HMA Agro IPO subscribed 84% on third day of bidding so far

HMA Agro Industries' Rs 480 crore initial public offering (IPO) continued to receive a slow-but-steady response from the investors during the third day of the bidding. The issue was overall subscribed 84 per cent so far at the close of the third day of the bidding process.

HMA Agro Industries is issuing fresh equity shares worth Rs 150 crore and its promoters and existing shareholders are offloading shares worth Rs 330 crore via offer-for-sale (OFS). The company has fixed the price band at Rs 555-585 apiece with a lot size of 25 shares. The issue closes for subscription on Friday, June 23.

According to the data from the BSE, the investors made bids for 50,65,075 equity shares, or 0.84 per cent, compared to the 60,54,054 equity shares offered for the subscription by 12.40 pm on Thursday, June 22, 2023.

The quota for retail investors was booked 46 per cent, whereas the allocation for non-institutional bidders fetched 1.44 times bids, while the portion for qualified institutional bidders was subscribed 1.04 times as of the same time.

HMA Agro Industries is one of the largest exporters of buffalo meat in India, accounting for more than 10 per cent of India’s export of frozen buffalo meat. Its products are self-branded, packaged under the brand name 'Black Gold', 'Kamil' and 'HMA' and exported to over 40 countries.

HMA Agro has four fully integrated packaged meat processing plants located at Aligarh, Mohali, Agra, and Parbhani and is in the process of setting up a fifth fully integrated owned meat product processing unit in Haryana.  Agra-based HMA Agro Industries also owns two additional secondary level meat processing units at Jaipur and Manesar.

Analysts remain divided on the stock. A few suggest investing in the issue citing its strong growth, rising demand of meat in the world and consistent performance. However, a few suggest to avoid the issue citing mounting debt and corporate governance concerns in the company.

Considering the FY22 and FY23 Annualized EPS of Rs 23.49 and 31.32 on a post issue basis, the company is going to list at a P/E of 24.91 times and 18.68 times, respectively with a market cap of Rs 2,929.5 crore. There are no Indian listed companies that are engaged in a business similar to that of the company, said Marwadi Financial Services.

"We assign 'subscribe' rating to this IPO as the company has a well-diversified market reach along with long standing relations with their customer base and well-established marketing set up. Also, it is available at reasonable valuation considering the future growth potential of the company," it added.

A day ahead of its IPO, HMA Agro Industries on Monday allotted 24,61,537 shares to seven anchor investors at Rs 585 apiece, amounting Rs 143.99 crore, including Craft Emerging Market Fund - Citadel Capital Fund, Minerva Ventures Fund, Forbes EMF, Craft Emerging Market Fund -Elite Capital Fund, Coerus Capital Opportunities, Radiant Global Fund and Absolute returns Scheme.

In terms of listing gains, we recommend an 'avoid' rating for the issue following a moderation in valuation going forward, we will revisit the company to take a long-term perspective on the business, said the IPO note from Stoxbox, formerly known as BP Equities.

The company has reserved 50 per cent of the shares for qualified institutional buyers (QIBs), while a 15 per cent quota is reserved for non-institutional investors (NIIs). Retail investors will get the remaining 35 per cent of the allocation.

Aryaman Financial Services is the sole book running lead manager to the issue, while Bigshare Services has been appointed as the registrar to the issue. The stock will be listed at both BSE and NSE and the stock is likely to make its debut on July 4, 2023.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today)

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