Ramdevbaba Solvent Limited IPO Review
Ramdevbaba Solvent Limited, a name that has become synonymous with quality rice bran oil, stands as a testament to the entrepreneurial spirit and the burgeoning FMCG sector in India. Incorporated on November 25, 2008, in Maharashtra, Mumbai, the company embarked on its journey with a clear vision and purpose.
At the helm of Ramdevbaba Solvent Limited are the promoters Prashant Kisanlal Bhaiya, Nilesh Suresh Mohata, and Tushar Ramesh Mohata. Their leadership has steered the company through the competitive landscape of the FMCG industry, ensuring a steady supply of high-quality rice bran oil to some of the biggest names in the business, such as Mother Dairy Fruit & Vegetable Private Limited, Marico Limited, and Empire Spices and Foods Ltd.
The city of Mumbai, known for its dynamic business environment, served as the birthplace of Ramdevbaba Solvent Limited. The company's operations have since expanded beyond the confines of its city of origin, reaching consumers and businesses across India.
The inception of Ramdevbaba Solvent Limited was driven by the need to provide a healthier alternative to the edible oils available in the market. Rice bran oil, known for its numerous health benefits, including a balanced amount of monounsaturated, polyunsaturated, and saturated fats, became the focus of their business. The company's commitment to delivering a product that contributes to the well-being of consumers has been the cornerstone of its philosophy since day one.
The decision to start Ramdevbaba Solvent Limited was rooted in the recognition of rice bran oil's potential as a healthier cooking oil option. The founders saw an opportunity to cater to the growing health-conscious segment of consumers and to fill a gap in the market for high-quality, physically refined rice bran oil. This foresight has allowed the company to establish itself as a key player in the FMCG sector, providing products that align with the consumers' shift towards healthier lifestyles.
As Ramdevbaba Solvent Limited looks to the future, it does so with the confidence of a company that has built a solid foundation and the excitement of one that knows there are still many more chapters to write in its success story. The company's journey is a shining example of how vision, quality, and leadership can come together to create a brand that stands the test of time and continues to serve the needs of its customers with excellence.
Competitive Strengths
Ramdevbaba Solvent Limited, a company that has carved a niche for itself in the solvent industry, stands out for its strategic competitive advantages. This detailed analysis explores the various strengths that give Ramdevbaba Solvent Limited an edge in the market.
Revenue, Sales, and Profit
Ramdevbaba Solvent Limited has shown a progressive financial performance over the past few years. The company's revenue from operations has seen a consistent increase, with figures reported at Rs. 432.92 crore in FY 2021, Rs. 582.88 crore in FY 2022, and Rs. 697.75 crore in FY 2023. This upward trend is indicative of the company's growing market presence and operational efficiency. In terms of profit after tax (PAT), there has been a significant improvement, particularly in the last fiscal year reported. The PAT stood at Rs. 6.17 crore in FY 2021, Rs. 6.59 crore in FY 2022, and witnessed a substantial rise to Rs. 13 crore in FY 2023. This nearly doubling of the PAT reflects a robust financial management and profitability strategy.
The company's net sales revenue and total operating revenue have also experienced an uptick, with a 19.71% increase in net sales revenue and a 20.82% increase in total operating revenue. Such growth percentages are promising and suggest that Ramdevbaba Solvent Limited is expanding its business operations effectively. Moreover, the company's net worth has increased by 24.80%, and EBITDA has risen by 12.39%, which further solidifies its financial stability and potential for future investments. The increase in revenue by 20.35% and the surge in PAT by 97.25% between the financial years ending March 31, 2022, and March 31, 2023, are particularly noteworthy.
Distribution Network and Geographical Reach
Ramdevbaba Solvent Limited, established in 2008, has developed a robust distribution network and geographical reach, particularly in the Indian market. The company specializes in the production and distribution of physically refined rice bran oil and has expanded its presence through strategic partnerships with FMCG companies such as Mother Dairy Fruit & Vegetable Private Limited, Marico Limited, and Empire Spices and Foods Ltd. With its own brands "Tulsi" and "Sehat," Ramdevbaba Solvent Limited has penetrated the retail market, leveraging a network of thirty-eight distributors to cater to various retailers across Maharashtra. Additionally, the company's by-product, De-Oiled Rice Bran (DORB), is sold as cattle feed, poultry feed, and fish feed in multiple states including Maharashtra, Goa, Gujarat, Madhya Pradesh, Andhra Pradesh, Telangana, Karnataka, Kerala, and Tamil Nadu. The company's manufacturing facilities are strategically located in Central India, with one in Mahadula and another in Bramhapuri near Nagpur, both in the state of Maharashtra. This strategic positioning allows for efficient distribution and accessibility to key markets. Furthermore, the majority of the company's revenues are derived from customers located in Maharashtra, Andhra Pradesh, and Uttar Pradesh, indicating a strong presence in these regions. Ramdevbaba Solvent Limited's commitment to quality and innovation has enabled it to cater to both large FMCG entities and direct retail consumers, ensuring a comprehensive reach within its operational geography.
