INITIAL PUBLIC OFFERNING | ITALIAN EDIBLES LIMITED

 The ‘ITALIAN EDIBLES LIMITED’ officially issued its Prospectus mentioning the important details regarding its recent Initial Public Offering (hereinafter referred as IPO) which will start from February 2, 2024 and closes on February 8, 2024. In this article we will look at some Important Financial Details of the company and the IPO, which investors need to consider before investing in a right company.

INITIAL PUBLIC OFFERNING | ITALIAN EDIBLES LIMITED

 The ‘ITALIAN EDIBLES LIMITED’ officially issued its Prospectus mentioning the important details regarding its recent Initial Public Offering (hereinafter referred as IPO) which will start from February 2, 2024 and closes on February 8, 2024. In this article we will look at some Important Financial Details of the company and the IPO, which investors need to consider before investing in a right company.

ABOUT THE COMPANY

As per the details of the company present on its official website, the company was incorporated in the year 2002 as a private company with the name ‘Italian Edibles Private Limited’ and subsequently, in the September 2023 the company decided to go public and changed its name to ‘Italian Edibles Limited’.

BUSINESS OPERATIONS

For the last 14 years, Italian Edibles Limited has been a mainstay in the confectionery sector, exemplifying the concepts of "Delightful Creation and Boundless Joy" and "Sharing is Everything." The firm specialises in creating delicious confectionary treats, and its goods are known for their excellence in flavour and quality. Italian Edibles Limited sells a wide variety of confectionary treats under the "of course" brand. These treats include both modern and traditional Indian sweets including chocolate paste, lollipops, and jelly candies, as well as traditional sweets like milk paste and rabdi. Due to the company's awareness of India's rich cultural diversity and celebratory culture, its goods are essential for festivals, special events, and everyday pleasures.

INDUSTRY RESEARCH

Italian Edibles Limited is a player in the rapidly expanding Indian confectionery industry, which was valued at INR 338.2 billion in 2022 and is expected to increase at a compound annual growth rate (CAGR) of 6.3% from 2023 to 2028 to reach INR 485.9 billion. The corporation drives market demand by taking advantage of the popular custom of giving confectionary items as gifts during festivals, birthdays, and social occasions.

Furthermore, Italian Edibles Limited stands to gain from rising consumer expenditure as a result of rising urbanisation, improved consumer lifestyles, and a growing inclination for imported chocolates and sweets. The company's market position is further strengthened by the development of premium, limited-edition confectionery items that are enhanced with premium ingredients and appeal to discriminating consumers. Italian Edibles Limited is also in a good position to take advantage of new trends in the food industry, such as sugar-free, clean-label, vegan, and organic confections, which appeal to consumers who are health-conscious. The confectionery scene is competitive, but Italian Edibles Limited can maintain its development trajectory by innovating and adapting to the changing market circumstances and packaging options.

COMPETITION

Italian Edibles Limited competes against both domestic and international heavyweights in the very competitive Indian confectionary business. There is fierce competition in many domains, including product offers, quality, cost, and delivery capabilities. The business must contend with challenges from both organised and unorganised players, which come in all shapes and sizes. As Italian Edibles competes with well-established regional and national rivals in the retail and bulk client categories, rivalry is becoming more intense. In spite of this, Italian Edibles manages to stay ahead of the competition thanks to its wide range of products that suit a variety of local and foreign consumer tastes. Among their main rivals are Amul Ltd., Mondelez India Food Pvt. Ltd., and Nestle India Ltd. Italian Edibles is aware of how dealer relationships and rivals' procurement networks may affect sales and profitability. In order to stay ahead in this competitive industry, the corporation also continuously innovates and adapts while being on the lookout for any threats from new competitors.

