Apex Frozen Foods

Aquaculture products exporter Apex Frozen Foods has opened its initial public offering for subscription today i.e August 22, 2017
The company aims to raise around Rs 152 crore through the issue that will close on August 24.
On Monday, the company raised Rs 43 crore from anchor investors - Reliance Capital Trustee Company, HSBC Midcap Equity Fund, HSBC India Opportunities Fund and ITPL --Invesco India Contra Fund.
Its equity shares will be listed on NSE and BSE. Karvy Investor Services Limited is the book running lead manager to the issue.
About the company

  1. Apex is one of the integrated producer and exporter of shelf stable quality aquaculture products. It supplies ready-to-cook products to food companies, retail chains, restaurants, club stores and distributors spread across the developed markets of USA, UK and various European countries.
  2. Company produces two kinds of shrimps namely the Whiteleg shrimp (Litopenaeus vannamei) and the Black Tiger Shrimp (Penaeus monodon).
  3. The company sold variants of processed Vannamei shrimp (White shrimp) under the brands owned by customers and also through its own brands namely Bay fresh, Bay Harvest and BayPremium.
  4. Its integrated operations span across hatchery and farming on 1,337.69 acres of land. Its processing facility is located at Kakinada, Andhra Pradesh with a capacity to process approximately over 9,240 MTPA of finished products and an additional non-exclusive pre-processing and processing arrangement at a facility owned by Royale Marine Impex Private Limited located at Bapatla, Andhra Pradesh, for a capacity to process around 3,000 MTPA of finished products.
  5. The processing facilities are supplemented by cold storage facilities located at Kakinada and Bapatla. Along with this, it has its own fleet of vehicles with freezing capabilities.

About the Issue

  1. Apex launched the public issue of up to 87 lakh equity shares which will be offered through a book-building route.
  2. The issue comprises of fresh issue of 72.5 lakh shares and an offer for sale of 14.5 lakh shares by promoters Karuturi Satyanarayana Murthy (7.25 lakh shares) and Karuturi Padmavathi (7.25 lakh shares).
  3. The issue also includes a reservation of up to 4 lakh equity shares for subscription by eligible employees. The issue would constitute up to 27.84 percent on post issue paid-up capital.
  4. The company targets to raise Rs 152.25-148.77 crore at a price-band of Rs 171–175 per share.

Objects of the Issue

  1. Apex proposes to utilise the net proceeds (Rs 90.15 crore) from the fresh issue for setting up a new shrimp processing unit with a proposed capacity of 20,000 MTPA at East Godavari District, Andhra Pradesh and general corporate purposes.
  2. It will not receive any proceeds from the offer for sale.

Competitive Strengths

  1. It is able to achieve economies of scale due to synergised business operations. It sources approximately 15-20 percent of raw material requirements through own farming efforts. It has uninterrupted supply of raw shrimp.
  2. Operational facilities are strategically located along the costal belt of Andhra Pradesh.
  3. It has long-standing relationships with numerous global customers in USA, UK and various European countries.
  4. It focuses on quality control measures and research & development initiatives.
  5. It has proven and experienced management team.
  6. Farming at ponds allows the company to procure raw materials and ensures that business of shrimp processing is cost effective.
  7. It has robust financial performance

Financial Performance

  1. Exports contributed significantly to financial strength of the company. Total revenues grew from Rs 255.48 crore in FY13 to Rs 709.68 crore in FY17, at a CAGR of 29.10 percent and profit after tax increased from Rs 9.41 crore in FY13 to Rs 24.4 crore in FY17, at a CAGR of 26.89 percent.
  2. The growth was aided by rising demand for aquaculture products globally especially from USA and European Union, favourable state policies, and shifting of seafood processing activities by south-east Asian countries to India.
  3. Currently sales to the USA for FY17 accounted for 82 percent of total revenue, whereas sales to UK and various European countries account for 17.77 percent of revenues, respectively.

Snapshot of Promoters

  1. Karuturi Satyanarayana Murthy, aged 61 years, is the chairman and managing director of the company. He has an experience of 20 years in aquaculture industry. He has setup partnership firm ‘Apex Exports’ in 1995 to export shrimps which was later converted into Apex Frozen Foods Private Limited.
  2. Karuturi Subrahmanya Chowdary, aged 37 years, is the executive director. He has an experience of 12 years in aquaculture industry. He is involved in the business operations and marketing activities.
  3. Karuturi Neelima Devi, aged 32 years is the whole time director. She holds a bachelor degree in science from Andhra University and has over 5 years of experience in the aqua industry. She has experience in administration.
  4. In my informations, they don’t have any major case of corporate mis-governance against them, if you have knowledge, kindly let me know
    Business and Growth Strategies
  5. Apex intends to set up new processing facility to continue to improve operational efficiencies and expand operations and sales. It also proposes to set-up a facility for processing value-added products.
  6. It intends to increase the share of value-added product portfolio by focusing on different aspect of ready to eat shrimp, cooked shrimp, dusted shrimp and breaded shrimp, to cater to the evolving customer trends, taste, demand and requirements.
  7. The company intends to increase global footprint and further grow business in the USA and the emerging markets of Europe by expanding sales and distribution networks. Its current clientele consists of 100 percent international customers that are from US and Europe.
  8. It intends to increase and enhance goodwill attached to name through various strategic branding initiatives.
  9. It intends to augment area under cultivation. Company’s total cultivable shrimp farming land (as on the date of RHP) is 1,337.69 acres with 105.78 acres of owned land and 1,231.91 acres of leased land.
  10. It will further improve the technology and research & development platform.

