Parag Foods logoParag Milk Foods IPO

Parag is one of the leading manufacturers and marketers of dairy-based branded foods in India. The company commenced its business in 1992 with collection and distribution of milk and has now developed into a dairy-based branded consumer products company with an integrated business model, manufacturing a diverse range of products including cheese, ghee (clarified butter), fresh milk, whey proteins, paneer, curd, yoghurt, milk owders and dairy based beverages targeting a wide range of consumer groups through several brands. A significant portion of its product range includes long shelf-life food and beverage products that enable it to sell its products to retail and institutional customers across India. The company derives all of its products only from cows’ milk. The company’s aggregate milk processing capacity is 2 million litres per day while its cheese plant has the largest production capacity in India, with a raw cheese production capacity of 40 MT per day.
Parag sells its products – primarily milk, curd products, ghee, paneer, butter, cheese products, UHT milk – under Gowardhan and Go brands while also selling premium cow milk under Pride of Cows brand and flavoured milk under Topp Up name. The company’s main business lines and products are as follows:
  • Gross fresh milk accounted for 20.3% of its total revenues for the nine months ended 31 December 2015.
  • Ghee, butter and cream accounted for 28.5%
  • Cheese/paneer accounted for 18.7%
  • UHT (Ultra Heat Treatment) products accounted for 4.8%
  • Whey products accounted for 2.9%
  • Skimmed milk powder and dairy whitener accounted for 10.1%
  • Other products such as curd, fruit yoghurt, gulab jamun mix, and flavoured milk accounted for 4.9%
Parag’s manufacturing facilities are strategically located at Manchar in the Pune district of Maharashtra and Palamaner in the Chittoor district of Andhra Pradesh with milk processing capacities of 1.2 million litres per day and 0.8 million litres per day, respectively.
Its institutional customers include restaurant and cafe chains such as Yum! Restaurants (India) Private Limited (for Pizza Hut, Taco Bell and KFC), Jubilant Foodworks Limited (for Domino‘s Pizza) and Sankalp Recreation Private Limited (for Sam‘s Pizza).

Parag Milk Promoters – Devendra Shah, Pritam Shah and Parag Shah

Subscription Dates 4-6 May 2016
Price Band INR220 – 227 per share
Issue Size INR767 crore
Face Value INR10 per share
Minimum Bid 65 shares
Retail Allocation 10%
Listing On BSE, NSE
Proceeds to the company INR300 crore
Expansion and Modernisation Plan INR147.7 crore
Investment in Subsidiary for financing the capital expenditure requirements INR2.3 crore
Partial repayment of the Working Capital Consortium Loan INR100 crore
General corporate purposes Remaining amount
Major shareholders in Parag Milk Foods
Name of shareholder Equity Shares Percentage (%)
Devendra Shah 14,570,832 20.69
IDFC PE 14,134,162 20.07
Netra Shah 10,272,782 14.59
Pritam Shah 9,159,888 13.01
IBEF I 4,359,749 6.19
Priti Shah 3,322,820 4.72
Poojan Shah 3,295,000 4.68
IDFC SPICE 2,411,870 3.43
IBEF 2,316,866 3.29
Iris Business Solutions Private Limited 2,314,200 3.28
Total 66,158,169 93.95

Parag Milk’s consolidated financial performance (in INR crore)

  FY2011 FY2012 FY2013 FY2014 FY2015
Total revenue 658.5 900.5 927.1 1,089.5 1,440.5
Total expenses 608.1 817.5 841.6 1,005.9 1,332.3
Profit/(loss) after tax -0.4 18.9 20.7 15.9 25.9
Net margin (%) -0.1 2.1 2.2 1.5 1.8

Parag Milk IPO Subscription Details

Category Shares offered Subscription (No. of times)
Day 1 Day 2 Day 3 Day 4 Day 5 Day 6
QIB  10,388,303 0.12 0.12  0.55 0.55  0.69  1.18
NII  5,098,447 0.02 0.22  2.65 2.66  2.66  3.10
Retail  3,398,964 0.14 0.50  1.71 1.79  1.84  2.14
Employees 300,000 0.02 0.72 0.96 0.97  0.98  1.02
Total  19,185,714 0.10 0.22 1.32 1.33  1.42  1.86

Parag Milk Foods Contact Details

Parag Milk Foods Ltd
Flat No 1, Plot No. 19,
Nav Rajasthan Society, S.B. Road,
Shivaji Nagar, Pune 411 016

Phone: +91 22 4300 5555
Fax: +91 22 4300 5580
Email: cs@paragmilkfoods.com
Website: http://www.paragmilkfoods.com

Registrar of Parag Milk Foods IPO

Karvy Computershare Private Limited
Karvy House, 46, Avenue 4, Street No. 1,
Banjara Hills, Hyderabad – 500 034
Andhra Pradesh, India

Phone: +91 40 23312454
Fax: +91 40 23311968
Email: einward.ris@karvy.com
Website: http://karisma.karvy.com

Listing Performance of Parag Milk Foods IPO

IPO Closing Date: 6 May 2016 (IPO extended to 11 May after poor demand)

Finalisation of Basis of Allotment: 11 May 2016

Initiation of refunds: 12 May 2016

Transfer of shares to demat accounts: 17 May 2016

Listing Date: 19 May 2016

Listing Price on NSE: INR217.5 per share (7.1% premium over IPO price)

Closing Price on NSE: INR248 per share (22.2% return over IPO price)

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10 Comments on "Parag Milk Foods IPO"

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Parag had a nice breakout on 1 June I think there will be a big move nexr week

Despite all the outrage, I have a feeling this IPO will make you richer on 19 May when it lists. Don’t read too much into analysis and don’t discount a good and profitable business.

Feroz Bhai, aap to baap nikle sabke…what is your view from here???

I’ve sold 50% of the allotment but will keep the rest. It is a good company with capable management and a strong brand.

Parag deserves these troubles. Strange that no one mentioned the conflict of interest for Motilal Oswal and IDFC…

@BrezzaRunner, good point but both were involved only in marketing of the IPO. At least on the face of it, there was no conflict of interest.

None of the analysts said to avoid the issue and still such poor response. If it lists at discount which has high probability, it will be double whammy for investors as there will be full allocation

Parag IPO is a good bid, fair price band

You may be right John and this review also says this stock may give some returns on listing. but why to risk when there are better options available?

Can we have the ipo review for Parag Milk please?

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