Swasth Foodtech India Limited, a prominent player in the edible rice bran oil industry, is all set to launch its Initial Public Offering (IPO) in February 2025. Specializing in the production of premium rice bran oil, the company is known for its health-conscious offerings, boasting a balanced fat profile, high smoke point, and rich antioxidant properties, making it a healthier choice for cooking. Additionally, the company markets byproducts like fatty acids, gums, spent earth, and wax, promoting sustainability and making use of the entire oil extraction process.

The company is offering a fixed price issue amounting to ₹14.92 crore, consisting entirely of a fresh issue of 15.88 lakh shares. The IPO opens for subscription on February 20, 2025, and will close on February 24, 2025. The shares are priced at ₹94 per equity share, which will result in a market capitalization of ₹55.06 crore at the issue price.

IPO Subscription Details: Swasth Foodtech India's IPO has a lot size of 1,200 shares, meaning that retail investors will need to invest a minimum of ₹1,12,800. For High-Net-Worth Individuals (HNIs), the minimum subscription amount is ₹2,25,600, covering 2 lots (2,400 shares). Horizon Management Private Limited is the book running lead manager, while Mas Services Limited is the registrar for the IPO. The shares are expected to list on the BSE SME platform, with the listing date tentatively set for February 28, 2025.

Grey Market Premium (GMP) and Market Sentiment: As of now, the Grey Market Premium (GMP) for the Swasth Foodtech India IPO is at ₹0, indicating no immediate price premium. The GMP reflects the unorganized demand and supply for shares in the market, but it does not offer a definitive insight into the actual listing price. The lack of significant GMP may suggest a cautious market sentiment towards the IPO.

Financial Performance and Growth: Swasth Foodtech India has shown impressive growth in its financial performance, with revenues for the year ending September 30, 2024, reaching ₹8,863.21 lakh. The company’s EBITDA for FY2024 stood at ₹348.44 lakh, and its Profit After Tax (PAT) was ₹182.94 lakh. These figures highlight the company’s steady growth trajectory.

IPO Utilization of Proceeds: The net proceeds from the IPO will be utilized for key areas of business expansion and growth:

1. ₹329.87 lakh for setting up a new packing line at the existing manufacturing unit.
2. ₹750.00 lakh to fund the company’s working capital requirements, ensuring the smooth operation of its production processes.
3. ₹220.00 lakh will be allocated for general corporate purposes, supporting business development and expansion initiatives.

Valuation and Investment Outlook: The company’s pre-issue earnings per share (EPS) stands at ₹5.03, with a post-issue EPS of ₹3.30. The price-to-earnings (P/E) ratio for the IPO is 18.69x pre-issue and 28.49x post-issue, indicating a fully priced IPO. The company’s Return on Capital Employed (ROCE) for FY2024 is 13.48%, and the Return on Equity (ROE) is 30.97%, which is impressive but suggests limited upside potential for immediate gains.

IPO Recommendation: Despite the company’s consistent financial growth, the current market conditions and IPO pricing suggest that the Swasth Foodtech India IPO may not offer immediate listing gains. The Grey Market Premium (GMP) is at 0%, and the valuation metrics indicate that the IPO is fully priced. Therefore, it is recommended that investors avoid subscribing to this IPO for short-term gains or long-term investments at this point in time.

Conclusion: The Swasth Foodtech India IPO presents an opportunity to invest in a health-conscious company offering premium rice bran oil and sustainable byproducts. While the company has shown solid financial growth, the IPO pricing and market sentiment indicate that investors should carefully consider their options before proceeding with their investment. The lack of significant Grey Market Premium and the current valuation suggest limited upside potential, making this IPO less attractive for immediate gains.

The Upcoming IPOs in this week and coming weeks are Beezaasan Explotech, Nukleus Office.

The Current active IPO are Swasth Foodtech, HP Telecom India.

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