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  1. Patanjali could be a threat to Parag Milk Foods; should you invest?

Patanjali could be a threat to Parag Milk Foods; should you invest?

Parag Milk Foods initial public offerings hit capital markets on May 4 to raise Rs 760 crore.

By: | New Delhi | Updated: May 4, 2016 4:17 PM

 

patanjali parag milk foods ipo Parag Milk Foods initial public offerings hit capital markets on May 4 to raise Rs 760 crore.

Parag Milk Foods initial public offerings hit capital markets on May 4 to raise Rs 760 crore. The company already raised nearly Rs 343 crore from anchor investors. This is the third initial public offer in less than one week which hit capital markets after Thyrocare Technologies and Ujjivan Financial Services.

Price band of Parag Milk Foods has been fixed at Rs 220-227 per share.

While brokerage houses such as Angel Broking, KR Choksey and Prabhudas Lilladher gave ‘Subscribe’ rating to the issue on account of sustained growth in the past couple of years. Choice Broking gave ‘Avoid’ rating to Parag Milk Foods public offer.

Choice Broking in a research note said, “Volatile profitability trend and single digit profitability are the main concern for Parag and increased competitive pressure from Patanjali Ayurved Ltd, which recently said that it is planning to venture into dairy segment this year are another reason to worry. Therefore, we recommend ‘Avoid’ rating for the issue.

According to Angel Broking, Indian and multinational FMCG companies are expected to face stiffer competition from the Patanjali brand. Patanjali has significant presence in the ghee segment, thus posing competition to PMFL.

Read more: Parag Milk Foods Rs 760 cr IPO hits markets: What these 5 brokerages are saying

Parag Milk Foods is one of the leading manufacturers and marketers of dairy-based branded foods in India. Its products are sold under four brands, namely: “Gowardhan”, “Go”, “Pride of Cows” and Topp Up”.

Net proceeds from the issue will be utilised to fund the expansion and modernisation of its facility in Maharashtra and for the partial repayment of the working capital loans.

 

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