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| May 02, 2016 | 
| | | Parag Milk Foods
Parag Milk Foods Ltd (PMFL) is coming out with an initial public offering (IPO) to raise Rs753-767crore from the equity market at a price band of Rs220-227 per equity share. The offer is being made through a mix of offer for sale (OFS) of 2.057 crore shares and a fresh issue of 1.33-1.37 crore shares based on the upper end and the lower end of the price band. IDFC PE and IBEF & IBEF I (private equity funds of Motilal Oswal) are selling 0.83 and 0.6 crore shares respectively under the OFS option. On the other hand, funds raised through fresh issue of shares will be largely utilised for expansion and modernisation of existing manufacturing facilities and partial repayment of working capital debt.
Valuation: At a price band of Rs220-227, the issue is priced at 56.1-57.8x its price-earnings (PE) ratio for FY2015 consolidated earnings per share (EPS) of Rs3.9. Despite similar margin profile, PMFL's valuations at the offer price are at a premium to some of its nearest peers. The improvement in profitability and operating cash flows will be the key performance drivers for the company in the near to medium term. |
| Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a position in the companies mentioned in the article. | |
Regards,
Sharekhan Fundamental research team
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www.sharekhan.com
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