DSM Fresh BSE SME IPO review (Not Rated)

•    The company is Delhi-NCR region centric online non-veg food retailer. 
•    The company posted growth in its top and bottom lines for the reported periods.
•    It is operating in a highly competitive and fragmented segment.
•    Based on its recent financial data, the issue appears fully priced.
•    Well-informed/cash surplus investors may park moderate funds for long term.

ABOUT COMPANY:
DSM Fresh Foods Ltd. (DFFL) is a fresh meat and ready-to-cook/eat non-veg products (Zappfresh) retailer. It is an online meat delivery company committed to revolutionise the way customers experience and enjoy quality non-veg food. Established in 2015, the company has swiftly risen to prominence by blending convenience, unpreserved products, with a commitment to customer satisfaction. With a user-friendly website and mobile application that offers a diverse selection of fresh and hygienically sourced meats, ranging from succulent cuts of mutton, poultry and seafood to exotic options. Its aim is to ensure that all the produce reaching the end consumer is fresh. 

The platform allows customers to tailor their orders according to their preferences. Emphasizing transparency and encourages customer reviews and provides detailed product descriptions. Timely and efficient deliveries, bolstered by tracking systems, to further enhance the customer experience. With a focus on quality, convenience and innovation, the company is on the path of its growth trajectory, shaping the future of online meat delivery. It is Delhi-NCR region centric company. As of August 13, 2025, it had 46 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 5906400 equity shares to mobilize Rs. 59.65 cr. at the upper cap. It has announced a price band of Rs. 96 – Rs. 101 per share of Rs. 10 each.  The IPO opens for subscription on September 26, 2025, and will close on September 30, 2025. The minimum application to be made is for 2400 shares and in multiple of 1200 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 26.50% of post-IPO paid-up equity capital of the company. From the net proceeds of the issue, the company will utilize Rs. 25.00 cr. for working capital, Rs. 10.68 cr. for capex requirement, Rs. 15.00 cr. for marketing expenses, and the rest for unidentified acquisition and general corporate purposes.

The IPO is solely lead managed by Narnolia Financial Services Ltd., while Maashitla Securities Pvt. Ltd. is the registrar to the issue. Alacrity Securities Ltd. is the market maker. The issue is underwritten to the tune of 15.01% by Narnolia Financial, and 84.99% by Nikunj Stock Brokers Ltd. 

The company has issued initial equity shares at par, and issued/converted further equity shares in the price range of Rs. 9174.00 – Rs. 148616 per share between June 2016, and March 2024. It has also issued bonus shares in the ratio of 725 for 1 in May 2024. The average cost of acquisition of shares by the promoters is Rs. 0.01, and Rs. 45.77 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 16.38 cr. will stand enhanced to Rs. 22.29 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 225.10 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit, of Rs. 56.62 cr. / Rs. 2.74 cr. (FY23), Rs. 90.68 cr. / Rs. 4.67 cr. (FY24), Rs. 131.48 cr. / Rs. 9.05 cr. (FY25). The company posted steady growth in its top and bottom lines for the reported fiscals.

For the last three fiscals, the company has reported an average EPS of Rs. 4.72, and an average RoNW of 19.33%. The issue is priced at a P/BV of 3.37 based on its NAV of Rs. 29.97 as of March 31, 2025, and at a P/BV of 2.07 based on its post-IPO NAV of Rs. 48.79 per share (at the upper cap).

If we attribute its FY25 super earnings on post-IPO expanded equity base, then the asking price is at a P/E of 24.88, and based on its FY24 earnings, the P/E stands at 48.33. Thus, the issue appears fully priced.

The company has posted PAT margins of 4.87% (FY23), 5.16% (FY24), 6.92% (FY25), and RoCE Margins of 16.44%, 18.71%, 19.18%, respectively for the referred periods. ROCE data differs on page no. 124 and no. 122.

DIVIDEND POLICY:
The company has not declared any dividends for any financial year. It will adopt a prudent dividend policy, based on its financial performances and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Chatha Foods, Tasty Bite, HMA Agro as its listed peers. They are currently trading at a P/E of 36.6, 61.4, and 18.2 (as of September 25, 2025). However, they are not truly comparable on an apple-to-apple basis. This comparison appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORDS:
This is the 23rd mandate from Narnolia Financial in the last three fiscals (including the ongoing one). Out of the last 10 listings, 1 opened at discount, and the rest with premium ranging from 2.60% to 90.00% on the date of listing.