Hamps Bio IPO Review: Should You Apply?

The Hamps Bio IPO is set to go live between 13th December 2024 and 17th December 2024, with an issue size of ₹6.22 Crore. The price range for the IPO is fixed at ₹51 per share, and the minimum investment for retail investors is ₹1,02,000, with a lot size of 2,000 shares.

If you’re an investor looking to explore the latest IPO opportunities, Hamps Bio IPO is definitely one to watch. The company operates in the pharmaceutical and FMCG sectors and is focused on the distribution of pharmaceutical products and freeze-dried food. This blog provides an in-depth review of Hamps Bio IPO, covering its strengths, weaknesses, business model, financials, and more.

About Hamps Bio: Company Overview

Founded in 2007, Hamps Bio Limited has established itself as a key player in the marketing and distribution of pharmaceutical products and FMCG goods. The company operates two primary segments:

1. Pharmaceutical Products: These include tablets, syrups, capsules, injectables, oils, gels, and nutritional supplements.
2. Freeze-Dried and Frozen Products: Under the FzyEzy brand, Hamps Bio produces a variety of freeze-dried and frozen items, including fruits, vegetables, herbs, and flowers.

Hamps Bio has a global presence, distributing pharmaceutical products across 8 states and union territories in India. Its freeze-dried products are available in 22 states, union territories, and 6 countries. The company uses a wide network of over 50 distributors and has strong e-commerce platforms, including Amazon (US, Canada, Europe), Flipkart, and Jio Mart, for the sale of its products.

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Business Model and Key Segments

Hamps Bio’s business revolves around two key segments:

1. Pharmaceutical Division: The company markets over 100 pharmaceutical products under its flagship brand Hamps. These products are targeted at both domestic and international markets. It provides essential medicines and nutritional supplements in various forms, such as tablets, capsules, syrups, and injectables.
2. FMCG Division: The company operates the FzyEzy brand for its freeze-dried and frozen products. These include products such as strawberries, mango powder, chikoo powder, and other health-focused food products. Hamps Bio offers these products in both B2B and B2C formats and through contract manufacturing.

Financial Performance

Hamps Bio has shown steady growth in revenue and profit over the last few years. Here is a look at the company’s financial performance:

• Revenue from operations:
  • FY22: ₹5.34 Crore
  • FY23: ₹5.58 Crore
  • FY24: ₹6.47 Crore
• Profit After Tax (PAT):
  • FY22: ₹0.12 Crore
  • FY23: ₹0.36 Crore
  • FY24: ₹0.50 Crore

Though the revenue and profit margins are small, the company’s consistent growth in revenue shows promise in the long term.

Also Read: Hamps Bio IPO: Should You Invest in This Pharmaceutical Pioneer?

Strengths of Hamps Bio

Hamps Bio has several competitive advantages that make it a notable player in its industry:

1. Diversified Product Portfolio: With over 180 products in both the pharmaceutical and FMCG divisions, the company offers a diversified range of goods. This wide product offering allows the company to cater to different consumer needs.
2. ISO and FDA Certifications: Hamps Bio holds ISO 9001:2015 and ISO 22000:2018 certifications for quality and food safety management. The company is also certified by the US FDA and the Food Safety and Standards Authority of India (FSSAI), ensuring its products meet the highest standards of safety and quality.
3. Robust Distribution Network: The company has a strong distribution network that spans multiple states and territories in India and several international markets. It has also established itself on major e-commerce platforms, boosting its visibility and accessibility.
4. Brand Recognition: Over the years, Hamps Bio has built a solid reputation, especially in the domestic market. The Hamps and FzyEzy brands are becoming increasingly well-known in the pharmaceutical and FMCG sectors.
5. Expanding Global Reach: With its expansion into 6 countries and a significant presence in 22 states and union territories, Hamps Bio has effectively positioned itself as a company with substantial international potential.

Risks Involved with Hamps Bio IPO

Every investment comes with its risks, and it is essential to consider the following challenges that could affect Hamps Bio’s performance:

1. Dependence on Third-Party Manufacturers: Hamps Bio does not have its own manufacturing facility for pharmaceutical products and relies on third-party manufacturers. The company does not have long-term agreements with these manufacturers, and any disruptions in manufacturing could impact product quality and delivery times.
2. Legal Proceedings: The company is currently involved in ongoing legal cases, which could pose a threat to its business prospects. Adverse judgments could negatively impact its reputation and financial standing.
3. Geographical Risk: A significant portion of Hamps Bio’s revenue comes from Gujarat, contributing around 70% of its total revenue. Any disruptions in the business environment in Gujarat could severely affect the company’s financial performance.
4. Concentration of Clients: A large portion of Hamps Bio’s revenue comes from its top 10 customers. Any loss of these key clients or a decline in their business could harm the company’s revenue generation.
5. High Dependence on Debt: Hamps Bio has outstanding borrowings of ₹1.38 Crore. If the company faces difficulty in repaying its loans, it could negatively impact its financial position and growth prospects.

IPO Objectives

The company intends to use the proceeds from the Hamps Bio IPO for the following purposes:

1. Purchase of plant & machinery for its FMCG division.
2. Enhancing the visibility and awareness of the brand.
3. General corporate purposes.

Hamps Bio IPO Review by Experts

Based on the financials and business model, expert opinions on the Hamps Bio IPO are mixed.

Dilip Davda (IPO Expert) recommends Avoiding the IPO. He notes that while the company has shown steady growth, the issue appears aggressively priced, especially considering its small revenue base and equity base post-IPO. He suggests that the company’s growth potential is not adequately reflected in its pricing.

Should You Invest in Hamps Bio IPO?

The Hamps Bio IPO presents a unique opportunity for investors interested in the pharmaceutical and FMCG sectors. However, given the small scale of the company and the risks associated with its dependence on third-party manufacturers and the Gujarat region, investors should approach this IPO with caution.

If you are looking for high-risk, high-reward opportunities, this IPO could be worth considering for a long-term investment. However, for conservative investors, it may be better to skip this issue due to its aggressive pricing and limited track record.

Conclusion

Hamps Bio is an emerging company in the pharmaceutical and FMCG markets, offering a diverse range of products. While it shows potential in its domestic and international markets, the risks associated with its operations and pricing make it a relatively risky investment.

Always conduct thorough research or consult a financial advisor before investing in any IPO to make an informed decision based on your financial goals and risk tolerance.

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