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    Wednesday , May 04, 2016

   Parag Milk Issue Opens Today, Brokerages Say Price Band Steep

   Publication: The Economic Times , Journalist:Buraeu
   Edition: Delhi/Bangalore/Kolkata/Mumbai , Page No: 10 , Location: Middle-Right , Size(sq.cms): 160
  

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Parag Milk Issue Opens Today, Brokerages Say Price Band Steep
N-yugandhara.04.5 - 0044-1.jpg
end of the IPO price band. Abu Dhabi Investment Auhority, Nomura India Investment Fund and Morgan Stanley Mauritius Co are among the major anchor investors.
Analysts believe the issue may of­fer only limited listing gains given its premium valuation, but they ex­pect it will yield decent returns over the medium to long term.
The company a peer to the recently listed Prabhat Dairy, is looking to raise up to about Rs300 crore by offer-
ing a fresh issue of 1.33-1.37 crore shares, while existing shareholders will sell 2.05 crore shares worth about Rs464 crore (at the upper end of the price band) in an offer for sale (OFS).
The price band is fixed at Rs220-227. The issue will close on Friday
Here's what analysts say:
PRABHUDAS LILLADHAR: SUBSCRIBE
"A 15-20% sustained sales growth, debt repayment of Rs100 crore and improvement in cash flow will ena-
ble the company to achieve 30% (CAGR) PAT growth over FY16-18. At 37 times FY16E, the stock would offer limited listing gains. But long-term prospects look encouraging with the scope of decent returns over the coming 2-3 years," the bro­kerage said.
RELIANCE SECURITIES: NO RATING
"On an annualised market cap-to-sales basis, Parag Milk is priced at 1.2 times sales compared with 0.9
times for Prabhat Dairy and 0.5 times for Heritage Foods. Annualised RoCE for Parag Milk is 12.3% for FY16E vis-a-vis 19.6% for Heritage Foods, 18.1% for Hatsun and 9.5% for Prabhat Dairy," it said.
SHAREKHAN: NO RATING
The brokerage believes at the offer price the company's valuations are at a premium to some of its peers, despite similar margin profit, and the improvement in profitability
and operating cash flows will be key performance drivers for the compa­ny in the near to medium term.
KHAMBATTA SECURITIES: SUBSCRIBE
In the price band of Rs220-227, Parag Milk's IPO is expensive compared with its direct competitors such as Hatsun Agro, Heritage Foods, Kwality Dairy and Prabhat Dairy, the brokerage said. "However, we believe the company is poised to grow at a healthy rate.
Amit.Mudgill@timesinternet.in
ETMarkets.com: The initial public offering (IPO) of the owner of 'Gowardhan' and 'Go' brands of milk products, Parag Milk Foods, will hit the market on Wednesday The company said it has allotted 1.5 crore shares to 17 anchor investors at Rs227 per share, which is the higher
 
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Parag Milk Issue Opens Today, Brokerages Say Price Band Steep
Summary:
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Date: Wednesday , May 04, 2016
Publication: The Economic Times, Journalist: Buraeu
Edition: Delhi/Bangalore/Kolkata/Mumbai, Page No: 10, Location: Middle-Right, Size(sq.cms): 160