Jay Kailash Namkeen Limited

Jay Kailash Namkeen Limited is engaged in the business of manufacturing of packaged Indian snacks. The range of Indian snacks includes Chana Jor Namkeen, Masala Chana Jor, Pudina Chana, Masala Mung Jor, Plain Mung Jor, Soya Sticks, Haldi Chanas, Chana dal, Sev Murmura & Garlic Sev Murmura, Bhavnagari Gathiya, Chana Dal, Sing Bhujia, Popcorn, Roasted Peanuts, etc. They have 186 SKUs of the 56 products ranging from Rs 5, Rs 10, 200 Grams, 400 Grams, 500 Grams, 5 Kgs. and 20 Kgs. packs. The diversified product portfolio is therefore, relatively less susceptible to shifts in consumer preferences, market trends and risks of operating in a particular product segment. The Company was initially engaged in B2B business wherein they manufacture products in bulk quantities for other well recognised companies/brands in same industry. They manufacture products and supply in the states of Assam, Bihar, Chhattisgarh, Gujarat, Madhya Pradesh, Maharashtra, Odisha, Rajasthan, Telangana and Uttar Pradesh. However, from April 2022 onwards they have also started B2C. Business along with the existing B2B business under the own brand name Kailash. They are also into wholesale trade of Chana Jor namkeen. The registered office and manufacturing facility is situated at Deeva House, Fourth Floor, Diwanpara 11/12 corner, Rajkot City, Rajkot, Gujarat-360001, India and R S No 130 P1, Plot No 7, R K Industrial Zone-7, Kuchiyadad, Rajkot, Gujarat, 360023 respectively. They have production capacity of 10 tonnes per working day at the manufacturing facility. The units are well equipped with machineries and other handling equipment to facilitate smooth manufacturing process. As per financial performance, Jay Kailash Namkeen Limited has posted total income / net profits of Rs 13.15 Cr / Rs 0.09 Cr (FY21), Rs 10.43 Cr / Rs 0.55 Cr (FY22), Rs 9.88 Cr / Rs 0.89 Cr (FY23) and Rs 6.46 Cr / Rs 0.40 Cr (upto 30.11.2023 FY24). So as per previous financials data, company has shown decline in sales growth, but sudden rise in net-profit just before IPO raises doubts. Company has posted an average EPS of Rs 2.66 and average RoNW of 24.72% for last three fiscals. Issue is priced at a P/BV of 4.14 as per NAV of 17.62 as on 30.11.2023. 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 66.81, 41.08 and 60.05 respectively, which looks aggressively priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Expert Global Consultants Private Limited is associated with this SME IPO and handled 6 SME IPOs and in last 2 year. From last 6 SME IPOs, one opened below issue price and remaining opened above issue price or at par on the day of listing. As of now from last 6 SME IPOs, two are trading below issue price and remaining are trading above or at par issue price. ( As on 21.03.24 ) As per financials, Jay Kailash Namkeen Limited has shown good results, RoNW is 24.72% and P/E is respectively 66.81, 41.08 and 60.05 as per FY22, FY23 and annualised FY24 earnings. So, issue looks aggressively priced, and sudden rise in net-profit just before IPO is very surprising. Company is in business of manufacturing of packaged Indian snacks, which is highly competitive and fragmented segment. Performance of BRLM is good. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.

• 1 Mr. Neel Narendrabhai Pujara
• 2 Ms. Tulsi Neel Pujara