively 120.29, 44.47, 43.08 and 44.96 as per FY22, FY23, TTM and annualised FY24 earnings. So, issue looks fairly priced compared to peers. Company is in business of Indian and western packed snacks & food items, which is highly competitive and fragmented segment. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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