The NeoPolitan IPO: A Taste of Growth in the Food Sector?

NeoPolitan Pizza and Foods IPO: From Dough to Decision

Welcome to the in-depth journey into one of the tastiest IPOs of the year-NeoPolitan Pizza and Foods Limited. As we dig into the nitty-gritty of this SME IPO, we will discover what makes it a good taste for investors seeking a slice of the food industry in their portfolio.

Neopolitan Pizza and Foods Limited An Insight Overview

NeoPolitan Pizza and Foods is more about building the perfect recipe for a business model that knits together traditional values with the demands of a modern market. Having been set up with a vision to not only serve high-quality Neapolitan cuisine, it has embarked on its footprint across multiple cities; not only pizzas are offered but an entire dining experience, which is ringing in robust growth and consumer trust.

NeoPolitan Pizza IPO Details

• The IPO of NeoPolitan Pizza and Foods opened for subscription from 30 September 2024 till closing date, 04 Oct 2024.
• The issue size comprises a fresh issue of 60 lakh shares at Rs20 per share with an intention to raise ₹12 crore.
• The proceeds would be used to enhance their retail network, increase the security deposits, and meet other operational expenses-all point to high growth aspirations.

Event	Date
IPO Opening Date	September 30, 2024
IPO Closing Date	October 4, 2024
Allotment Finalization	October 7, 2024
Refunds and Credit to Demat	October 8, 2024
Listing Date	October 9, 2024

Here is the updated table for NeoPolitan Pizza and Foods Limited IPO:

IPO Details	Information
Company Name	NeoPolitan Pizza and Foods Limited
IPO Size	₹20 crore
Fresh Issue	₹20 crore (1 crore equity shares)
Price Band	₹20 per share
Face Value	₹10 per share
Listing Exchange	NSE SME
Minimum Bid Lot	6,000 shares
Minimum Investment	₹120,000
Issue Type	Fixed Price Issue
Issue Category	SME IPO
QIB Allocation	50%
NII Allocation	15%
Retail Allocation	35%
Company Sector	Food & Beverage (QSR)

NeoPolitan Pizza and Foods Limited IPO Financial

NeoPolitan Pizza’s growth prospects are encouraging in the financial front as their revenue increased to Rs 44.00 crore for FY24 from Rs 20.03 crore of FY23 while the profits too could look at this upward trajectory. This reflects a good health of the business model adopted by the company which hints more than the symptoms shown by it for further growth.

Here, for instance, is a comparison of NeoPolitan Pizza and Foods Limited’s recent financial year data:.

Financial Metric	Fiscal Year Ending March 31, 2024	Fiscal Year Ending March 31, 2023	Change %
Assets	₹2,040.50 lakh	₹1,811.58 lakh	12.6%
Revenue	₹4,401.07 lakh	₹2,004.61 lakh	120%
Profit After Tax (PAT)	₹210.72 lakh	₹116.80 lakh	80%
Net Worth	₹1,590.86 lakh	₹1,381.61 lakh	15.2%
Reserves & Surplus	₹492.33 lakh	₹281.61 lakh	75%
Total Borrowing	₹59.19 lakh	₹68.82 lakh	-14% (decrease)

Revenue Spike: There was a sharp 120% increase in revenue from FY23 to FY24, which could be reflective of the successful expansion or market penetration strategies.
Increase in the Profits: There was an 80% growth in PAT, which means that while revenue grew, the company was still able to improve profit drastically, maybe through better management of costs or margins.
Asset Growth: The company’s assets grew by 12.6%, which might reflect investments in new facilities, equipment, or acquisitions, aligning with the revenue increase. Net Worth and Reserves: Both net worth and reserves & surplus have increased by a good amount- 15.2% and 75%, respectively. This means that the profits have been retained and added to the capital base of the company and can prove to be used for increasing capital further or repayments of debt. Reduced Borrowings: The total borrowing came at a decline of 14%, which possibly shows the company paying off debts with higher profits or possibly an orchestrated move to reduce financial leverage.

During the previous fiscal year, NeoPolitan Pizza and Foods Limited appears to be financially healthy as well as growing. The significant increases in revenues, profit, and reserves together with a decrease in debt give the impression of successful operations and financial prudence. Such performance would then be attributed to efficient market strategies, cost efficiencies, or successful expansion into new markets. However, investors should take into account that high growth rates may bring about increasing complexity in operations and risk exposure in the markets. A focus of the company on reducing borrowings while expanding operations suggests balancing the option of growth opportunities leveraging a commitment to financial health.

