Sresta Natural Bioproducts IPO : 7 things to know

Sresta Natural Bioproducts Ltd, the Hyderabad based leader in natural health foods, is planning to raise funds through a public issue. Sresta Natural Bioproducts Ltd has just filed for its IPO in the second week of January 2022, so the approval, which takes about 2-3 months should come in closer to mid-April. The issue will be a combination of a fresh issue and an offer for sale (OFS).

7 important things to know about Sresta Natural Bioproducts IPO
 

1) Sresta Natural Bioproducts Ltd has filed for an approximately Rs.500 crore IPO with SEBI which comprises of a fresh issue of Rs.50 crore and an offer for sale of OFS of nearly Rs.500 crore. Sresta Natural Bioproducts Ltd owns 24 Mantra Organic which sells a variety of packaged food products under this umbrella brand which include cooking essentials, dry fruits, organic teas and other similar products.

2) Out of the total issue of approximately Rs.500 crore, let us look at the OFS portion first. The OFS will entail the sale of 70,30,962 or approximately 70.31 lakh shares by promoters and early investors to the public. While the eventual value of the OFS component will only be known once the price band is fixed, the OFS component of the public issue is approximately estimated to be around Rs.450 crore. 

3) The IPO will be predominantly an offer for sale with the fresh issue portion being relatively smaller. Some of the key early investors who will be selling the 70.31 lakh shares as part of the offer for sale would include names like Peepul Capital Fund III LLC, Venture East Life Fund III LLC and Venture East Trustee Company.

The OFS component will also result in change in ownership and will not be IPO dilutive. However, the IPO will help to increase the free float of the stock.

4) Sresta Natural Bioproducts IPO will also comprise of a small Rs.50 crore component that will be in the nature of a fresh issue or approximately 10% of the total issue size. Here is how the fresh funds will be used by the company. The net proceeds will be used to fund the net working capital needs of the company, repay or even prepay in part or in full some of the outstanding borrowings in the books of the company and allocate some portion of the funds for general corporate purposes.

5) Sresta Natural Bioproducts Ltd was incorporated in Hyderabad in the year 2004. It is largely into the business of procuring, processing, manufacturing, marketing and research and development of organic food products. These include organic kitchen essentials, flavours, organic tea etc.

The idea is to leverage on the big shift towards healthy lifestyles, healthy food consumption and an organic bias in the post COVID world. The positioning of Sresta Natural Bioproducts Ltd in line with this though process. 

6) Sresta Natural Bioproducts Ltd  will allocate 75% of the total issue size for the qualified institutional buyers (QIBs), 15% to the non-institutional investors / high net worth investors and the balance 10% for retail. The retail portion has been kept small considering the limited appetite for such products in the IPO markets. Retail investment quote refers to individual investors who invest up to a limit of Rs.2 lakhs per application.

7) The IPO of Sresta Natural Bioproducts Ltd will be lead managed by Axis Capital and JM Financials. They will act as the book running lead managers or BRLMs to the issue. The company has also appointed KFINTECH Technologies (formerly Karvy Computershare Ltd) as the designated registrar to the IPO.

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