Bumper Listing: Leo Dryfruits & Spices Makes Stellar Debut At 31% Premium On BSE SME; Buy Or Not?

Leo Dryfruits & Spices made an entry into the stock market on January 8, 2024, listing at Rs 68 per share on the BSE SME, a 31% premium over its issue price of Rs 52. However, after the robust debut, the stock witnessed a slight decline, trading at Rs 66.50, down 2.2% from its listing price.

Subscription Response

The Rs 25.12 crore IPO garnered strong interest, with an overall subscription of 181.77 times. Non-institutional investors (NIIs) led the enthusiasm, oversubscribing their portion by 394 times, while retail investors followed suit with a subscription rate of 154 times. The Qualified Institutional Buyers (QIBs) category was subscribed 68 times.

The IPO was open for bidding from January 1 to January 3, 2024, with a price band of Rs 51 to Rs 52 per share. It consisted entirely of a fresh issue of 48.30 lakh equity shares.

Key Details of the IPO

Price Band and Lot Size: The price band was set at Rs 51 to Rs 52 per share, with a single lot comprising 2,000 shares. At the upper price band, the minimum investment stood at Rs 1,02,000.
Reservation Quota: Half the issue was allocated to QIBs, 35% to retail investors, and 15% to NIIs.
Utilization of Funds: The company plans to deploy the net proceeds for working capital requirements, marketing, branding, and general corporate purposes.
Lead Manager and Registrar: Shreni Shares Limited acted as the book-running lead manager, while Bigshare Services Pvt Ltd handled the registrar duties.

Financial Highlights

Leo Dryfruits & Spices has demonstrated strong financial growth over the last three fiscal years. In FY22, the company reported a modest Profit After Tax (PAT) of Rs 7.90 lakh, which surged to Rs 3.63 crore in FY23, reflecting substantial improvement in profitability. This upward trajectory continued into FY24, with PAT further climbing to Rs 6.64 crore.

Business Overview

Leo Dryfruits & Spices, operating under the brand names "VANDU" and "FRYD," offers a diverse portfolio of products catering to various consumer needs. The spices category features an array of whole and blended spices, while the dry fruits segment includes plain, roasted, and flavoured varieties. Additionally, the company provides a selection of grocery items such as ghee, poppy seeds, sesame seeds, and various seasonings. Under the "FRYD" brand, it also markets frozen and semi-fried goods.

Market Presence

Currently, Maharashtra contributes the lion's share of Leo Dryfruits' revenue, accounting for 96.71%, 92.45%, and 93.00% of total sales in FY24, FY23, and FY22, respectively. The company's revenues from Maharashtra have grown significantly over the years, with sales figures rising from Rs 489.70 lakh in FY22 to Rs 6,011.99 lakh in FY24.

With its growing market share in Maharashtra, Leo Dryfruits & Spices is now eyeing expansion into other Indian states and global markets to diversify its revenue streams and enhance its footprint.

IPO Objectives

Leo Dryfruits & Spices plans to utilize the IPO proceeds to drive its growth objectives. A significant portion will be allocated to strengthening working capital to support its expanding operations. Additionally, the company aims to enhance its market presence through robust marketing and branding initiatives, increasing consumer visibility and reach. The remaining funds will be directed toward general corporate purposes.