Unique Features
Ramdevbaba Solvent Limited is a company that has carved a niche in the manufacturing and distribution of physically refined Rice Bran Oil. Established in 2008, the company has been serving FMCG giants like Mother Dairy Fruit & Vegetable Private Limited, Marico Limited, and Empire Spices and Foods Ltd. With a focus on quality and innovation, Ramdevbaba Solvent Limited has expanded its product line to include not only Rice Bran Oil but also De-Oiled Rice Bran (DORB), which is utilized as cattle feed, poultry feed, and fish feed across various Indian states. The company's commitment to sustainability is evident in its zero liquid discharge milling process and its venture into ethanol blending through its subsidiary, which is a step towards supporting renewable energy initiatives. Furthermore, the company's IPO details reveal a strategic approach to growth, with a book-built issue aiming to raise capital for further expansion and development.
Investment in Research and Development
Ramdevbaba Solvent Limited, a company that recently opened its Initial Public Offering (IPO), has set a price band of ₹80 to ₹85 per share. The IPO aims to raise about ₹50 crore, which indicates a significant investment capacity for the company. While specific details on the allocation for research and development (R&D) are not publicly disclosed, the financial performance of the company for the period ending December 2023, with revenues of ₹463 crore and a net profit of ₹8.3 crore, suggests a stable financial footing. This could potentially allow for a substantial investment in R&D. Companies often use funds raised from IPOs to invest in R&D, which is crucial for innovation and staying competitive in the industry. For more detailed information, one might refer to the company's prospectus or financial reports, which would provide insights into their specific R&D investment strategies.
Ramdevbaba Solvent Limited IPO Details
Issue Date: The Issue Date in an Initial Public Offering (IPO) refers to the specific day when a company's shares are first made available for public purchase on the stock market. This date is a critical milestone in the IPO process, marking the transition of a company from private to public status and allowing investors to buy shares directly from the company for the first time. (Issue Date: April 15, 2024 to April 18, 2024).
Listing Date: The listing date refers to the day when the company's shares are officially listed and begin trading on a stock exchange. This is typically several business days (3-6 days) after the issue date after processes like share allotment and finalization are completed. On this date, investors who were allotted shares during the IPO can begin selling them, and new investors can start purchasing them on the exchange at the prevailing market price. (Listing Date: Tuesday, April 23, 2024).
Face Value of Shares: The face value of shares in an Initial Public Offering (IPO) refers to the original cost of the shares as determined by the company going public. It represents the nominal value and is often set at a lower figure, such as Rs. 10 or Rs. 100, which remains constant irrespective of the market price of the share after the company is listed on the stock exchange. When a company launches an IPO, the shares are typically offered at a price that includes this face value plus an additional premium, which reflects the current market valuation of the company. The premium over the face value is determined by the company's financial performance and future growth prospects as assessed by the investment bankers managing the IPO. (Face Value: ₹10 per share).
Price Band: A price band of an IPO is the range of prices within which the investors can bid for the shares of a company that is going public. The price band is set by the issuer and the lead managers of the IPO, based on various factors such as the demand and supply of the shares, the financial performance and valuation of the company, and the market conditions. (IPO Price: ₹80-₹85 per share).
Lot Size: In the context of an Initial Public Offering (IPO), the term "lot size" refers to a fixed number of shares that the issuing company sets as the minimum quantity that investors can apply for. This lot size is predetermined before the IPO and is mentioned in the application forms. The lot size varies from one company to another and is an important factor for investors to consider when applying for an IPO. (Lot Size: 1600 Shares).
