Apex Frozen Foods Ltd Rs 152 crore IPO opened for subscription today. The IPO consists of up to 87,00,000 equity shares of face value of Rs 10 each. The price band is set between Rs 171-175 a share. The company intends to raise up to Rs 152.25 crore at the higher end, while at the lower end the company seeks to raise Rs 148.77 crore. The issue comprises of fresh issue of 72,50,000 shares and an offer for sale of 14,50,000 shares. The promoter and promoter group stake is set to dilute to 72% post issue from 99.9%.
Apex Frozen Foods Ltd (AFFL) is an integrated producer and exporter of shelf stable quality aquaculture products. It supplies ready-to-cook products to a diversified customer base consisting of food companies, retail chains, restaurants, club stores and distributors spread across the developed markets of USA, UK and various European countries. The company sells it’s produce under the brands Bay fresh, Bay Harvest and BayPremium. It strategically focuses on the market of USA, which is the largest importer of aquaculture products in the world.
HDFC Securities has identified various strengths in the company including economies of scale on account of integrated operations; strategically located processing plant and established customer relationships. Its integrated operations comprise of hatchery, farming, pre-processing, processing and exporting of aquaculture products. The research and brokerage firm says that Apex Frozen Food Ltd’s products and processes comply with stringent quality standards set by the developed markets it serves.
Pointing out the concerns in the company, HDFC Securities says that any adverse developments or changes in the major export markets of AFFL such as the United States, United Kingdom and parts of European Union may adversely impact AFFL’s business, financial condition and results of operations, as the company generates majority of its revenues through exports. In the absence of long term contracts with suppliers, AFFL is exposed to volatility in the prices of raw materials which may adversely impact the overall profitability and financial performance of its business. AFFL’s aquaculture farms operates in an environment sensitive industry. AFFL derives a significant portion of AFFL’s revenue from a few customers. Any reduction in their demand for its products could adversely affect its business, results of operations, financial condition and cash flows.
AFFL has a total workforce of 1,344 employees in the Company. As per the standalone financial statements, its total revenues grew from Rs 2,554.83 million in FY13 to Rs 7,096.80 million in FY17, at a CAGR of 29.10%, and the PAT grew from Rs 94.15 million in FY13 to Rs 244.05 million in FY17, at a CAGR of 26.89%.