Jhandewalas Foods Limited

Started in 2006, Jhandewalas Foods Limited is Jaipur, Rajasthan based company involved in manufacturing of Ghee, Mangodi, Poha, Saffron and Dalia. These products are marketed under their brand name 'Naman' and 'Godhenu'. Currently, company has a one manufacturing unit, located at Jaipur, Rajasthan. The unit also have an in-house laboratory for testing the quality of products. Company has employed 84 employees (including skilled, semi-skilled and unskilled). On financial performance front, JFL has posted turnover/net profits of Rs. 115.88 cr. / Rs. 0.77 cr. (FY13), Rs. 152.04 cr. / Rs. 1.16 cr. (FY14), Rs. 141.51 cr. / Rs. 1.77 cr. (FY15), Rs. 142.75 cr. / Rs. 0.94 cr. (FY16), Rs. 148.66 cr. / Rs. 2.38 cr. (FY17). For FY16 it suffered a setback in bottom lines as per the general trends for the industry. For Q1 of the current fiscal, it has reported net profit of Rs. 0.59 cr. on a turnover of Rs. 33.77 cr. For last three fiscals it has posted an average EPS of Rs. 5.75 and average RoNW of 14.79% on an equity base of Rs. 3.13 crore. Issue is priced at a P/BV of 1.24 on the basis of NAV of Rs. 44.35 as on 30.06.17 and at a P/BV of 1.89 on the basis of post issue NAV of Rs. 29.12. If we annualize latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 24 against industry average of around 113. As per offer documents its peers Prabhat Dairy, Parag Milk and Hatsun Agro are trading at a P/E of around 130, 163 and 88 (with an average P/E of 127 - as on 22.12.17). For last three years JFL's capacity utilization remained under 50% and it hopes to raise it and take upto 83% till 2020. On merchant banker's front, this is the 22nd mandate from its stable in past three years. Out of last 10 listings, 3 opened at a discount, 2 at par and the rest at a premium ranging from 5% to 20% to offer price on the day of listing. As per financials, top line is almost same since FY14 and bottom line has seen incremental rise except FY16, RoNW is 14.79% for last three fiscals and issue is reasonably priced as per latest earnings. Company is in food processing and dairy products and it is expected Government is going to give boost to thi industry and GST will give benefit to organized players of the sector, so we give SUBSCRIBE rating to this SME IPO.

• 1 Mr. Raakesh B. Kulwal
• 2 Mrs. Jinko Devi Koolwal