BOARD OF DIRECTOR AND PROMOTERS OF THE COMPANY

The company’s management includes the following members-

01.  Mr. Ajay Makhija as Managing Director of the company.

02.  Mr. Akshay Makhija as Executive Director of the company.

03.  Mr. Shankar Arya acting as Non-Executive Director of the company.

04.  Ms. Devyani Chhajed, Ms. Anjali Jain acting as an Non-Executive Independent Directors of the company.

PROMOTER HOLDING

Mr. Ajay Makhija, Mr. Akshay Makhija are the company's promoters. The Promoters own 1,08,56,201 Equity Shares having face value of Rs.10/- per share and representing 99.99 % of the pre-issue paid up Capital of our Company. The shareholding of the promoter in the company is mentioned in the given chart.

KEY FINANCIAL DETAILS OF THE COMPANY

In the fiscal year 2022-23, the Company has achieved a noteworthy revenue from its operations of Rs. 6,321.20 (in Lakhs), and generated a revenue of Rs. 3,051.70 (in Lakhs) till 31^st August, 2023. While securing a profit of Rs. 264.21 (in Lakhs) for the year 2022-23. For the period ending 31 March, 2022 the company has earned a profit of Rs. 80.21 (in Lakhs). And till 31 August, 2023 the company has earned a profit of Rs. 209.68 (in Lakhs).

To make a wise investment choice, we will delve into various financial ratios for a comprehensive assessment of the company's financial condition and performance.

DETAILS OF THE IPO

The present public offer of upto 3,920,000 Equity Shares includes a Fresh issue of 3,920,000Equity shares and an offer for sale under which 200,000 Equity shares are reserved for Market Makers and the shares are there to be subscribed at the price of ₹ 68 Per Share.

Some Important details with respect to the Application Size for Qualified Institutional Bidder and Non-Institutional Investor has been Summarised in the following table:

OBJECTIVES OF THE IPO

The objective of the issue of the IPO is for (i) Setting up of new manufacturing unit; (ii) Repayment of certain borrowings; (iii) Meeting the working capital expenses; (iv) meeting the general corporate expenses of the company.

RISKS INVOLVED

Italian Edibles is exposed to many risks that might affect its financial performance and business operations. First off, ongoing legal actions involving the promoter and promoter firms may distract managerial focus and funds, maybe leading to unfavourable rulings that affect the financial health of the business. A portion of the net proceeds from the offering will also be used by the firm to repay or prepay certain borrowing facilities. Ineffective debt management might put a pressure on cash flows and make it more difficult for the business to get the working capital it needs. Furthermore, Italian Edibles intends to establish a new production facility in the Tillor Khurdh region, posing a sizable capital investment and operational risk. A firm that depends heavily on a small number of clients for a substantial amount of its income is also vulnerable to concentration risk, which can have a negative impact on cash flows and financial stability in the event of defaults or payment delays. A sizeable amount of the company's working capital needs is devoted to creditors and inventories. Operating conditions might be negatively impacted and liquidity issues could arise from insufficient cash flows to satisfy these obligations. Overall, Italian Edibles has a number of risks that need to be carefully managed and mitigated in order to protect its financial stability and ability to continue operating.

ANALYSIS AND RECOMMENDATION

With Italian Edibles Limited's impending IPO, investors will have the chance to participate in a business that has been firmly established in the candy industry for more than 14 years. Italian Edibles has developed a varied range of sweet delicacies under the trademark "of course," appealing to both traditional and modern tastes, with a particular focus on "Delightful Creation and Boundless Joy." The goal of the IPO is to collect money for a number of uses, such as the establishment of a new production facility, loan repayment, and working capital costs. Investors should, however, carefully weigh the risks, which include concentration risk owing to reliance on a small number of significant clients, continuing legal processes, and worries about managing debt. Italian Edibles' financial figures demonstrate the company's encouraging sales growth and profitability. The IPO presents a structured investment opportunity with a net issue price of ₹68 per share and precise application size information for both retail and non-retail investors. All things considered, even if the IPO offers opportunity for development and growth, investors must assess the risks against the company's potential before making an investment.

IMPORTANT DATES

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