Incorporated in 1992, Tasty Dairy Specialities Ltd is engaged in processing milk, along with bulk milk procurement and handling during season time which primarily caters to bulk and marquee institutional customers. Company is further involved in value added milk products like Skimmed Milk Powder, Butter, Ghee, Dairy Whitener, Concentrated Milk etc. They have wide range of quality dairy products which includes Pasteurized Liquid Milk, Cream, Butter (White/Salted), Pure Desi Ghee (Clarified Butter), Paneer (Fresh Cottage Cheese), Skimmed Milk Powder, Full Cream Milk Powder, Dairy Whitener, Instant Gulab Jamun Mix, Peda (an Indian Sweet), Mithai Powder etc. Thhey are packaged under the brand names 'UJJWAL', 'SHIKHAR', 'VERIFRESH', 'CIMA', 'MITHAI MASTER' and are available in Uttar Pradesh, Madhya Pradesh and Bihar. Currently they process approximately 5,00,000 litres of raw milk which comprises of 1,60,000 litres of milk packaging, 20,000 litres of buttermilk packaging, 2,20,000 Litres of Skimmed Milk Powder and Ghee and 2,00,000 litres of bulk milk processing. Company's customer base includes Delhi Milk scheme (a Central Government of India Organisation), Mother Dairy (wholly owned subsidiary of the National Dairy Development Board (NDDB)), Parle Products, Sterling Agro Industries Limited, Kwality Dairy Limited, Perfetti Van Melle etc. On performance front, TDSL has posted turnover/net profits of Rs. 251.90 cr. / Rs. 5.43 cr. (FY14), Rs. 307.95 cr. / Rs. 4.48 cr. (FY15), Rs. 334.88 cr. / Rs. 4.63 cr. (FY16) and Rs. 239.00 cr. / Rs. 4.52 cr.(FY17). Though its top line marked growth from FY 14 to FY 16, it marked declined in bottom lines. For FY17 it suffered a setback in top line as well, but surprising posted similar net profit. For first half of the current fiscal, company has earned net profit of Rs. 2.43 cr. on a turnover of Rs.137.40 cr. For last three fiscals it has posted an average EPS of Rs. 2.51 and average RoNW of 6.56% on an equity base of Rs. 9 crore. However, company has posted an average EPS of Rs. 1.51 on post bonus equity as on 30.09.17. Issue is priced at a P/BV of 1.83 on the basis of its NAV of Rs. 24.57 as on 30.09.17 and at a P/BV of 1.5 on the basis of its post issue NAV of Rs. 30. If we annualise latest earnings and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 19 against listed peers trading at Kwality (16), Prabhat Dairy (76) and Hatsun Agro (96). Issue appears fully priced based on its performance parameters. Group's three companies are also dealing in similar business. On merchant banker's front, this is the 2nd mandate from its stable and the only one listing took place so far i.e. Madhya Pradesh Media opened around 6% premium to offer price. As per financials, top line shown growth till from FY14 to FY16 and set back in FY17, where as bottom line remain nearly in same line and issue is also priced fully. Dairy business and specifically organised, has huge growth potential. But there is stiff competition from big players. So we give NEUTRAL rating to this SME IPO.
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