Ice Make Refrigeration Limited IPO Review (NSE SME)

Ice Make Refrigeration Limited IPOIce Make Refrigeration Ltd (IMRL) is coming out with Public issue of 41,60,000 Equity Shares (including Market Maker reservation portion of 2,08,000 equity shares). Ice Make Refrigeration Limited is a Ahmadabad based refrigeration equipment manufacturer established in 1993 and is engaged in providing cooling solutions and accessories under the brand of ‘Ice Make’, in variety of industries like  dairy, ice-cream, food processing, agriculture, pharmaceuticals, cold chains, logistics, hospital, hospitality and retail, among others..The Equity Shares of Ice Make Refrigeration  IPO will be listed on NSE EMERGE platform.

Ice Make Refrigeration Limited IPO Details
Issue Period 28-Nov-2017 to 30-Nov-2017
Issue Size Public issue of 41,60,000 Equity Shares (including Market Maker reservation portion of 2,08,000 equity shares)
Price Range Rs 55 to Rs 57
Face Value Rs 10
Market Lot 2,000 Equity Shares and in multiples thereof
Minimum Order Quantity 2,000 Equity Shares
Maximum Subscription Amount for Retail Investor Rs. 2,00,000
Book Running Lead Managers Vivro Financial Services Pvt Ltd.
 Registrar Link Intime India Private Limited
About Ice Make Refrigeration Limited
  • Ice Make Refrigeration Limited is a refrigeration equipment manufacturer, engaged in providing cooling solutions for cooling systems and accessories used in industries such as dairy, ice-cream, food processing, agriculture, pharmaceuticals, cold chains, logistics, hospital, hospitality and retail, among others.
  • Ice Make Refrigeration Limited has presence in the 4 verticals:  (i) Cold Room (ii)  Commercial  Refrigeration (iii)  Industrial Refrigeration and (iv) Transport Refrigeration. All business verticals operate under the brand of “Ice Make”.
  • The company business as refrigeration equipment manufacturer by Commercial Refrigeration manufacturing in 1993 and forayed into Cold Room manufacturing in 2002 as well as Industrial Refrigeration manufacturing in 2003. Subsequently, the Company introduced Transport Refrigeration manufacturing in 2012. The 5 products of Ice Make Refrigeration Limited are : (i) Cold Room (ii) Commercial Freezer (iii) Chiller (iv) Refrigerated Vehicle and (v) Ice Cream Hardener. 
  • In December 2016, company acquired ‘Bharat Refrigerations Private Limited’, a company based in Chennai, engaged in a business similar to its business, which is now its wholly owned subsidiary. Bharat Refrigerations Private Limited is present in the above business verticals through the brands named ‘Bharat’ and ‘Trans Freez’.
  • The manufacturing facilities of Company are located at Dantali, Gujarat and the manufacturing facilities of its Wholly Owned Subsidiary are located at Chennai, Tamil Nadu. Its has anetwrok of dealers and associates in the cities of Bikaner, Cochin, Cuttack, Goa, Hubli, Jodhpur, Kolhapur, Kolkata, Nagpur, Patna, Pune, Pondicherry, Trivandrum, Kathmandu and Colombo.
( Rs.  in Lakhs)
Particulars 30-Jun-17 FY17 FY16 Fy15 FY14 Fy13
Revenue from Operations 2,299.17 8,752.95 7,168.66 5,048.28 3,917.20 4,043.62
Other Incomes 6.02 35.32 13.41 13.56 8.73 4.64
 Total Revenue  2,305.19 8,788.28 7,182.07 5,061.84 3,925.93 4,048.26
Cost of Materials Consumed 1,494.06 5,599.24 5,007.91 3,551.12 2,796.22 3,028.48
Changes in Inventories 41.3 -112.27 -111.7 14.83 -104.19 -47.53
Manufacturing Expenses  124.8 467.55 386.27 242.69 210.48 195.15
Employee Benefit Expenses  181.29 652.71 465.29 370.1 295.53 272.48
Other Expenses 159.62 1,113.27 729.57 474.13 399.4 322.01
Finance Costs 43.3 126.49 152.08 128.73 117.89 86.05
Depreciation and Amortization  34.97 160.65 152.4 139.11 83.23 70.13
Total Expenses 2,079.33 8,007.63 6,781.81 4,920.71 3,798.55 3,926.78
 Profit before Tax  225.86 780.65 400.25 141.13 127.37 121.48
Tax Expense:            
(1) Current tax 80.08 268.16 136.53 55.95 37.21 42.39
(2) Deferred Tax -0.76 1.6 -0.66 -8.46 1.7 -4.31
(3) Short / Excess earlier yrs 0.04 0.24 -0.59 0.45
Restated Net Profit after Tax 146.53 510.89 264.34 93.41 89.05 82.96
Net Profit Margin 6.37% 5.84% 3.69% 1.85% 2.27% 2.05%
Share Capital 1151.2 719.5 719.5 143.9 143.9 126.7
Reserves 544.19 829.36 318.46 629.72 536.32 335.46
Net worth 1695.39 1548.86 1037.96 773.62 680.22 462.16
Face Value 10 10 10 10 10 10
NAV 14.73 21.53 14.43 53.76 47.27 36.48
RONW % 32.98% 25.47% 12.07% 13.09% 17.95%
IPO Price 57          
Earning Per Share FY17 4.44        
Price / Earning 12.84          
Price / Book Value 3.87          
Post Issue Equity 1567          
EPS (post Issue) 3.26          
PE Post Issue 17.48          
Cagr  Sales (Fy15-17) 21.30%          
Cagr NP (Fy15-17) 57.53%          
Market Cap 8932 Lakhs
Market Cap/Sales 1.02
Ice Make Refrigeration IPO: Objectives
  1. Setting up of a coil manufacturing facility at Dantali Plant & upgradation of existing facilities.
  2. Construction of an administration office at Dantali.
  3. Expenses towards enhancement of brand through brand building activities.
  4. Upgradation of  existing facilities at Chennai.( acquired company- Bharat Refrigerations)
  5. Meet the incremental working capital requirement.
  6. For General Corporate Purposes.
Rationale for Investment
  • Ice Make Refrigeration Limited caters to industries such as dairy, ice-cream, food processing, agriculture, pharmaceuticals, cold chains, logistics, hospital, hospitality and retail which are exhibiting good growth and have good potential.
  • Ice Make Refrigeration Limited top 5 products are: (i) Cold Room (ii) Commercial Freezer (iii) Chiller (iv) Refrigerated Vehicle  (v) Ice Cream Hardener.
  • Company’s customers span acroos all the above industries and include names like  Amul, Havmor, Vadilal, The Grand Bhagwati, Thirumala, Sankalp, Vimal Dairy, Scoops, Himalayan, Kitchen Express, Urmin, Haldiram’s Prabhuji etc.
  • The company has witnessed  consistent growth over  the years and funds from IPO are likely to strengthen its manufacturing capabilities & make it more competitive 
  • Company has a good dealer network. The dealers channel business contributed significantly to the tune of 31.96% of its total revenue for FY 2017.
Riks & Concerns
  • The company has not entered into any long term or definitive agreements with its  customers.
  • Some of Ice Make Refrigeration Limited competitors are global companies that have larger technical and financial resources and broad customer bases needed to bring competitive solutions to the market.
  • SME NSE IPO’s due to low floating stock and larger lot are prone to infrequent trading and alrger arbitrage.

