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Parag Milk Foods (PMFL) is one of the leading manufacturers and marketers of Dairy-based branded foods in India, is coming with an initial public offer (IPO) to raise Rs 7530-7670 million at a price band of Rs 220-227 per equity share. This IPO is a mix of offer for sale 20.57 million shares and fresh offer of 13.3-13.7 million shares based on the upper price band and the lower price band of the price band.
BoB Capital Markets Research has recommended 'Subscribe' to IPO of Parag Milk Foods. Commenting on the investment rationale, the stock broker said, ''PMFL grew at a CAGR of 21.6% over FY11 to FY15 and posted revenue of Rs.14,387 million in FY15 and Rs 12,306 million in the first nine months of FY16. EBITDA grew at a CAGR of ~21% to Rs.1063 million and Rs.1075 million in the first nine months of FY16. The company's reported PAT grew from negative Rs. (4) million in FY11 to positive Rs.260 million in FY15. It has maintained its EBITDA margin at 7.5% in FY15 and 8.7% in the first nine months of FY16.
The company's debt equity ratios has reduced significantly from 7.07x in FY11 to 1.62x in FY15 and 1.25x in the first nine months of FY16. The company is coming with issue at the price band of Rs. 220-227. At upper price band of Rs 227, the stock is available at a PE of 37.6x and at a lower price band of Rs.220, stock is available at a PE of 36.4x for 9MFY16 consolidated annualized EPS.''
''We believe that the company is poised for strong growth going forward on account of leading manufacturers and marketers of dairy-based branded foods in India; integrated business model; pan India presence; established brand; strong customer base in retail as well as intuitional like Yum! Restaurants (India) Private (for Pizza Hut, Taco Bell and KFC), Jubilant Foodworks (for Domino's Pizza) and Sankalp Recreation Private (for Sam's Pizza); growing dairy industry in India; increasing per capita income. Hence we recommend, 'SUBSCRIBE' to the issue,'' it added.
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