Fine Organics Industries Ltd - IPO Note (Not Rated)
Issue Opens: June 20, 2018
Issue Closes: June 22, 2018
Face Value: Rs 5
Price Band: Rs 780-783
Issue Size: ~Rs 598-600 cr
Public Issue: 76.6 lakh shares
Bid Lot: 19 Equity shares
Issue Type: 100% Book Building
|
Shareholding (%) |
Pre IPO |
Post IPO |
|
Promoter |
100.0 |
75.0 |
|
Public |
0.0 |
25.0 |
Source: RHP
Company Background
Fine Organics Industries Limited (FOIL) is a Mumbai based specialty chemical (oleochemical) company. FOIL produces wide range of specialty additives used in food, plastic and other industries. It had 387 products sold under the 'Fine Organics' brand in FY18. Its customers include FMCG companies like HUL, Parle Products, etc. FOIL currently has three facilities with capacity of 64.3k tonnes/year. It is planning to add 52k tonnes/year capacity over next two years taking total capacity to 116.3k tonnes by FY20E end. Company in 9MFY18 derived 44% revenue from India and rest 56% from exports markets.
Objective of the Offer
The object of the offer is to achieve benefits of listing and sale of up to 76.6 lakh shares (Rs600cr on upper end) offered by the promoter group shareholders. This is a 100% offer for sale issue.
Financials
|
Consolidated Rs cr. |
FY15 |
FY16 |
FY17 |
9MFY18** |
|
Revenue from operations |
636 |
686 |
815 |
590 |
|
EBITDA Margin (%) |
18.3 |
22.3 |
18.7 |
17.9 |
|
Adj. PAT |
53.2 |
76.5 |
78.4 |
60.9 |
|
EPS (`) |
17.3 |
24.9 |
25.6 |
19.9 |
|
P/E* |
45.1 |
31.4 |
30.6 |
- |
|
P/BV* |
11.6 |
9.6 |
7.3 |
- |
|
RoE (%) |
25.7 |
30.5 |
23.8 |
- |
Source: RHP, 5Paisa Research; *Ratios at higher end of the price band, **non-annualized numbers
Key Points
- FOIL is the largest manufacturer of oleochemical-based additives in India and one of the few large manufacturers in global oleochemicalbased food/plastic additives. FOIL was the first company to introduce slip additives to the Indian market and it now manufactures wide range of oleochemical-based additives. FOIL is a very competitive company in its sector, which has helped it in pricing its products attractively. This has discouraged major domestic/global players setting up a manufacturing facility in India.
- FOIL currently operates three production facilities, one each in Ambernath/Badlapur/Dombivli with combined installed capacity ~64,300 tonnes/annum. FOIL, in Q4FY19E will be commissioning production facility in Ambernath (32,000 tonnes/year). In Q3FY20E, FOIL will commission its JV facility in Germany (10,000 tonnes/year). Premia Research Fine Organic Industries Ltd Company is expecting to commission a 10,000 tonnes/year bakery/confectionary products ingredient manufacturing facility in Patalganga (JV with Fine Zeelandia) in Q1FY19E. Once these capacities are commissioned, the current capacity of 64.3k tonnes/year will grow to 1.16lakh tonnes/year in FY20E.
Key Risk
The company is nearly doubling its capacity over next two years and is also entering in oleochemical manufacturing in Germany. Company also claims that oleochemical is dominated by very few large companies and hence we believe that additional capacity additions may drive down the oleochemical realizations
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