India's first fast-moving consumer goods (FMCG) Initial public offering (IPO) in five years, namely, Manpasand Beverages, which opens on June 24, is being valued at five times its FY15 revenues of nearly Rs 300 crore. While lower than Bajaj Corp, the last FMCG IPO, valued at nearly seven times its FY10 revenues of Rs 331 crore, investment bankers say Manpasand's current valuations are fair, given the growth prospects of the juices market in India.
Valued at nearly Rs 8,300 crore, the overall juice market in India is estimated to grow at nearly 20 per cent per annum in volume terms and 22 per cent per annum in terms of value in the next five years, according to a study by Euromonitor. The Vadodara-based Manpasand is looking to raise Rs 400 crore by offloading 25 per cent stake in the current offering. Post issue, its market capitalisation will be Rs 1,600 crore.
Known for its Mango Sip brand of juice, Manpasand had last year launched a new range called Fruits Up, which targets mainly urban areas. Mango Sip, on the other hand, is positioned as an affordable beverage option, strong in tier II and III makets.
Promoter stake post issue, incidentally, will come down to 50.25 per from 67 per cent, while private equity investors SAIF Partners and Aditya Birla Private Equity will see their stakes come down to around 22 per cent and 2.25 per cent respectively.
With the current issue, SAIF will revert to its initial stake-holding prior to a pre-IPO placement last year. SAIF had first invested Rs 45 crore in Manpasand in 2011. Alongwith Aditya Birla PE, SAIF pumped in Rs 71 crore in 2014, raising its stake to around 29.8 per cent in the process. Aditya Birla PE, on the other hand, got a three per cent stake in the company.
Persons in the know say the shift to juices by health-conscious Indians from carbonated drinks is what prompted SAIF to stay invested in Manpasand. The venture and growth capital investment firm, which has a strong consumer focus, has seen a few of its portfolio companies tap the capital markets in the past. These include MakeMyTrip, Just Dial, Speciality Restaurants and Lovable Lingerie.
"Catering to this demand will be critical if juice players have to grow," Manpasand's CMD Dhirendra Singh said. The proceeds of the IPO will be utilised to set up a new manufacturing plant at Ambala in Haryana (Rs 150 crore) and expand and modernise its existing production facilities at Vadodara and Varanasi respectively (Rs 40-50 crore). Rs 150 crore will also be utilised to pay debt on its books, set up a new corporate office and for allied expenditure.
