The Hyderabad-based organic food manufacturer Sresta Natural Bioproducts Ltd has submitted preliminary paperwork to SEBI in order to earn about Rs 500 crore through a first share offering. The initial public offering (IPO) consists of a fresh issue of equity shares worth up to Rs 50 crore and an offer-for-sale by the selling shareholders of up to 70.30 lakh equity shares. Peepul Capital Fund III LLC (up to 22.50 lakh shares); Ventureast Life Fund III LLC; Ventureast Trustee Company (on behalf of the Biotechnology Venture Fund and Ventureast Life Fund III); and Ventureast Life Fund III LLC, Ventureast Trustee Company, who together plan to sell nearly 47.80 lakh shares, are the participants in the OFS. The issue's book-running lead managers are JM Financial and Axis Capital.
With a market share of 29 per cent in the packaged organic food category in FY 2020, Hyderabad-based Sresta Natural Bioproducts is the owner of the most well-known brand, "24 Mantra." It is in the business of buying, processing, producing, selling, and developing organic food products. With a presence in 39 states across Indian Ethnic Stores and Mainstream, it is also one of the top Indian organic food brands in the USA. By 2021, it will also be present in 34 other countries and on major e-commerce platforms like Bigbasket in India. It provides a wide range of shopping essentials, including packaged food, drinks, meal fixings, spices & condiments, and edible oils. The business cultivates the most land for organic farming among B2C organic food firms in India, and it has close contact with farmers in 12 different states. The business has a network of suppliers that consists of 34,516 farmers, 190,610 acres of certified organic land spread across 12 Indian states, 65 vendors/companies, and several aggregators.
Sresta Natural Bioproducts IPO Objectives:
Here are a few quick reasons why BIBA is going public
- Funding the working capital requirements of our Company.
- Repayment or pre-payment in full or part, of certain outstanding unsecured/secured borrowings availed by our Company.
- General corporate purposes.
Why should you invest in the Sresta Natural Bioproducts IPO?
- In Fiscal 2025, the Indian Health and Wellness industry is expected to reach approximately INR 1,27,290 crore, growing at a CAGR of 16% between Fiscal 2020 and Fiscal 2025.
- Indian packaged food market is expected to contribute 20.2% to the overall food and grocery market by 2030.
IPO Financials
| Particulars | FY21 | FY20 |
|---|---|---|
| Revenue | 31.21 | 26.23 |
| EBITDA | 2.49 | 2.37 |
| PAT | 1.04 | 0.95 |
| Total Assets | 19.36 | 16.95 |
| Share Capital | 1.83 | 1.83 |
| Total Borrowings | 5.26 | 4.45 |
| Net cash generated from operating activities | 2.05 | 16.49 |
| Net cash from investing activities | -0.13 | 0.59 |
| Net cash flow from financing activities | -1.48 | -15.28 |
| Net change in cash and cash equivalents | 0.44 | 1.79 |
Know before investing
Strengths
4With a varied and innovative product portfolio developed via research & development, the market leader and one of the innovators in India's rapidly expanding organic foods sector.
An omnichannel distribution network supports Pan-India presence and market dominance.
With exports to 34 nations, one of the top Indian organic food companies in the USA.
A quality-focused, asset-light strategy with strategically placed processing facilities and complete control over the entire supply chain.
Risks
4It may have a negative impact if sufficient quantities of organic agricultural products cannot be purchased from growers, aggregators, and organic certified vendors/companies at fair rates or at all.
The company may suffer if the activities at these third-party facilities are disrupted or if contracts for the first processing of organic raw materials by third-party facilities are terminated.
The inability to properly foresee and successfully adjust to changes in market demand or to satisfy the tastes, preferences, or consistent quality needs of the consumers.
India's organic food business is still in its infancy, and because neither farmers nor consumers are aware of the existence of organic food items, they are susceptible to misunderstandings about organic farming.
