HMA Agro Industries is set to make a debut on the bourses on July 4, the first listing in the second half of the current calendar year.
However, experts are not gung-ho about the listing as they see a flat to moderately positive opening for the stock despite positive market conditions. They cite a tepid response to its public issue and the firm's high dependency on exports with a single product even though it has started to diversify into other products, the volumes of which are minuscule.
The Rs 480 crore public issue was subscribed 1.62 times during June 20-23 supported by institutional and non-institutional investors only, whereas the retail investors were not looking excited about the issue as their portion was subscribed by 96 percent. The portion set aside for qualified institutional buyers (QIBs) and high networth individuals (HNIs) were booked 1.74 times and 2.97 times.
The price band for the offer was Rs 555 to Rs 585 per share.
"The mostly tepid response to the HMA Agro IPO is likely to reflect on the listing day as well. We expect the issue to open on a flat note when it lists on the bourses from tomorrow," Manish Chowdhury Head of Research StoxBox said.
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He feels that investors, especially in the retail category, were not comfortable with the business proposition of the group, which is into packaged frozen buffalo meat products. On the fundamental side, he believes that the business is heavily dependent on exports and dependent on a single product.
Avinash Gorakshakar, Head of Research at Profitmart Securities expects a moderate listing price of Rs 625 levels.
HMA Agro Industries is currently among the largest exporters of frozen buffalo meat products from India, accounting for more than 10 percent of the country's total export of frozen buffalo meat. It exports to over 40 countries across the globe.
More than 95 percent of its business comes from buffalo meat and allied products via its four fully-integrated packaged meat processing plants, while the diversified segments - frozen fish and basmati rice - contributed less than 2 percent of its total revenue.
It is in the process of setting up a fifth fully-integrated meat product processing unit at Haryana and is also in the advanced stages to acquire an additional plant at Unnao. Further, it also owns two additional secondary-level meat processing units at Jaipur and Manesar.
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The grey market also seems less enthusiastic about the pricing as HMA Agro IPO shares traded at a 1-2 percent premium over the final issue price of Rs 585 per share, said a few analysts on condition of anonymity.
The grey market is an unofficial trading platform for trading in IPO shares. Generally, investors look at the grey market valuations to know the possible listing price for an IPO.
The company received only Rs 150 crore via fresh issue and the rest of the Rs 330 crore was received by promoters, which is more than double the fresh issue size.
Also, the borrowings on its books have been increasing every as a result of which the finance cost is also rising. The firm's total debt stood at Rs 340 crore in FY23 (April-December period), up from Rs 330 crore in March FY22, Rs 181.3 crore in FY21 and Rs 169.1 crore in FY20.
Its profit jumped to Rs 117.6 crore in FY22, from Rs 71.6 crore in FY21, partly driven by other income, which rose to Rs 55.8 crore from Rs 12.9 crore in the same period. Revenue from operations during the same years increased to Rs 3,083.2 crore from Rs 1,707.5 crore. In the nine-month period ended December FY23, its profit stood at Rs 113.2 crore on revenue of Rs 2,370.5 crore.
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