Freshara Agro Exports is poised to make a significant impact in the pickled commodities market with its upcoming IPO. The company specializes in the procurement, processing, and export of preserved gherkins and other pickled products from India, catering to a diverse range of international markets. This article delves into the details of the Freshara Agro Exports IPO, offering potential investors valuable insights into its financial performance and investment opportunities.

Company Profile

Freshara Agro Exports operates on a model that emphasizes sustainability and support for local farmers. The procurement process is meticulously designed to source products directly from accredited farms, focusing on sustainable agricultural practices. By establishing buy-back agreements with farmers, Freshara ensures a stable supply chain while providing essential resources like seeds to small and marginal farmers. This approach not only promotes sustainable farming but also strengthens the economic fabric of local communities.

IPO Details

The Freshara Agro Exports IPO aims to raise ₹75.39 Crores through a Fresh Issue of 64.99 Lakh Shares. The subscription period is set to open on October 17, 2024, and close on October 21, 2024. The allotment of shares is expected to be finalized by October 22, 2024, with the listing anticipated on the NSE SME by October 24, 2024. The price band for the shares is set between ₹110 and ₹116, with a minimum lot size of 1,200 shares.

For retail investors, this translates to a minimum investment requirement of ₹1,39,200, while High-Net-Worth Individuals (HNIs) are required to invest a minimum of ₹2,78,400 for two lots. Such structured investment opportunities provide a clear pathway for various investor categories to participate in the IPO.

Anchor Investors

Freshara Agro Exports has successfully garnered interest from Anchor Investors, raising ₹20.43 Crores at a price of ₹116 per share. The allocation of 17,61,600 equity shares to these investors showcases the confidence the market has in Freshara’s business model and future growth potential.

Grey Market Premium (GMP)

The Grey Market Premium (GMP) for Freshara Agro Exports is currently projected at ₹35, indicating positive sentiment towards the IPO. This premium suggests a potential listing gain of around 30%, although it’s essential to note that GMP figures are derived from demand and supply in the unregulated market and may not reflect actual trading conditions once the shares are listed.

Financial Performance

Analyzing the financial performance of Freshara Agro Exports reveals a consistent growth trajectory:

Revenue from Operations for FY 2021-22 was ₹11,840.68 lakhs, which rose to ₹12,700.22 lakhs in FY 2022-23.

The current year figures indicate revenue of ₹12,476.60 lakhs for the period ending January 23, 2024, and ₹7,324.98 lakhs for Q1 FY24.

EBITDA and Profit after Tax have also shown remarkable improvements, underscoring the company's operational efficiency and profitability:

EBITDA stood at ₹1,749.30 lakhs for FY 2022-23, with the latest figures reflecting a robust ₹1,385.66 lakhs in Q1 FY24.

The Profit after Tax reached ₹996.77 lakhs for the same period, showcasing the company’s capacity for sustainable growth.

These metrics translate into a pre-issue EPS of ₹12.83 and a post-issue EPS of ₹9.29, presenting a pre-issue P/E ratio of 9.04x and a post-issue P/E ratio of 12.49x. The Return on Capital Employed (ROCE) for 2MFY24 stands at 10.04%, while the Return on Equity (RoE) is an impressive 36.96%.

Use of IPO Proceeds

The proceeds from the Freshara Agro Exports IPO will be allocated as follows:

₹879.97 Lakhs for capital expenditure.

₹5,600.00 Lakhs to fund working capital requirements.

General corporate purposes.

Covering issue expenses.

This strategic allocation of funds indicates the company's commitment to leveraging the IPO to foster growth and enhance operational capacity.

Investment Recommendation

Given the financial performance and strategic approach of Freshara Agro Exports, the IPO is regarded as fairly priced. The potential for listing gains, combined with the company's sustainable business model, makes it an attractive opportunity, particularly for risk-tolerant investors. While the GMP points to a positive outlook, investors should consider their risk profiles before committing funds.

Conclusion

As the subscription period approaches, potential investors are encouraged to evaluate the Freshara Agro Exports IPO thoroughly. With solid financials, a sustainable business model, and a promising market position, this IPO presents a compelling opportunity for those looking to invest in the growing pickled commodities sector.

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