Started in 2014, Indore based Soni Soya Products Limited is engaged in the business of processing and trading of organic and non-genetically modified organisms (non-GMO) agricultural products such as Soya, Maize ( Corn), Wheat, Flax seeds and Mustard, Oil, Rice, Pulses, Herbs, Spices, and other grains. The Company is registered with U.S. Food and Drug Administration pursuant to the Federal Food Drug Cosmetic Act and the FDA Food Safety Modernization Act. Soni Soya is also registered with Agricultural and Processed Food Products Export Development Authority of Government of India (APEDA) to export such scheduled products as per APEDA Act, 1985. The Company is equipped with an in-house testing laboratory to test the products. Its customer base is spread across the globe with presence in countries like Canada, Dubai, South Korea, Sri Lanka, United States of America. The majority of sales revenues are through direct exports which contributed to 97.71%, 82.05% and 67.84% for March 31, 2015, 2016, and 2017 respectively. The company has 24 employees on its payroll. On financial performance front, SSPL has posted total income/net profits of Rs. 8.00 cr. / Rs. 0.21 cr. (FY15), Rs. 15.19 cr. / Rs. 0.08 cr. (FY16), Rs. 28.77 cr. / Rs. 0.50 cr. (FY17). For H1 of FY18, it has earned net profit of Rs. 0.75 cr. on a turnover of Rs. 35.22 cr. which is surprising. Company has shown sharp increase in its revenue YoY, but net profit is very low. For last three fiscals it has posted an average EPS of Rs. 1.40 and an average RoNW of 27.83%. Issue is priced at a P/BV of 1.38 on the basis of its post issue NAV of Rs. 18.16. If we annualise latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 9 against industry average of 24. It has shown Ruchi Soya, LT Foods, Gokul Agro, Kriti Nutri, Shanti Overseas and Sanwaria Consumer as its listed peers which are trading at a P/E of around –(0.46), 16, 14, 18, 7 and 14 (as on 23.03.118 closing on BSE/NSE). Issue appears fully priced, considering current market scenario. On merchant banker's front, this is 67th mandate from its stable in last three fiscals. Out of last 10 listings, 1 opened at discount to offer price, 1 just Rs. 0.05 paisa up on offer price, 7 with a premium ranging from 4% to 20% and 1 (main board issue) with a premium of 130% on the offer price on the day of listing. As per financials, company's performance in top line, is very good, but net profit is very low. RoNW is 27.83% for last three fiscals and issue is fully priced as per latest earnings. So we give NEUTRAL rating to this SME IPO as per current market situation.
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