Vadodara-based FMCG player Manpasand Beverages has made changes in its IPO structure and now existing shareholders SAIF Partners and Aditya Birla Equity will also participate in the issue. The IPO will result in 25% equity dilution. Promoter Dhirendra Singh will account for 17% of the total share to be sold while SAIF Partners and Aditya Birla Equity will account for 7% and 1% respectively. Total number of shares to be sold will be finalized after the IPO is closed. The company has set a price band of INR290-320 per share and aims to raise INR400 crore through the IPO that opens today and closes on Friday (26 June). Manpasand Beverages plans to use the funds to set a new manufacturing facility, to modernize its twin facilities in Vadodara and Varanasi, and to repay borrowings.
Manpasand Beverages has also allotted 56.25 lakh shares to 11 anchor investors at a price of INR320 per share. In a statement available on the website of National Stock Exchange (NSE), Manpasand Beverages said Birla Sun Life Insurance, ICICI Prudential Life Insurance, BNP Paribas and Goldman Sachs India Fund were prominent names among anchor investors. Goldman Sachs India Fund and Birla Sun Life Insurance were the biggest buyers with 10.93 lakh and 5.75 lakh shares respectively.
Also Read: Plenty to like in Manpasand Beverages IPO
Analysts cautious over valuations
Participationn of existing shareholders in the issue is not a negative for this high-growth company but analysts have voiced concerns over high valuations of the IPO. In a note, Reliance Securities said Manpasand Beverages’ price to earnings (P/E) valuation of 28 on the basis of FY 2016/17 earnings is high considering stocks of several large FMCG players are available at better valuations.
Angel Broking is also advising caution on the IPO stating that the company has high dependence on its Mango Sip brand and on rural and semi-urban areas.
On the price to earnings per share (EPS; post-IPO) front, the company is valued at 95x 9MFY2015 annualised numbers, while its close peer Dabur is trading at 44x FY2015 numbers
– Angel Broking
Manpasand Beverages is largely known for its Mango Sip brand which is sold in 23 states across India through 54 consignee agents and 472 distributors. The company plans to expand its distribution reach to all 29 states and even plans to expand overseas by opening a facility in Dubai, although that is part of a long term plan. Currently, it operates three manufacturing facilities in Vadodara, Varanasi and Dehradun.
Established in fiscal 2010, the company has moved fast to achieve revenues of INR294.3 crore in fiscal 2014. Part of its success lies in the strategy to tap the under-penetrated rural markets and also, leverage the growing consumer preference for healthier beverages, especially in urban markets. The company’s net sales has shown a CAGR of 85.29% from fiscal 2012 to fiscal 2014, while EBITDA and profit after tax has shown a CAGR of 78.63% and 83.68% during the same period. In line with its growth strategy, the company plans to boost its annual revenues to INR1,000 crore by March 2016.