About the company
Prabhat Dairy, incorporated in 1998, is a firm which sells dairy products to both institutional and retail customers of India. The firm is in three verticals namely: integrated business, consumer business and co-manufacturing. Some of the products in their portfolio include fresh, dry, frozen, cultured and fermented dairy products, including pasteurized milk, flavoured milk, sweetened condensed milk, ultra-pasteurised or ultra-high temperature (UHT) milk, yoghurt, dairy whitener, clarified butter (ghee), milk powder, ingredients for baby foods, lassi and chaas. As of June 30, 2015, the firm had an aggregate milk processing capacity of 1.5 million litres per day.
Issue proceeds will be used for
Prabhat Dairy, incorporated in 1998, is a firm which sells dairy products to both institutional and retail customers of India. The firm is in three verticals namely: integrated business, consumer business and co-manufacturing. Some of the products in their portfolio include fresh, dry, frozen, cultured and fermented dairy products, including pasteurized milk, flavoured milk, sweetened condensed milk, ultra-pasteurised or ultra-high temperature (UHT) milk, yoghurt, dairy whitener, clarified butter (ghee), milk powder, ingredients for baby foods, lassi and chaas. As of June 30, 2015, the firm had an aggregate milk processing capacity of 1.5 million litres per day.
Issue proceeds will be used for
- Increasing their manufacturing capacity
- Developing their logistics chain
Risks
- Margins are very low around 2% level.
- Sales to institutional clients are more (around 75%) and top five clients contribute around 36%.
Industry
Currently, about 42% of the total milk produced in India is purchased by consumers directly from milk farmers in a raw form. The remaining 58% goes for processing and is sold as processed milk and milk products like curd, yogurt, buttermilk, lassi, butter, ghee, ice cream, frozen desserts, cheese, paneer, khoa and milk powder (including skimmed and whole). The processed dairy industry in India was estimated to be around ₹3,650-3,700 billion. The processed milk and milk products segment is expected to record about 12-13% CAGR between Fiscal 2014 and Fiscal 2017. Growth will be driven by several factors such as changing lifestyle of consumers, growth in the food services industry, increasing urbanisation.
Financial
The firm's total revenue increased at a CAGR of 36.71% from Rs 2,868.21 million in Fiscal 2011 to Rs 10,017.38 million in Fiscal 2015, while their profit after tax increased at a CAGR of 22.06% from Rs 94.81 million in Fiscal 2011 to Rs 210.45 million in Fiscal 2015. In the same period, the firm's EBITDA increased at a CAGR of 48.00% from Rs 213.75 million in Fiscal 2011 to Rs 1,025.50 million in Fiscal 2015.
Valuation
At the price band of Rs 140 – Rs 147, the firm is valued at an 43.8x to 46.4x which looks expensive. Therefore, the firm may not be a good bet for listing gains. The dairy industry is a very competitive one, so the firm may face difficulty in gaining market share.
No comments:
Post a Comment