NeoPolitan Pizza and Foods Limited IPO GMP and Subscription

An overview: A detailed analysis of the IPO subscription numbers for NeoPolitan Pizza and Foods Limited along with other relevant information that GMP stands at 0 is given below.

Market Maker:

Market maker was totally subscribed. In this, shares allocated for market makers are fully subscribed for creating market liquidity. The offers made were same as bids obtained at 300,000, which amount is ₹ 0.60 crore.

• Non-Institutional Buyers (NIIs): At this subscription level, was much lower at 0.44 times with 1,248,000 shares bid for out of the 2,850,000 offered and contributed ₹2.50 crore. This could reflect a level of skepticism or lack of interest from mid-tier investors.
• Retail Investors: This group was the most eager, as their subscription was 5.12 times the allotment. Actually, the retail investors offered a bid for 14,598,000 shares against the number of shares offered, which was 2,850,000. Hence, the amount subscribed by this segment came out to be ₹29.20 crore.
  The issue in total got subscribed 2.78 times; that is, 15,846,000 shares were offered out of the available 5,700,001, amounting to ₹31.69 crore.

GMP Impact:

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• GMP at 0: When GMP of an issue is 0, it merely means the shares are trading in the grey market at par with the issue price. It means a few things:
  Neutral Market Sentiment: Investors may be taking a ‘wait and watch’ approach, not very optimistic nor pessimistic about the issue’s performance at the listing.
• Pricing or Valuation Concerns: The issue price may be felt to be reasonably priced, or there could be concerns over the future for the company that are not reflected in a premium.
• Market Factors: Other factors in the market are influencing investors’ decisions and driving investment elsewhere or market-wide trends taking precedence over interest in the new issue.

Implications for Investors:

• Retail Interest: The robust retail subscription rate will go to indicate that the individual investor is comforted by the prospects of the company, presumably because of brand appeal, sector trend, or growth prospects in general for NeoPolitan Pizza and Foods.
• Listing Expectations: Obviously, without a GMP, listing may not see almost-immediate price appreciation, but if retail interest translates into buying pressure post-listing, there could still be upside. Without a positive GMP signal, however, the listing might be a bit more of a conservative number.

It may be a buying opportunity for the fundamentals of the company’s stock by investors, particularly in the stock, with respect to its fundamentals. The absence of the premium can also be used as a window of those who believe in the medium and long term possibilities for the company, considering if the interest at retail is a sign of a healthy consumer base.

A GMP of 0 for NeoPolitan Pizza and Foods Limited’s IPO means that the grey market is generally being balanced, which infers that the market is pricing the shares at face value. Thus, the scenario may not hold promise for short-term gain upon listing but does not rule out future growth based on how the company performs and sector dynamics. Such a scenario could well bode well for long-term investor interest, while short-term market behavior would be more cautious.

NeoPolitan Pizza and Foods Limited IPO EPS and PE Ratio

Based on the data up to September 30, 2024, this is an update brief on NeoPolitan Pizza and Foods Limited’s EPS and P/E ratio after its issue.

• EPS: Pre-IPO EPS of NeoPolitan Pizza and Foods Limited is worked out based on the pre-issue shareholding and the latest financial year’s earnings as of March 31, 2024, and it can be derived from their financial statements and the number of shares. Since the actual figure is not given here, let’s assume this is worked out based on their PAT of ₹210.72 lakh and the number of shares before IPO. So if we assume an approximate total number of shares pre-IPO (since that is not directly given but might infer from similar IPOs), then the EPS would be approximately ₹210.72 lakh divided by the number of shares.
• P/E Ratio: P/E ratio given in the comparison with other IPOs, namely Subam Papers, where NeoPolitan’s P/E ratio is 10.44. The P/E ratio can be calculated as issue price divided by EPS. At ₹20 per share, if we reverse the computation to get an implied EPS, that would have been approximately ₹1.92. However, this calculation might not correspond with actual reported figures in case of misalignments in calculating or reporting EPS in their financial statements or some error in data interpretation.

Conclusion: Is NeoPolitan Pizza IPO a Slice Worth Considering?

The NeoPolitan Pizza IPO brings old-fashioned appeal with new business strategy to the investment arena. For investors focused on this longer growth aspect, brand expansion, financial performance, and market strategy might just bake up into a profitable investment. However, since with any IPO due diligence on market conditions, competition, and personal investment strategy is paramount before taking a bite.