  • Refrigeration industry in which the company operates stands to benefit  from thrust laid and incentives  being given by Government of India for setting up cold storage.
  • The company has been witnessing good growth. CAGR for total revenue from FY 2013 to FY 2017 is 21.0%, our CAGR for EBIDTA from FY 2013 to FY 2017 is 49.0% and oits CAGR for net profit from FY 2013 to FY 2017 is 58.0%.
  • The Ice Make Refrigeration Limited IPO is priced at a  Price/Book Value Ratio of 3.88.
  • Companys’s ROE has increased from 13.1% in FY 2013 to 34.6% in FY 2017. Further its debt / equity ratio has reduced from 1.57 times in FY 2013 to 0.93 times in FY 2017 whereas the working capital days have increased from ~ 34 days in FY 2013 to ~ 41 days in FY 2017.
  • Funds raised from the IPO are to be utilized for  Backward integration at its Dantali Plant which will enable the company  reduce dependency of procuring coil from external suppliers, optimize manufacturing cost and provide a pricing advantage as compared to competitors.
  • NSIC(National Small scale Industries corporation) -Crisil scale has been developed for SME’s  indicating the SME’s  performance capability and financial strength. The company has received  CRISIL NSIC – CRISIL SE1B Rating which indicates Highest Performance Capability and moderate financial strength. NSIC-CRISIL rating
  • Company has been recognised by DSIR for its in-house research and development laboratory
  • This is first issue from Vivro in NSE SME segment. Earlier Vivro was the lead manager for Capacit’e infra IPO in this year and Raj Television Network Ltd earlier.
  • Considering reasonable financials, good clients and growth rate witnessed, I intend to subscribe to the issue. The Ice Make Refrigeration IPO is likely to get heavy subscription & chances of allotment are low.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.

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