Ramdevbaba Solvent Limited is in the business of manufacturing, distribution, marketing and selling of Physically Refined Rice Bran Oil ('Rice Bran Oil'). They manufacture and sell Rice Bran Oil to FMCG companies like Mother Dairy Fruit & Vegetable Private Limited, Marico Limited and Empire Spices and Foods Ltd. They also manufacture, market and sell Rice Bran Oil under the own brands 'Tulsi' and 'Sehat' through thirty-eight distributors who in turn sell to various retailers across Maharashtra. Rice bran oil is the oil extracted from the hard outer brown layer of rice called ‘bran’. It is well known for its high smoke point of 232 °C i.e. 450 °F and mild flavour, making it fit for high-temperature cooking methods such as stir-frying and deep-frying. It has an ideal balance of Polyunsaturated Fats (PUFA) and Monounsaturated Fats (MUFA), in almost a 1:1 ratio. Since rice bran oil is made from bran, it is rich in Vitamin E, an antioxidant. Company also produces De-oiled Rice Bran (DORB), which is a by-product in the extraction of Rice Bran Oil and sell the same as cattle feed, poultry feed and fish feed in the States of Maharashtra, Goa, Gujarat, Madhya Pradesh, Andhra Pradesh, Telangana, Karnataka, Kerala and Tamil Nadu. Other by-products such as fatty acid, lecithin, gums, spent earth and wax are sold in the open market. Manufacture of Rice Bran Oil mainly involves two processes: (i) solvent extraction of crude oil from rice bran, having capacity of 2,55,000 MTPA; and (ii) refining the extracted crude rice bran oil, having capacity of 48,000* MTPA as on the date of this Red Herring Prospectus. They own and operate two (2) Manufacturing Facilities, one (1) in Mahadula and one (1) in Bramhapuri near Nagpur, in the State of Maharashtra, which are strategically located in Central India. The Manufacturing Facilities have extraction and refining divisions which enables integrated production and processing of Rice Bran Oil. As per financial performance, Ramdevbaba Solvent Limited has posted total income / net profits of Rs 427.17 Cr / Rs 6.17 Cr (FY21), Rs 585.25 Cr / Rs 6.59 Cr (FY22), Rs 704.33 Cr / Rs 13 Cr (FY23) and Rs 465.69 Cr / Rs 8.28 Cr (upto Q3 FY24). So as per previous financials data, company has shown very good growth, but sudden rise in net-profit just before IPO raises doubts. Company has posted an average EPS of Rs 7.07 and average RoNW of 26.69% for last three fiscals. Issue is priced at a P/BV of 3.74 as per NAV of 22.72 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 28.53, 14.46 and 17.02 respectively, which looks fully priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Choice Capital Advisors Private Limited is associated with this SME IPO and handled one Main Board IPO in last 1 year. from last 1 Main board IPO, all opened above issue price or at par on the day of listing. As of now from last 1 Main board IPO, that is trading above issue price. ( As on 05.04.24 ) As per financials, Ramdevbaba Solvent Limited has shown good results, RoNW is 23.97% and P/E is respectively 28.53, 14.46 and 17.02 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced, but sudden rise in net-profit just before IPO is very surprising. Company is in business of manufacturing, distribution, marketing and selling of Physically Refined Rice Bran Oil. So, we give NEUTRAL rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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