Total Issue Size: The total issue size represents the total number of shares the company is offering to raise capital through the IPO. This number is determined by the company and its advisors, considering factors like their funding needs and the expected investor demand. The total issue size is then divided by the lot size to determine the total number of lots available for purchase by investors. (Total Issue Size: 5,913,600 shares (aggregating up to ₹50.27 Cr)).
Fresh Issue: A Fresh Issue in the context of an Initial Public Offering (IPO) refers to the creation and sale of new shares by a company to the public. Unlike an Offer for Sale, where existing shareholders sell their shares, a Fresh Issue results in the generation of new capital for the company. This capital is typically used for growth initiatives such as expansion, research and development, or debt repayment. (Fresh Issue: 5,913,600 shares (aggregating up to ₹50.27 Cr)).
Issue Type: The type of an IPO can vary depending on the market and regulatory conditions. Some of the common types of IPOs are, Fixed priced IPO, Auction IPO, Book Building IPO, and Hybrid IPO. (Issue Type: Book Built Issue IPO).
Listing At: An integral part of the IPO process is the listing. This refers to the day the company's shares officially begin trading on a stock exchange, such as the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE) in India. Once listed, anyone with a brokerage account can buy and sell the company's shares on the exchange. (Listing at: NSE SME).
Retail Shares Offered: Retail shares offered in an IPO refer to the portion of shares that are specifically allocated for individual investors, as opposed to institutional investors. These shares are part of the public offering where companies going public aim to raise capital by selling shares. Retail investors are typically allocated a certain percentage of the total shares available for the IPO. The allotment process for retail investors is designed to be fair and transparent, ensuring that all investors have an equal chance of receiving shares based on their application and market conditions. (Retail Shares Offered: 1,960,000 (33.14%)).
Market Maker Shares Offered: Market Maker Shares in an IPO refer to the shares that a market maker commits to buy and sell to ensure liquidity for the stock once it starts trading on the exchange. Market makers are typically brokerage firms that agree to hold a certain number of shares of the new issue to facilitate trading and provide stability to the stock price. They play a crucial role in the SME (Small and Medium Enterprises) segment, where they help in price discovery and improve the liquidity of stocks by providing two-way quotes. (Market Maker Shares Offered: 281,600 (4.76%)).
QIB Shares Offered: QIBs are institutional investors such as banks, mutual funds, insurance companies, pension funds, etc., who have expertise and financial resources to invest in the securities market. They are considered as informed and sophisticated investors who can assess the risks and returns of an IPO. QIBs can bid for up to 50% of the total shares offered in an IPO via the profitability route, or up to 75% of the total shares offered in an IPO via the QIB route. QIBs have to pay only 10% of the bid amount at the time of application, and the rest after the finalization of the basis of allotment. (QIB Shares Offered: 1,120,000 (18.94%)).
NII (HNI) Shares Offered: NII stands for Non-Institutional Investors, which includes High Net-worth Individuals (HNIs) who bid for shares worth more than ₹200,000. The NII category is reserved for investors who do not fall under the retail or Qualified Institutional Buyers (QIBs) categories. Typically, a certain percentage of the IPO, usually around 15%, is allocated for NIIs to ensure a wider distribution of shares. HNIs within the NII category often have a higher chance of allotment compared to retail investors, making it an attractive option for those looking to invest larger sums in an IPO. (NII (HNI) Shares Offered: 872,000 (14.75%)).
Anchor Investor Shares Offered: Anchor investors are reputable institutional investors who participate in an Initial Public Offering (IPO) before it becomes available to the general public. These investors, which can include pension funds, insurance companies, and mutual funds, play a crucial role in setting the tone for the IPO by establishing confidence in the company's prospects. They are often referred to as "cornerstone investors" due to their significant influence on the price discovery process during an IPO. (Anchor Investor Shares Offered: 1,680,000 (28.41%)).
Competitors of Ramdevbaba Solvent Limited
Ramdevbaba Solvent Limited (RSL) operates in the dynamic and competitive sector of oil extraction and production, with a focus on rice bran oil and related products. The company has carved out a niche for itself in the market, but it faces competition from various other players in the industry.
One of the primary competitors of RSL is BCL Industries, which is involved in similar business activities. BCL Industries has a significant market presence and is known for its diversified product range, including edible oils and renewable energy. Another notable competitor is Gokul Refoils and Solvent Ltd., a company that has established itself in the edible oil sector with a wide distribution network.
