ICL Organic Dairy Products Limited

Started in 2013, ICL Organic Dairy Products Ltd is engaged in all sorts of dairy business such as dairy farming, breeding of mammals, and animal husbandry. The company takes the animals either under an agreement or rent with any other person on profit sharing basis to deal with all kinds of products such as milk, cream, paneer, ghee and other by-products. The company deals with milk contractors, dairymen, vendors, milers, dealers, and purveyors. The company is mainly active in Bareilly, Badaun, and Pilibhit districts of Uttar Pradesh. The company focuses on good quality milk and has a veterinary supporting staff to train the farmers. The main work of the company is to collect the milk from other dairy farmers and its own facility and distribute it to dairy establishments, sweet shops and various households. The company has total 35 employees on the date of prospectus. On the financial performance front, for the last three fiscals, ICL Organic has posted turnover/ net profits of Rs. 2.53 cr. / Rs. 0.05 cr. (FY17), Rs. 12.07 cr. / Rs. 0.35 cr. (FY18) and Rs. 15.73 cr. / Rs. 0.28 cr. (FY19). For upto 31.07.19 FY20, company had posted net profit of Rs 0.05 cr. on a turnover of Rs. 2.23 cr. For the last three fiscals, ICL Organic has posted an average EPS of Rs. 85.30 and an average RoNW of 39.25%. Its based on old equity base. The issue is priced at a P/BV of 1.03 based on its NAV of Rs. 19.38 post issue.  If we annualise latest earnings of FY20 and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 83 and if we consider FY19 earnings, than its priced at P/E of 43. So issue looks aggressively priced as average industry P/E is 29.5. The comparison between peers is shown in above table. On BRLM's front, for Finshore Management Services Limited this is the 15th IPO and from last 10 IPOs, 3 opened below issue price and remaining opened around or above issue price with 0% to 25% premium on the day of listing. As of now, from last 10 IPOs, 5 are trading below issue price and remaining above or at par issue price. ( As on 31.01.20 ) Company has shown average results and issue is priced at P/E of around 43 as per FY19 earnings, which looks aggressively priced. Also the company is working in very competitive business segments. The performance of BRLM is very poor, So we give AVOID rating to this SME IPO.

• 1 Mr. Roop Kishore Gola
• 2 Mr. Avadhesh Kumar Gola