Started in 2011, Megastar Foods Ltd is Chandigarh based Company, and is engaged in the manufacturing of food based products such as wheat flour, organic wheatflour products and allied flour products. Basically, company produces food products related to wheat i.e. Atta-wheat flour products, Maida-Fine wheat flour products, Suji/Rawa-Semolina, Chokar/Wheat Bran, Organic Atta, Organic whole Wheat flour and Organic wheat flour etc. MFL is an FSSC 22000 certified company for food safety systems including ISO 22000:2005, ISO 22002-1:2009 and additional FSSC 22000 requirements in respect of Processing (Pre Cleaning, Cleaning, milling, Sifting) of Wheat products like Atta, Maida, Suzi, Bran and its packaging in HDPE laminated bags and Poly Pouch bags by Intertek Certification Limited, United Kingdom. Company is having FSSAI license, Organic Certificate for in accordance with the requirements of India's National Programme for Organic Production Standards by the Ecocert India Pvt. Limited, HALAL certified by HALAL India Pvt. Ltd etc. MFL is having wheat processing plant in Punjab, India, with an installed capacity of 81000 MT per year and its operating around 57% capacity utilisation and company is planning to take it to around 77% till FY 19-20. At present, company is catering majorly to MNC's in India and also exporting some of its products to United Nations Organization, Europe, United States & Middle East. Company has maintained long-standing relationship with its major customers such as Jubilant Foodworks Limited, NestleIndia Limited, GSK (Glaxo Smithklime Consumer healthcare Limited), Pepsico India Holding Pvt. Ltd., UB (United Biscuits Pvt. Ltd.) and ITC Limited etc. Currently, company has 62 employees including Key Managerial Personal as on December 31, 2017. As per financial performance, MFL has posted total revenue/net profits of Rs. 7.85 cr. / Rs. - (0.11) cr. (FY14), Rs. 44.50 cr. / Rs. - (0.28) cr. (FY15), Rs. 78.04 cr. / Rs. 0.59 cr. (FY16) and Rs. 97.76 cr. / Rs. 1.06 cr. (FY17). For the period upto Q3 of FY18, it has earned net profit of Rs. 0.87 cr. on a turnover of Rs. 78.37 cr. So company has shown good performance in top-line and bottom line. Issue is priced at a P/BV of 1.83 on the basis of its NAV of Rs. 16.4 post issue. For last three fiscals, it has posted an average EPS of Rs. 1 and an average RoNW of 9.52%. If we annualise latest earnings and attribute it on fully diluted equity post issue then asking price is at a P/E of around 26, against industry average of 38. As per RHP, DFM Foods is a listed peer and its trading around P/E of 65 as per 11.05.18 closing price. For the BRLM, Swastika Investmart Limited, this is 14th IPO in last three fiscals. Out of last 10 listings, 2 opened at a discount to offer price and the rest with a premium ranging from 2.8% to 20% on the day of listing. If we check latest performance if last 10 listings, than 4 are trading below issue price as on 14.05.18. As per financials, company's performance is good and consistent, RoNW is 9.52% for last three fiscals and issue is reasonably priced as per latest earnings. We give NEUTRAL rating to this SME IPO as per the current market condition.
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