Started in 2013, Bangalore based Valencia Nutrition Limited is an applied biotechnology startup. Valencia Nutrition Limited is engaged in developing, researching, marketing and quality control activities of high-quality nutraceutical products (multi-nutrient functional beverages which are used to prevent lifecycle related diseases). The company works under two brand names which are Bounce Superdrinks & VitaMe Enriched Beverage. Under Bounce Superdrinks, Valencia sells out low-calorie hydration drink range including Vitalize, Sports, Glucose, Gluco Fizz, Lemon Fizz, and Jeera Fizz products. VitaMe brand consists of multi-nutrient drinks which are Watermelon Prebiotic, Guava Electrolite, Lemon - Lime Antioxidant Burst and Litchi- Mint Unwind. Valencia has an in-house research and development team to create formulations and add new products by testing and developing at final saleable forms. The company outsources the manufacturing, packaging, bottling and transportation work. The Company is bridging the increasing gap between demand & supply for healthy products with its healthy, nutritious & flavoursome drinks - 'Bounce Superdrinks' & 'VitaMe Enriched Beverage'. VNL has been working in a most focused manner since the last 4 years to fully evolve a well-researched product and develop a niche brand within this nascent but high potential market. However, as per market reports, there are many players (domestic as well as MNCs) in this segment and hence it is poised for competitions. On the financial performance front, for the last three fiscals, VNL has posted turnover/ net profits of Rs. 0.74 cr. / Rs. - (1.47) cr. (FY17), Rs. 0.43 cr. / Rs. - (1.16) cr. (FY18) and Rs. 1.49 cr. / Rs. - (2.14) cr. (FY19). For Q1 FY20, company had suffered loss of Rs - (0.92) cr. on a turnover of Rs. 0.93 cr. For the last three fiscals, VNL has posted an average EPS of Rs. - (7.33) and an average RoNW of - (17.93)%. The issue is priced at a P/BV of 1.80 based on its NAV of Rs. 25.61 as on 30.06.19 and at a P/BV of 2.89 based on post IPO NAV of Rs 15.94. Due to negative earnings company has negative P/E and its risky bet. As per offer documents, VNL has no listed peers to compare with. On BRLM's front for Aryaman Financial Services Limited, this is the 37th IPO in the last three fiscals (including the ongoing). Out of last ten listing, two opened at discount and the rest with premiums ranging from 0.03% to 2% on the day of listings. As of now from last 10 IPOs, 8 are trading below issue price and remaining above or near issue price. ( As on 19.12.2019 ) Company has shown very poor results. The industry is expected to grow at CAGR of around 7-8% and competition between local players and MNC expected to grow with time. The performance of BRLM is average, So we give AVOID rating to this SME IPO.
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