R&D focused Hexagon Nutrition files for Rs. 600 crore IPO

Mumbai-based Hexagon Nutrition Limited (HNL), a fully integrated company engaged, from product development to marketing including research and development and manufacturing of nutrition, with a focus on quality has filed preliminary papers. with capital market regulator Sebi to raise funds through an initial share-sale.

The initial public offering (IPO) with a face value of Rs. 1 per equity share consists of a fresh issue of equity shares aggregating to Rs. 100 crore, and an offer for sale of up to 30,113,918 equity shares, according to the draft red herring prospectus (DRHP).

As per market sources, the issue size will be approximately in the range of Rs. 500-600 crore.

The Offer for Sale comprises up to 7,700,000 equity shares by Arun Purushottam Kelkar, up to 6,136,000 equity shares by Subhash Purushottam Kelkar (The Promoter Selling Shareholders."), up to 1,500,000 equity shares by Anuradha Arun Kelkar, up to 2,500,000 equity shares by Nutan Subhash Kelkar, up to 12,204,250 equity shares by SomeRs.et Indus Healthcare Fund I Limited and up to 73,668 equity shares by Mayur Sirdesai (The "Other Selling Shareholders").

The proceeds from its fresh issuance worth Rs. 33.5 crore will be utilised for the repayment or prepayment of borrowings, in full or part of all or certain borrowings for the company and subsidiaries; Rs. 15.00 crore for funding incremental working capital requirements; Rs. 19.17 crore for funding capital expenditure requirement for expanding existing facility; Rs. 7.15 crore for investment in subsidiary and financing capital expenditure at existing facility and general corporate purposes.

In 2016, Somerset Indus Healthcare Fund-I, along with Mayur Anand Sardesai, an advisor and director at SomeRs.et Health Capital Advisors, had invested Rs. 25 crore for a 10% stake in the company. Somerset is an offshore private equity firm focused on making healthcare investments in India.

Founded by Arun and Subash Kelkar in 1993, Hexagon Nutrition started as a micro-nutrient formulations player, and today it has moved up the value chain to develop brands like "PENTASURE", "OBESIGO" and "PEDIAGOLD" which are leading names in the health, wellness, and clinical nutrition space. It is the only holistic nutrition player that offers. products across clinical products, micronutrient premixes and therapeutic products. Its product portfolio includes fortification of foods, therapeutic nutrition, clinical nutrition and alleviation of malnutrition.

Being a differentiated and research oriented pure-play nutrition company, it focus on holistic nutrition products encompassing a wide range of nutritional and nutrition enhancing products, that sells its products in around 70 countries, currently from its three factories located at Nasik, Chennai, and Thoothukkudi.

In order to grow and diversify its business in the last three fiscals, the Mumbai-based company continued to leverage its ability to implement new product launches and/ or introduction of products such as Penta Sure Fiber, Carboload and Penta Sure Whey Protein Max, in the branded nutrition product category.

In absence of direct competition, however it faces competition from various domestic and multi-national companies across its Branded Nutrition Products (B2C) like Abbott Healthcare Private Limited, Nestle Health Science, Zydus Wellness, Fresenius Kabi and Premix Formulations (B2B) like DSM N.V., Piramal Enterprises, P D Navkar Bio-Chem Pvt. Ltd.

In 2019, it had set up a trading company in South Africa and has future plans to build a facility there. The company is also setting up a factory in Uzbekistan that is expected to commence operations by Q1 2022.

India's health and wellness nutrition market was worth $ 10.5 billion in CY 2020 and is estimated to grow at a CAGR of 11.9% till CY 2025. Staple and processed foods are being increasingly industrially produced in many developing economies allowing for standardised and fortified healthy nutritious food. The Indian food fortification premix market was valued at $ 80.0 million in CY 2020 and is expected to reach $ 149.6 million in CY 2026.

Revenue from operations grew 3.01% to Rs. 209.97 crore for the fiscal 2021 against Rs. 203.84 crore for the fiscal 2020, primarily due to increase in demand for B2B2C and ESG segment and increase in volume of premixes and therapeutic foods sold, while its net profits grew by 23.10% from Rs. 18.57 crore in FY20 to Rs. 22.86 crore in FY21.

Equirus Capital Private Limited and SBI Capital Markets Limited are the book running lead managers. to the issue.

Source : Equity Bulls

Keywords

HexagonNutrition FundRaising IPO SEBI OfferForSale