Harshdeep Hortico Limited is primarily engaged in the business of designing, developing, manufacturing and supplying of various types of pots and planters like: plastic Indoor Planters, Outdoor Planters, Illuminated Planters, Decorative Planters, Roto Moulded Planters, Fiber Reinforced Plastic (FRP) Planters, Eco series Planters etc. along with related accessories like Garden Hose Pipe & Water Can. Apart from this recently they have also entered into the field of Roto Moulded Outdoor Furniture. The company’s product portfolio comprises of more than 500 different variants of pots, planters and related accessories which are available in multiple size and color. For the period ending July 31, 2023, the Roto Moulded Series, Grower Series, Indoor Series, FRP Series & Gropo Series contributed 30.22%, 26.12%, 15.13%, 7.37% & 6.80% of total revenue of said period. Other categories of planters like Decorative Series, Garden Furniture, Eco Series, Illuminated Planters/Furniture & other Garden Accessories collectively contributed to 14.36% of total revenue of said period. Currently they have two manufacturing units, one is situated at Building No.1 Shree Sai Logistics, Survey No.18/2E 18/2P 17/2A, 17/2B Part, Elkunde, Bhiwandi, Thane - 421302, Maharashtra – India, spreading in an area of 93769 sq. ft. and the other one is situated at Gat No. 589, Darekarwadi Road, Boriaind, Daund, Pune -412202, Maharashtra, India, spreading in an area of 40000 sq. ft., along with three stores located in Delhi, Pune (Maharashtra) and Rajahmundry (Andhra Pradesh). Apart from these manufacturing units and stores, they have 04 Distributors at Hyderabad, Kolkata, Chandigarh and Visakhapatnam, who are exclusively dealing in the products. They provide an Omni-channel experience to customers through the website, various online marketplaces such as Amazon and Flipkart, as well as, social media platforms like Facebook and Instagram to promote the products. Currently, they market the products to around 27 states & Union Territories in India of which majority portion of the revenue comes from the state of Maharashtra. They had also exported the products from the Proprietorship concern- M/s Harshdeep Agro Products in past to countries such as Djibouti, East Africa, United Kingdom, Nepal etc. The revenue from exports for fiscal 2023 and 2022 was Rs 75.58 lakhs and Rs 70.25 lakhs respectively which constituted 1.85 % and 2.02 % of the revenue from operations for the respective fiscal. As per financial performance, Harshdeep Hortico Limited has posted total income / net profits of Rs 25.31 Cr / Rs 2.00 Cr (FY21), Rs 35.05 Cr / Rs 2.48 Cr (FY22), Rs 41.06 Cr / Rs 2.23 Cr (FY23) and Rs 14.83 Cr / Rs 1.77 Cr (upto 4M FY24). So as per previous financials data, company has shown growth, but sudden rise in net profit just before IPO raises doubts. Issue is priced at a P/BV of 4.02 as per NAV of 11.19 as on 30.07.2023. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 29.23, 32.49 and 13.62 respectively, which looks fully priced. As per RHP, there are no listed peers. On BRLM's front, Hem Securities Limited is associated with this SME IPO and handled 38 SME IPOs in last 3 year. From last 10 IPOs, all are opened above issue price on the day of listing. As of now from last 10 IPOs, all are trading above issue price. ( As on 23.01.24 ) As per financials, Harshdeep Hortico Limited has shown average results, RoNW is NA and P/E is respectively 29.23, 32.49 and 13.62 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced. But sudden rise in net profit just before IPO raises doubts and it may be difficult to maintain same margin in future. Company is in business of designing, developing, manufacturing and supplying of various types of pots and planters, which is highly competitive and fragmented segment. Performance of BRLM is good. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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