The ₹480-crore initial public offer (IPO) of bufallo meat exporter HMA Agro Industries opened for subscription today, June 20, 2023, and will close on June 23, 2023 (Friday). This is the second IPO to be launched in the month of June, however, the issue is not tracked by most analysts.
Let's look at some key things to know about the IPO.
Price Band: The price band for the offer has been fixed at ₹555-585 per share. Investors can bid for a minimum of 25 equity shares and in multiples thereafter. At the upper end of the price band, investors will have to invest ₹14,625 for one lot of the shares.
About the IPO: The company aims to raise ₹480 crore via the IPO comprising of fresh issuance of shares worth ₹150 crore and an offer for sale (OFS) for ₹330 crore by promoters. Wajid Ahmed, Gulzar Ahmad, Mohammad Mehmood Qureshi, Mohammad Ashraf Qureshi, Zulfiqar Ahmad Qurashi and Parvez Alam are shareholders participating in the OFS.
Objective: The proceeds from the IPO will be used to meet working capital requirements ( ₹135 crore), besides general corporate purpose. However, it will not receive any proceeds from the offer for sale. The entire offer for sale proceeds will go to selling shareholders.
Reservation: About 50 percent of the offer is reserved for qualified institutional buyers, 15 percent for non-institutional investors and the remaining 35 percent for retail investors.
Book running manager: Aryaman Financial Services is acting as the book-running lead manager to the issue and Bigshare Services is the registrar.
Anchor investors: A day ahead of its IPO, the company allotted 24.61 lakh shares to seven anchor investors at ₹585 per share worth ₹143.99 crore. Its anchor investors include Craft Emerging Market Fund - Citadel Capital Fund, Minerva Ventures Fund, Forbes EMF, Craft Emerging Market Fund -Elite Capital Fund, Coerus Capital Opportunities, Radiant Global Fund and Absolute Returns Scheme.
About the firm: HMA Agro Industries is currently one of the largest exporters of frozen buffalo meat products from India and accounts for more than 10 percent of India’s total export of frozen buffalo meat. Its products are self-branded, packaged under the brand name 'Black Gold', 'Kamil' and 'HMA' and are exported to over 40 countries. The company has also started focussing on exporting Frozen Fish Products and Basmati Rice, taking advantage of its robust export business and well-established distribution channels. It has four fully integrated packaged meat processing plants and is in the process of setting up a fifth one.
Promoters: HMA is completely owned by promoters and post the issue, their shareholding would be reduced to around 84 percent. Wajid Ahmed has a 32 percent shareholding in the company while Gulzar Ahmad, Mohammad Mehmood Qureshi, Mohammad Ashraf Qureshi, and Zulfiqar Ahmad Qurashi have 16 percent stake each in HMA. Meanwhile, Parvez Alam has a 4 percent stake.
Financials: The company’s net profit in FY22 came in at ₹117.62 crore versus ₹71.6 crore in FY21. Meanwhile, its revenue also rose to ₹3,139 crore in FY22 from ₹1,720 crore in FY21.
Peers: There are no Indian listed companies that are engaged in a similar business.
Allotment and listing: The company is likely to finalise its IPO share allotment by June 29 and refunds will be credited to the bank accounts of unsuccessful investors by June 30. The listing of the stock will take place on July 4, according to the schedule.
Grey market premium: HMA Agro Industries shares are trading in the grey market today at a premium of ₹28.
Brokerage views: Most major brokerages do not track the IPO. However, Marwadi Financial Services has assigned a ‘subscribe’ rating to this IPO.
“The company has a well-diversified market reach along with long-standing relations with their customer base and well-established marketing setup. It is available at a reasonable valuation considering the future growth potential of the company,” it said.
Risks include the mortgaging of personal properties of promoters, losses by subsidiaries, and religiously sensitive business of the company, cautioned the brokerage.