Abram Food IPO: Navigating the Investment Landscape
In the vibrant Indian financial market, Initial Public Offerings (IPOs) always capture significant attention, especially from retail investors seeking new growth opportunities. The latest buzz centers around Abram Food Limited, an SME IPO entering the market. This detailed blog post offers a comprehensive look at the company, its offering, and what potential investors should consider. Let's delve into the specifics of this fresh issue.
Introducing Abram Food Limited
Abram Food Limited, incorporated in 2009, is a key player in the manufacturing and trading of essential food commodities. Their product portfolio spans a wide range including Chana Dal, various types of Flour (Chakki Atta, Maida, Sooji, Multi-grain atta), Besan, Spices, Cattle Feed (khali), and edible oils. The company primarily markets its products under the well-recognized brand name "Kherliwala" across Rajasthan, Delhi/NCR, and Uttar Pradesh, leveraging an extensive network of distributors.
A notable aspect of Abram Food's operations is its commitment to quality. They emphasize processing products without artificial preservatives or chemicals, ensuring freshness from procurement to packaging. Their manufacturing facility in Alwar, Rajasthan, is strategically located and spans 3000 sq. meters, equipped with modern machinery for efficient cleaning, drying, grinding, and packaging.
Key Business Highlights:
- Manufacturing and trading of diverse food products and cattle feed.
- Strong regional presence in Rajasthan, Delhi/NCR, and Uttar Pradesh.
- Products sold under the established "Kherliwala" brand.
- Focus on quality, freshness, and natural processing.
- Dedicated manufacturing facility optimizing production.
- As of November 30, 2024, the company employs 15 individuals.
Unpacking the Abram Food IPO: Key Details
The Abram Food IPO is a fixed-price SME issue, entirely comprising a fresh issuance of shares. Here's a quick overview of the offering:
| Detail | Specification |
|---|---|
| IPO Type | SME Fixed Price IPO |
| Issue Price | ₹98 per share |
| Face Value | ₹10 per share |
| Total Issue Size | 14,28,000 shares (aggregating up to ₹13.99 Crores) |
| Issue Type | Fresh Issue |
| Listing At | BSE SME |
Your IPO Journey: Key Dates to Remember
Keeping track of important dates is crucial for any IPO application. Mark your calendars for the Abram Food IPO timeline:
Please note that the listing date is tentative and subject to change.
Understanding Your Investment: Lot Size Breakdown
For SME IPOs, investments are made in fixed lot sizes. Here’s what you need to know about the minimum and maximum investments for the Abram Food IPO:
| Application Type | Lots (Minimum) | Shares (Minimum) | Amount (Minimum) |
|---|---|---|---|
| Retail Investor (Min/Max) | 1 | 1,200 | ₹1,17,600 |
| High Net-worth Individual (Min) | 2 | 2,400 | ₹2,35,200 |
How Shares are Allocated: Investor Categories
The total shares offered in the Abram Food IPO are distributed among different investor categories as follows:
| Investor Category | Shares Offered | Percentage (%) |
|---|---|---|
| Market Maker | 72,000 | 5.04% |
| Non-Institutional Investors (NII/HNI) | 6,78,000 | 47.48% |
| Retail Individual Investors (RII) | 6,78,000 | 47.48% |
| Total Shares Offered | 14,28,000 | 100.00% |
It's important to note the significant allocation to NII and RII categories, a common structure in SME IPOs, with no QIB allocation for this specific issue.
Decoding the Numbers: Financial Health
Abram Food Limited has demonstrated robust financial growth in recent periods. Examining their financials offers insights into the company's operational strength:
| Period Ended (March 31) | Assets (₹ Crore) | Revenue (₹ Crore) | Profit After Tax (₹ Crore) | EBITDA (₹ Crore) | Net Worth (₹ Crore) | Total Borrowing (₹ Crore) |
|---|---|---|---|---|---|---|
| 2025 | 17.09 | 64.09 | 3.26 | 5.07 | 8.43 | 7.13 |
| 2024 | 10.62 | 36.14 | 1.02 | 1.96 | 4.15 | 6.01 |
| 2023 | 7.73 | 33.16 | 0.48 | 1.03 | 3.13 | 4.39 |
The company showcased a remarkable 77% increase in revenue and a substantial 220% jump in profit after tax between FY2024 and FY2025, indicating strong operational performance and profitability.
Performance at a Glance: Key Financial Metrics
Understanding the Key Performance Indicators (KPIs) provides a deeper perspective on the company's efficiency and financial stability. As of March 31, 2025, Abram Food Limited's market capitalization stands at ₹50.51 Crores.
| KPI | Value |
|---|---|
| Return on Equity (ROE) | 38.62% |
| Return on Capital Employed (ROCE) | 56.02% |
| Debt/Equity Ratio | 0.85 |
| Return on Net Worth (RoNW) | 38.62% |
| PAT Margin | 5.08% |
| EBITDA Margin | 7.92% |
| Price to Book Value | 4.33 |
These metrics reflect a healthy financial position and efficient use of capital, although investors should always consider them in context of the industry and peer performance.
Leadership Stake: Promoter Ownership
The promoters of Abram Food Limited are Mr. Brij Bhushan, Ms. Mona Singhal, and Mr. Arpit Gupta. Their stake in the company, both before and after the IPO, is a key indicator of their confidence:
| Holding Stage | Percentage (%) |
|---|---|
| Pre-Issue Shareholding | 93.14% |
| Post-Issue Shareholding | 67.33% |
The dilution of promoter holding is a standard part of the IPO process, reflecting new equity infusion into the company.
