Now Reading: Milky Mist plans expansion without fresh debt, targets Tier 1-3 cities
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Milky Mist plans expansion without fresh debt, targets Tier 1-3 cities
Milky Mist plans expansion without fresh debt, targets Tier 1-3 cities
The Erode-based packaged foods company, whose Rs 1,553-crore IPO is open, plans to expand into West and North India using internal accruals without fresh borrowings, CEO K Rathnam said. It will use…
The Story in Brief
The Erode-based packaged foods company, whose Rs 1,553-crore IPO is open, plans to expand into West and North India using internal accruals without fresh borrowings, CEO K Rathnam said. It will use Rs 500 crore from IPO proceeds to repay debt, on top of Rs 300 crore already repaid from a pre-IPO placement. Net debt stood at Rs 1,671.85 crore in the latest fiscal year. The company has acquired 50 acres in Maharashtra's Baramati for a new plant, though approvals are pending.
Milky Mist targets Tier 1, 2 and 3 cities and middle- and upper-middle-class consumers, Chairman Sathishkumar T said. CEO Rathnam said the company currently reaches only 1 crore consumers and aims for 5-10 crore. He argued the company should be benchmarked against packaged food and FMCG firms, not milk businesses, explaining its PE ratio of about 85 times earnings.
The Indian Opinion
Milky Mist's high PE ratio of 85 times draws scrutiny, but its claim to be a packaged food maker rather than a dairy firm is a convenient framing. Investors should note that nearly a third of IPO proceeds will retire debt, and net debt remains high at Rs 1,671 crore. The goal of growing consumers five- to ten-fold while avoiding fresh borrowing sounds ambitious. The test will be whether the company can fund its Maharashtra plant and expand reach without increasing leverage.
Source: thehindu.com
This story was synthesised by AI from the source linked above.
