HOAC Foods, a small and medium enterprise (SME), recently launched its initial public offering (IPO) valued at ₹5.54 crore. The IPO was open for subscription from May 16 to May 21, 2024, at a price of ₹48 per share. It consisted only of a fresh issue of 1,155,000 shares, with no offer-for-sale component. The company plans to use the net issue proceeds for working capital requirements and general corporate purposes.
Exceptional Response from Investors
The IPO received an outstanding response from investors, with a subscription rate of a whopping 2,013.64 times. According to Chittorgarh, the market capitalization of the Hariom Atta & Spices IPO stands at ₹18.45 crore.
Building a Niche Market
Hariom Atta & Spices specializes in manufacturing various products, including flour (chakki atta), herbs & spices, unpolished pulses, grains, and yellow mustard oil, sold under the brand name “HARIOM” through Exclusive Brand Outlets in and around Delhi-NCR.
The company carefully sources raw materials from different parts of the country and processes them without artificial preservatives or chemicals, ensuring fresh and pure organic products. This approach has helped the company capture a niche market segment in the Delhi-NCR region and establish a loyal customer base over the years.
To maintain product freshness and purity, the company has developed a robust manufacturing and packaging strategy, minimizing waste and offering a diverse range of fresh and wholesome products.
HOAC Foods operates through a franchise network comprising 4 company-owned outlets and 6 franchisee-owned outlets, totaling 10 Exclusive Brand Outlets exclusively selling its products.
Despite operating in a highly competitive and fragmented segment, the company has delivered average financial performance in the reported periods, according to Dilip Davda, contributing editor at Chittorgarh. Based on FY24 annualized earnings, the IPO seems fully priced, with a small equity capital post-IPO indicating a longer gestation period for migration. Savvy investors may consider moderate investments for the medium term.
Financial Insights
In terms of financial performance, the company reported revenues from operations of ₹1,148.59 lakhs for the nine months ended December 31, 2023. For the financial years ending in Fiscals 2023, 2022, and 2021, revenues were ₹1,208.56 lakhs, ₹1,087.27 lakhs, and ₹742.26 lakhs, respectively.
Profit After Tax (PAT) for the nine months ended December 31, 2023, and the financial years ending in Fiscals 2023, 2022, and 2021 amounted to ₹74.50 lakhs, ₹58.79 lakhs, ₹27.33 lakhs, and ₹12.85 lakhs, respectively, according to the DRHP report.
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