What the IPO Funds: Company Objectives
Abram Food Limited intends to utilize the net proceeds from this IPO for several strategic purposes, aimed at bolstering its growth and operational efficiency:
- Capital Expenditure: A significant portion (₹3.85 Crores) is earmarked for the purchase of new machinery, indicating plans for expansion or modernization of manufacturing capabilities.
- Working Capital Requirements: ₹6.70 Crores will be used to fund the company's working capital needs, ensuring smooth day-to-day operations and facilitating growth.
- General Corporate Purposes: ₹2.05 Crores are allocated for general corporate needs, providing flexibility for various strategic initiatives.
- Issue Related Expenses: ₹1.40 Crores will cover the costs associated with the IPO process itself.
Strategic Analysis: SWOT for Abram Food IPO
A balanced perspective involves evaluating the company's internal strengths and weaknesses, alongside external opportunities and threats. This SWOT analysis provides a framework for understanding Abram Food Limited's position:
Strengths:
- Robust Financial Growth: Significant increase in revenue and profit after tax in recent periods demonstrates strong operational performance.
- Established Brand & Network: "Kherliwala" brand recognition and an extensive distribution network in key northern Indian states.
- Quality Focus: Emphasis on processing products without artificial preservatives, appealing to health-conscious consumers.
- Strategic Location: Manufacturing facility in Alwar, Rajasthan, provides logistical advantages for target markets.
- Experienced Leadership: Presence of an experienced and professional senior management team.
Weaknesses:
- Highly Competitive Market: Operates in a fragmented and competitive food processing sector, facing challenges from both organized and unorganized players.
- SME IPO Nature: As an SME listing, it might experience lower liquidity compared to mainboard IPOs, potentially leading to a longer period for stock price stabilization and migration.
- Sustainability of Growth: The rapid growth observed raises questions about its sustainability in the long term within a competitive environment, requiring continuous innovation and market adaptation.
- Regional Concentration: Primary market presence is concentrated in Rajasthan, Delhi/NCR, and Uttar Pradesh, potentially limiting broader national reach.
Opportunities:
- Growing Demand for Packaged Food: Increasing urbanization and changing lifestyles drive demand for convenient, packaged food products in India.
- Expansion into New Markets/Products: Potential to expand product lines or penetrate new geographical regions beyond its current stronghold.
- Focus on Health & Hygiene: Growing consumer preference for quality, chemical-free products aligns with the company's processing philosophy.
- Digital Transformation: Leveraging e-commerce platforms and digital marketing to reach a wider customer base and enhance brand visibility.
Threats:
- Raw Material Price Volatility: Dependence on agricultural commodities makes the company vulnerable to fluctuations in raw material prices.
- Intense Competition: Facing stiff competition from both large, established food companies and numerous local players.
- Regulatory Changes: Evolving food safety standards and regulations could impact operational costs and compliance requirements.
- Economic Downturns: Consumer spending on discretionary food items could be affected during economic slowdowns.
Expert Insights: Is This IPO for You?
Market analysts often scrutinize SME IPOs closely due to their unique characteristics. A comprehensive review of Abram Food Limited indicates that while the company has shown impressive growth in its financial performance, the sector it operates in is highly competitive and fragmented. The rapid increase in both top and bottom lines warrants careful consideration regarding its long-term sustainability.
Given the fixed price nature and the sector dynamics, investors should evaluate their risk appetite. For those with a moderate risk tolerance and a medium-term investment horizon, parking funds in this IPO might be considered after thorough due diligence. It's always advisable to consult with a financial advisor before making any investment decisions.
Key Supporting Entities for the IPO
Understanding the key players involved in facilitating the IPO is essential:
- Lead Manager: Corporate Makers Capital Ltd. is the book-running lead manager, responsible for managing the entire IPO process.
- Registrar: Kfin Technologies Limited will handle the allotment process and investor services.
- Market Maker: Giriraj Stock Broking Private Limited will act as the market maker, providing liquidity post-listing.
Your Questions Answered: IPO FAQs
Here are some common questions about the Abram Food IPO:
- What is the Abram Food IPO?
It is an SME IPO of 14,28,000 equity shares with a face value of ₹10 each, aggregating up to ₹13.99 Crores. The issue price is ₹98 per share, and the minimum order quantity is 1200 shares. - When does the Abram Food IPO open and close?
The IPO opens on June 24, 2025, and closes on June 26, 2025. - What is the lot size for Abram Food IPO?
The minimum lot size is 1200 shares, requiring a minimum investment of ₹1,17,600 for retail investors. - When is the Abram Food IPO allotment expected?
The basis of allotment is expected to be finalized on Friday, June 27, 2025. Shares are typically credited to demat accounts by Monday, June 30, 2025. - When is the tentative listing date for Abram Food IPO?
The tentative listing date for Abram Food IPO on BSE SME is Tuesday, July 1, 2025.
Final Thoughts for Potential Investors
The Abram Food IPO presents an opportunity for investors to participate in the growth story of a food processing company with a strong regional presence and impressive recent financial performance. While the segment is competitive, the company's focus on quality products under an established brand name provides a foundation.
As with any investment, particularly in the SME segment, it's crucial to consider all aspects: the company's business model, its financial health, the industry landscape, and the overall market sentiment. Conduct your own research and consider consulting with a financial expert to determine if this IPO aligns with your investment goals and risk tolerance.