Shivashrit Foods NSE SME IPO review

•    The company is engaged in the manufacture and marketing of potato flakes in global markets.
•    It posted growth in its top lines for the reported periods.
•    It marked boosted profits from FY24 onwards following cost control and bulk raw material buying in peak season that helps it in higher margins.
•    Based on its recent financial data, the issue appears fully priced.
•    Well-informed investors may park funds for medium to long term.

ABOUT COMPANY:
Shivashrit Foods Ltd. (SFL) is a manufacturer, supplier and exporter of potato flakes. The Company has a dedicated potato processing and manufacturing facility at Aligarh in Western Uttar Pradesh, India for production of potato flakes. It specializes in manufacturing of premium-grade potato flakes, used in ready-to-eat meals, snack foods, and processed food products. SFL’s product’s portfolio is designed to cater to the specific requirements of both global and domestic food manufacturers, offering consistency in quality and a long shelf life.

The major raw material used in manufacturing of potato flakes are Potatoes. It procures potatoes directly from farmers, third party suppliers and traders. The peak season for procurement of potatoes is December to March, which is harvesting season. The company procures appx. 80% - 90% of annual requirement of potatoes during peak season. It has direct access to the farmers in the radius of 200 kilometres from its manufacturing unit. This extensive network of farmers enables it to ensure a steady supply of high-quality potatoes. The company works closely with the farmers to uphold strict quality standards at every stage of production, from planting to harvesting, by maintaining end - to end oversight of the procurement process. Thus, it ensures that the freshest and highest quality of the potatoes are delivered to processing facilities. It offers timely payments, ensuring that farmers are rewarded for their hard-work.

Potatoes, once sourced, are put through an end-to-end process, which is fully automated. The potatoes are first put through the process of washing to get rid of the larger dirt particles. These washed potatoes are there after peeled and trimmed, to prepare them for processing. These trimmed pieces are then sliced and blanched, which is a process of partial boiling, to make the potatoes soft and malleable. The blanched slices are then cooled and cooked thoroughly, before being sent for the mashing part of the process. These mashed potatoes are flattened into thin sheets that are rolled by a process called ‘drum drying’. Subsequently, these rolls are converted into flakes, which is its main product, ready for packaging and shipping. Lastly, the flakes are packaged into different sized packages, as per the requirements.

The company is marketing its products under the brand names of Shivashrit, Shreeaahar, and Flaker’s. It largely operates on B2B model and also exports and recently entered in to B2C segment. As of June 30, 2025, it had 68 personnel (including 18 contract employees).

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route combo IPO of 4932000 equity shares of Rs. 10 each to mobilize Rs. 70.03 cr. at the upper cap. It has announced a price band of Rs. 135– Rs. 142 per share. The issue consists of 4316000 fresh equity shares (worth Rs. 61.29 cr. at the upper cap), and an Offer for Sale (OFS) of 616000 equity shares (worth Rs. 8.74 cr. at the upper cap). The issue opens for subscription on August 22, 2025, and will close on August 26, 2025. The minimum number of shares to be applied is for 2000 shares and in multiples of 1000 shares, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 27.00% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, it will utilize Rs. 26.30 cr. for capex on expansion, Rs. 10.00 cr. for working capital, and the rest for general corporate purposes. 

The IPO is solely lead managed by Mark Corporate Advisors Pvt. Ltd., while Maashitla Securities Pvt. Ltd., is the registrar to the issue. Asnani Stock Broker Pvt. Ltd. is a market maker. Asnani Stock Broker Pvt. Ltd. is a syndicate member. The IPO is underwritten up to 60.83% by Mark Corporate and 39.17% by Asnani Stock Broker. 

The company has issued entire initial equity shares at par value, the company has issued bonus equity shares in the ratio of 2 for 1 in January 2025. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. 3.33, and Rs. 3.73 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 13.95 cr. will stand enhanced to Rs. 18.27 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 259.42 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 45.61 cr. / Rs. 1.52 cr. (FY23), Rs. 77.55 cr. / Rs. 11.61 cr. (FY24), Rs. 105.85 cr. / Rs. 12.06 cr. (FY25). Quantum jump in its bottom lines from FY24 raise eyebrows. Management attributes this to their cost management and hedging around 80% main crop of potato in its peak season at very low rates, that enhances their margins. It has exports as well as creamy domestic customers who give repeat orders.

For the last three fiscals, the company has reported an average EPS of Rs. 7.28 and an average RoNW of 36.91%. The issue is priced at a P/BV of 5.73 based on its NAV of Rs. 24.79 as of March 31, 2025, but its post-IPO NAV data is missing from the offer documents.

If we attribute FY25 super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 21.52. Based on FY24 earnings, the P/E stands at 22.33. Thus, the issue appears fully priced.

For the reported periods, the company has posted PAT margins of 3.34% (FY23), 15.24% (FY24), 11.51%, (FY25), and RoCE margins of 12.02%, 44.89%, 42.73%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not paid any dividends since incorporation. It has adopted a dividend policy in February 2025, based on its financial performance and future prospects.

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has no listed peers to compare with.

MERCHANT BANKER’S TRACK RECORD:
This is the 5th mandate Mark Corporate in the last three fiscals including the ongoing one.  Out of the last 3 listings, 1 opened at par, and the rest with premium ranging from 1.64% to 90.00% on the date of listing.