Kriti Nutrients Ltd. also poses competition to RSL, primarily in the soybean oil segment. Kriti Nutrients has a strong focus on quality and innovation, which allows it to maintain a loyal customer base. Shri Venkatesh Refineries Ltd., although smaller in scale compared to the others, competes in the same space with its range of refined edible oils.
These competitors are trading at varying price-to-earnings (P/E) ratios, reflecting their market valuation relative to their earnings. As of April 5, 2024, BCL Industries is trading at a P/E of 18.1, Gokul Refoils at 178, Kriti Nutrients at 11.9, and Shri Venkatesh Refineries at 16.8. These figures indicate the market's perception of the companies' growth prospects and profitability.
The competitive environment in which RSL operates is influenced by various factors, including raw material availability, technological advancements, regulatory changes, and consumer preferences. Companies that can adapt to these changes and offer high-quality products at competitive prices are more likely to succeed in the long run.
Ramdevbaba Solvent Limited faces stiff competition from established players in the oil extraction and production industry. However, with strategic initiatives aimed at diversification and capacity expansion, RSL is positioning itself to capture a larger market share and deliver value to its stakeholders. The company's future prospects will depend on its ability to innovate, optimize costs, and navigate the competitive landscape effectively.
Conclusion
In conclusion, the Ramdevbaba Solvent IPO represents a significant step for the company as it seeks to expand its operations and solidify its position in the market. The fresh issue of shares aims to raise capital for establishing new facilities, repaying borrowings, and funding working capital needs. With a strategic location near Nagpur, Maharashtra, and a niche in the central Indian market for Rice Bran Oil, the company has demonstrated a mixed financial performance with initial revenue growth followed by a shortfall. However, the increase in profitability and equity, along with a reduced reliance on debt financing, suggests a potential for growth. The IPO, set at a price band of ₹80 to ₹85 per share, offers an opportunity for investors to participate in the company's future. The detailed review of the IPO highlights the company's strengths, such as its integrated operations and partnerships with FMCG companies, as well as areas for improvement, including the need to enhance market competitiveness and customer value. As the company ventures into new areas like ethanol blending, which has bright prospects, the Ramdevbaba Solvent IPO could be an attractive proposition for investors looking for opportunities in the agri-business sector. Investors should consider the company's past performance, current market conditions, and future growth potential before making an investment decision.
Disclaimer: This is not an investment advisory. The article above is for information purposes only. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Please consider your specific investment requirements, risk tolerance, goal, time frame, risk and reward balance, and the cost associated with the investment before choosing securities, that suit your needs. The performance and returns of any equity stock can neither be predicted nor guaranteed.
FAQs
Q: What is an IPO?
An Initial Public Offering (IPO) is a process through which a privately held company offers its shares to the public for the first time and becomes a publicly traded company.
Q: How can I apply for an IPO?
You can apply for an IPO through various methods:
ASBA (Application Supported by Blocked Amount): In this method, your application money remains in your bank account until the basis of allotment is finalized.
UPI (Unified Payment Interface): You can authorize the blocking of funds in your bank account using UPI while applying for an IPO.
Q: What is ASBA?
ASBA stands for Application Supported by Blocked Amount. It allows your application money to be blocked in your bank account during the IPO bidding process. You continue to receive interest on the blocked amount.
Q: What is the difference between book building and a normal public issue?
Book building is a process where demand for securities is elicited and the price is assessed based on investor bids. In a normal public issue, the price is fixed by the issuer.
Q: Can I make payments through UPI for IPOs?
Yes, you can use UPI as a payment method for IPOs. The UPI platform blocks the funds for IPO applications after you approve the fund block mandate request.
Q: What is the minimum order quantity for an IPO?
The minimum number of shares you can apply for in an IPO is known as the minimum order quantity. It varies for each IPO.
Q: What is the cut-off price in an IPO?
The cut-off price is the price at which you bid for shares without specifying a particular price. It allows you to participate in the IPO without specifying a specific bid price.
Q: Can I revise my bids during the IPO process?
Yes, you can revise your bids multiple times before the IPO bidding period ends.
Q: Which banks offer the ASBA facility for IPOs?
Several banks, known as Self Certified Syndicate Banks (SCSBs), offer the ASBA facility. Some examples include HDFC Bank, ICICI Bank, Axis Bank, and SBI.
Q: How do I find IPO mandates on UPI apps?
You can check the list of UPI handles supported for IPO payments on the National Payments Corporation of India (NPCI) website. These handles allow you to apply for IPOs using UPI.