HOAC Foods India Ltd. (HFIL), a key player in the organic food sector, specializes in manufacturing flour (chakki atta), herbs and spices, unpolished pulses, grains, and mustard oil. The company's products, marketed under the "HARIOM" brand, are sold through Exclusive Brand Outlets in the Delhi-NCR region. HFIL emphasizes quality by sourcing raw materials from across India and processing them without artificial preservatives or chemicals, ensuring freshness and natural goodness in every product.
Since its inception, HFIL has carved out a niche market, gaining a loyal customer base in and around Delhi-NCR. The company’s commitment to high-quality, preservative-free products has been the cornerstone of its success. By packaging products in quantities that match their shelf life, HFIL minimizes waste while offering a diverse, fresh product range.
HFIL operates through an extensive network of 10 Exclusive Brand Outlets, comprising 4 company-owned and 6 franchisee-owned stores. This network is supported by a robust direct-to-consumer (D2C) platform, including a mobile app available on Google (NASDAQ:GOOGL) Play and the Apple (NASDAQ:AAPL) App Store, and a company website. The franchisee management system enhances coordination among franchise owners and store managers, optimizing inventory levels and sales. This efficient system ensures that products reach consumers within a day of manufacturing.
As of December 31, 2023, HFIL employed 50 people and utilized contract labor as needed.
HFIL is launching its initial public offering (IPO) of 1,155,000 equity shares at INR 48 per share, aiming to raise INR 5.54 crore. The subscription period is from May 16 to May 21, 2024, with a minimum application of 3000 shares. Post-IPO, the shares will be listed on NSE SME Emerge, with the issue representing 30.05% of the company’s post-IPO paid-up capital. The IPO proceeds will be allocated as follows: INR 3.50 crore for working capital, INR 1.45 crore for general corporate purposes, and INR 0.59 crore for IPO expenses.
The IPO is managed by GYR Capital Advisors Pvt. Ltd., with KFin Technologies Ltd. as the registrar and Giriraj Stock Broking Pvt. Ltd. as the market maker. Previous equity shares were issued between INR 34 and INR 85, with bonus shares issued at a 75:10 ratio in October 2023. The average acquisition cost for promoters ranges from INR 2.63 to INR 85 per share.
HFIL has demonstrated steady financial growth. From FY21 to FY23, total income increased from INR 7.46 crore to INR 12.19 crore, while net profit rose from INR 0.13 crore to INR 0.59 crore. For the nine months ending December 31, 2023, the company reported a net profit of INR 0.75 crore on a total income of INR 11.55 crore. HFIL has maintained an average EPS of INR 2.62 and an average RoNW of 34.67% over the past three fiscal years.
The IPO price is set at a P/BV of 4.09 based on a NAV of INR 11.74 as of December 31, 2023, and a P/BV of 2.12 based on the post-IPO NAV of INR 22.64 per share. The P/E ratio is 18.53 based on FY24 earnings and 31.37 based on FY23 earnings, indicating that the issue is fully priced.
HFIL operates in a competitive, fragmented market and has shown solid financial performance. While the IPO appears fully priced, its small equity capital post-IPO suggests a longer gestation period for significant returns. Informed investors with surplus funds might consider this IPO for moderate, medium-term investment.
Once the IPO hits the market, investors can do an extremely detailed and accurate analysis via InvestingPro+ before any analyst can come out with their analysis. To stay ahead of the game, click here to try the advanced features of InvestingPro+ at a steep discount of over 69% of INR 526/month.
X (formerly, Twitter) - Aayush Khanna