Jeyyam Global NSE SME IPO review (May apply)

•    The company is primarily in the business of manufacturing and processing of Bengal Gram (Chana).
•    It posted growth in its top and bottom lines for the reported periods. 
•    Super growth for FY24 raises eyebrows.
•    Based on FY24 earnings, the issue appears fully priced discounting all near term positives.
•    Well-informed investors may park funds for long term. 

ABOUT COMPANY:
Jeyyam Global Foods Ltd. (JGFL) was incorporated as "Kichoni Online Services Private Limited" on March 24, 2008, as a private limited company under the provisions of the Companies Act, 1956 pursuant to Certificate of Incorporation issued by Registrar of Companies, Chennai ("RoC") with the object to collect and sell data online. However, the Company did not start any business activity in this segment. Shareholders of the Company at the EGM held on July 31, 2008 passed a special resolution for amendment in the Object Clause of the MOA and the objects of Company were amended to include trading of FMCG products. The same was approved by the Registrar of Companies, Chennai vide its certificate dated September 17, 2008. The shareholders of our Company thereafter at the EGM held on May 09, 2009 passed a special resolution for change of the Name of the Company to 'Jeyyam Products Private Limited'. Accordingly, the name of company was changed to 'Jeyyam Products Private Limited' vide Fresh Certificate of Incorporation consequent upon change of Name dated June 18, 2009 issued by Registrar of Companies, Chennai. The Company has been in the business of trading since September 2008. Subsequently it changed its name to existing one in May 2023.

The company specializes in manufacturing and/or processing and supply of Bengal Gram (locally known as 'Chana'), Fried Gram, and Besan Flour to wide variety of market like Distributors, Large Retailers, Hotels, Restaurants, Caterers, Branded Supermarkets and Wholesalers. The Company is continuously engaged in undertaking research and development and is ready to enter into the B2C business of spices and masala, ready to cook and ready to eat foods, salt, sugar, soya and vermicelli, among others.

"Jeyyam" brand is known best for its quality. The brand has earned the trust, and loyalty of its distributors, retailers, and customers solely for its quality through complete transparency. It adheres to standard practices and strictly abides by statutory norms. The Company has obtained FSSAI License for both of its Factory locations and ensures that ISO 9001:2015 and ISO 22000:2018 standards are followed in both of its Factory location and have obtained the ISO Certification for Factory situated in Salem.

JGFL's focus on quality ensures that every step of the process, from procurement, processing to packaging, is carried out to the highest standards. Its manufacturing facilities, coupled with a supply chain, enables it to deliver products that meet the evolving needs of customers. Jeyyam is a brand that is synonymous with quality, trust, and innovation. It is dedicated to the Chana industry and is committed to driving growth and transformation in this sector.

With deep expertise in chana, a strong team and leverage to anchor and establish the entire Chana value chain, the company is on its way to become a Pan-India Chana brand. Jeyyam is a brand with a focus in the Chana industry. Its experience in setting up and operating chana product manufacturing units has helped it understand and build a thriving supply chain ecosystem. It is proud to have set up a model of forward and backward integration in the chana value chain, driving value for every player in the ecosystem. As of March 31, 2024, it had 155 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden combo book building route IPO of 13432000 equity shares of Rs. 5 each to mobilize Rs. 81.94 cr. at the upper cap. It has announced a price band of Rs. 59 - Rs. 61 per share. The IPO consists of 12088800 fresh equity shares worth Rs. 73.74 cr. (at the upper cap, and an Offer for Sale (OFS) of 1343200 shares worth Rs. 8.19 cr. (at the upper cap). The issue opens for subscription on September 02 2024, and will close on September 04, 2024. The minimum application to be made is for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 28.28% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, it will utilize Rs. 35.00 cr. for working capital, Rs. 19.00 cr. for capex, and the rest for general corporate purposes. 

The issue is solely lead managed by Corpwis Advisors Pvt. Ltd., and KFin Technologies Ltd. is the registrar to the issue. NNM Securities Pvt. Ltd. is the market maker for the company. The issue is underwritten to the tune of 15.01% by Corpwise and to the tune of 84.99% by NNM Securities.

Having issued initial equity shares at par value, the company issued further equity shares in the price range of Rs. 183 - Rs. 278.50 (on the basis of Rs. 5 FV) between March 2016 and July 2021. It has also issued bonus shares in the ratio of 28 for 1 in January 2024. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. MA, Rs. 9.60, Rs. 13.27, Rs. 15.73, Rs. 16.57, Rs. 17.18, and Rs. 17.21 per share. 

Post-IPO, company's current paid-up equity capital of Rs. 17.70 cr. will stand enhanced to Rs. 23.75 cr. Based on the upper IPO price band, the company is looking for a market cap of Rs. 289.73 cr.  

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 253.88 cr. / Rs. 4.37 cr. (FY22), Rs. 382.21 cr. / Rs. 7.87 cr. (FY23), Rs. 629.83 cr. / Rs. 15.09 cr. (FY24). 

For the last three fiscals, it has reported an average EPS of Rs. 3.11, and an average RoNW of 14.70%. The issue is priced at a P/BV of 2.69 based on its NAV of Rs. 22.66 as of March 31, 2024, and at a P/BV of 1.88 based on its post-IPO NAV of Rs. 32.42 per share (at the upper cap). 

If we attribute FY24 earnings to its post-IPO fully diluted paid-up capital, then the asking price is at a P/E of 19.18, thus issue appears relatively fully priced discounting all near term positives. 

For the reported periods, the company has posted PAT margins of 1.72% (FY22), 2.06% (FY23), 2.40% (FY24), and RoCE margins of 13.36%, 15.22%, 26.27% respectively for the referred periods. 

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy based on its financial performance and future prospects. 

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Sameera Agro as their listed peers. It is trading at a P/E of 13.8 (as of August 30, 2024). However, they are not comparable on an apple-to-apple basis.

MERCHANT BANKER'S TRACK RECORD:
This is the 2nd mandate from Corpwis Advisors in the current fiscal, out of the only 1 listing so far, it opened at par on the listing date.