HOAC Foods India Limited is engaged in the manufacturing of flour (chakki atta), herbs & spices, unpolished pulses, grains, and yellow mustard oil in the product range and markets & sell it in and around Delhi-NCR under the brand name “HARIOM” through the Exclusive Brand Outlets. They handpick the raw materials from various parts of the country and process the products with utmost care without using artificial preservatives or chemicals, thereby creating a product portfolio of organic spices and flour, which carry the freshness and goodness of each ingredient. The model has helped them penetrate the niche segment of the market and establish a customer base in and around Delhi-NCR. Since the inception, the objective has been to produce high-quality natural spices and food products without artificial preservatives or synthetic substances. To achieve this, they have developed a business model in which they manufacture and package the products in quantities that can sustain a customer until the shelf life of the product, reducing waste and providing a diverse range of products with freshness and goodness. Presently most of the sales are derived from Delhi-NCR region. The extensive franchisee network comprised of 4 company-owned outlets and 6 franchisee-owned outlets, totalling 10 Exclusive Brand Outlets Outlets which sells and markets only the brand’s products, complemented by the sales and marketing team comprising of 12 employees, as of December 31, 2023. They also rely on D2C platform through the in-house built Mobile Application both on Google Play Store and Apple’s App Store and Company website which is available for sale of the products. They have implemented a franchisee management system that helps them coordinate with the franchise owners, store managers and provides the visibility on the inventory levels and franchisee and store sales, enabling them to optimize the distribution network and reduce the time between the food product manufactured in the facility to consumer’s kitchen which is around within same day to maximum 1 day. This strong approach towards good supply-chain management across different business processes enable them to preserve the freshness, taste and nutritional value of our products. As per financial performance, HOAC Foods India Limited has posted total income / net profits of Rs 7.46 Cr / Rs 0.13 Cr (FY21), Rs 10.94 Cr / Rs 0.10 Cr (FY22), Rs 12.19 Cr / Rs 0.59 Cr (FY23) and Rs 11.55 Cr / Rs 0.75 Cr (upto Q3 FY24). So as per previous financials data, company has shown good growth. Company has posted an average EPS of Rs 2.62 and average RoNW of 37.48% for last three fiscals. Issue is priced at a P/BV of 2.12 as per NAV of 22.64 as on post issue. 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 67.57, 31.37 and 18.57 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, GYR Capital Advisors Private Limited is associated with this SME IPO and handled 23 SME IPOs in last 3 year. From last 23 SME IPOs, all opened above issue price or at par on the day of listing. As of now from last 23 SME IPOs, six are trading below issue price and remaining are trading above issue price. ( As on 13.05.24 ) As per financials, HOAC Foods India Limited has shown good growth, RoNW is 37.48% and P/E is respectively 67.57, 31.37 and 18.57 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced. Company is in business of manufacturing of flour (chakki atta), herbs & spices, unpolished pulses, grains, and yellow mustard oil, which is highly fragmented and competitive business segment. BRLM performance is good. So, we give "SUBSCRIBE FOR LISTING GAINS" rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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