Leo Dry Fruits and Spices Trading Ltd. is launching its Book Built IPO, raising ₹25.12 crore through a fresh issue of 48.30 lakh equity shares. The IPO opens on January 1, 2025, and closes on January 3, 2025. The allotment of shares is expected to be finalized by January 6, 2025, with shares set to list on the BSE SME on January 8, 2025.

The price band for the Leo Dry Fruits and Spices Trading IPO has been set between ₹51 and ₹52 per equity share, with a market capitalization of ₹93.03 crore at the upper price band of ₹52. The lot size for the IPO is 2,000 shares, requiring a minimum investment of ₹1,04,000 for retail investors and ₹2,08,000 for High Net-Worth Individuals (HNIs). The company has a strong presence in the spices and dry fruits market, offering a wide range of products under the brand name “VANDU” for spices and dry fruits, and “FRYD” for frozen and semi-fried items.

IPO Subscription and Grey Market Premium

On the final day of the IPO, the subscription surged to an impressive 169.08x. This strong demand is a positive sign, yet the Grey Market Premium (GMP) of ₹0 reflects a lack of real trading activity based on the Grey Market, suggesting that no significant listing gains are anticipated. The Grey Market Premium is highly speculative and depends on demand-supply dynamics, so it is not advisable for investors to base decisions on this figure.

Leo Dry Fruits and Spices Trading’s Financial Performance

For the fiscal year 2024, Leo Dry Fruits and Spices Trading reported revenue from operations of ₹6,226.51 lakh, with an EBITDA of ₹1,123.08 lakh and a Profit After Tax (PAT) of ₹663.69 lakh. This demonstrates the company’s consistent growth over the years. The EPS for the company is ₹5.21 pre-issue and ₹3.71 post-issue, with a P/E ratio of 9.98x pre-issue and 14.02x post-issue, which is lower than the industry average of 71x, suggesting that the IPO is fairly priced.

Leo Dry Fruits and Spices Trading’s Return on Capital Employed (ROCE) stands at 33.52%, and Return on Equity (ROE) is 34.12%, which indicates that the company is generating healthy returns on its investments. These strong financials provide confidence in the company’s growth prospects.

The Objectives of the IPO

The company plans to utilize the proceeds from the Leo Dry Fruits and Spices Trading IPO for working capital requirements (₹1,500 lakh), branding, advertisement, and marketing activities (₹425 lakh), and general corporate purposes. These initiatives will likely help the company strengthen its market position and further expand its operations.

Key Risks and Recommendations

Although the company has demonstrated steady financial growth, the Grey Market Premium (GMP) is currently ₹0, which suggests that the listing gains may not be substantial. Moreover, while the IPO is reasonably priced, potential investors should consider the long-term growth prospects of the company rather than expecting immediate listing gains.

We recommend that investors exercise caution and consider their investment horizon before subscribing to the Leo Dry Fruits and Spices Trading IPO. If you are looking for long-term growth, this IPO might be a viable option, but if you are expecting quick listing gains, it may not meet your expectations.

The Upcoming IPOs in this week and coming weeks are Sat Kartar Shopping,Barflex Polyfilms.

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