Dividend Policy

  1. Apex announced dividend of Re 1 per share in FY17 but it has not paid any dividend in FY13-16.
  2. Financial Indebtedness
    Company avails loans in the ordinary course of business for the purposes of meeting working capital requirements and capital expenditure including purchase of machinery and equipment for carrying out day-to-day operations.
    Risk factors
  3. Brokerage houses pointed out some risks and concerns:-
  4. White leg shrimps are susceptible to baculovirus and parvovirus. These diseases are difficult to treat.
  5. Due to ease of cultivation and maintenance, white leg shrimps are produced in most of the exporting countries, leading to fierce competition.
  6. The margins in processing are wafer thin.
  7. Due to high exports, the revenues are directly affected by rupee movement.
  8. Any adverse developments or changes in export markets may adversely impact Apex’ business, financial condition and results of operations.
  9. Its aquaculture farms operate in an environment sensitive industry.
  10. Apex is subject to anti-dumping duty levied on shrimp exports by the US government.
  11. Any disruption in labour industry or strikes by AFFL workforce may affect the production capability of the company.
  12. AFFL derives a significant portion of AFFL’s revenue from a few customers.
  13. Its processing facility and procurement operations are concentrated in Andhra Pradesh region, which is prone to cyclones and famines, which may result in severe disruption

Disclaimer - I have invested under the retail option and this post has been initiated in order to discuss this company with like minded investors, Look for more knowledge on risk factors, concern areas as well as headwinds and projections for higher growth going forward, if any

Credits - http://www.moneycontrol.com/news/business/ipo-business/apex-frozen-foods-ipo-opens-for-subscription-here-are-10-things-to-know-2366247.html


Thanks fore initiating the thread. At 175, it would be trading at 22.4 times trailing. I believe Avanti Feeds is a much much better investment due to its size, diversity (feed and processed), TUF tie up, economy of scale, proven management. Avanti is visibly trading at higher multiples, but if you look 1 year forward, this would be somewhere around 20-25 p/e.

Also, processing division has very low margins. This also has customer concentration issue, which in food processing industry could be devastating if something wrong happens.

I think this is more like Waterbase.

My View: Due to IPO frenzy, this might be good for listing day gains (although, this is being listed in t segment), but definitely not a long term bet.


I would atleast thanks the source of information.


Good analysis: http://ipocentral.in/apex-frozen-foods-ipo-review-frozen-delight/

Disc: Planning to invest for listing gains

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IPO Apex Frozen Foods_Concise Sales Note-1.pdf (1.0 MB)
Apex_IPO_Note(2)-2.pdf (232.3 KB)

Ipo notes of apex.

Most of the reports and reproductions from online websites that are quoted here (thanks rkothuri) are simply a regurgitation of what’s clearly mentioned and written concisely in their draft prospectus. They offer no independent “analysis” - but a couple of pages of disclaimer to “it may rise or it may fall” message.

I personally prefer scouring the pages of VP for the insights that members offer.

What I find interesting is that, unlike the past IPOs, 2 days into the IPO offer period:-

  1. Retail portion is oversubscribed
  2. NII segment has drawn 27 % subscription
  3. QIB has not shown much movement (though I am not too sure about the 2nd day).

Apex seems a good IPO with decent RONW & CAGR in top n bottomline of 25% consistently over last few years.

Promoter stake is also decent at 72% & they are in this field since from last 20 years & belong to coastal Andhra the hub of shrimp farming.

Sector tailwinds are strong. As all the ideal combo converging at one place. DE will be 0.5 post IPO & major trigger of capacity expansion by good 20000 MTPA will boost the EPS in fy 19 lowering the PE even further from pre issue PE of 17.


Very good quality Anchor investors in form of Reliance MF buying 57% of offered stake,HSBC & Invesco

Any scuttlebutt on promoters from our Andhra based friends please.??

As its in T2T Apex may give good buying opp in preopen or on listing?? Discl- Applied in ipo. evaluating buying more on listing

Views invited.

NB_Apex-Frozen-Foods-IPO-Note_22Aug17.pdf (675.0 KB)


Apex is one of the few aquaculture co to have survived the absolutely horrid time of 90s .Avanti & Waterbase among few other aquaculture cos to have survived alongwith Devi sea foods & Coastal,

A good interview of promoter. Seem a sure footed confident young man in right age of late 30s .

The size of the export market is expected to more than double to $7 billion by the year to March 2021, Apex Food said in its draft red herring prospectus. Frozen shrimps contributed the highest, over 38 percent, to India’s seafood exports in the year ended March, according to the Marine Products Exports Development Authority.

ANOTHER good interview on basics of aquaculture n company.

https://www.youtube.com/watch?v=RyeRiqEic70 .The company n promoter has nothing to do with similar sounding but infamous Karturi floriculture co.


Apex main business is to prepare ready to eat shrimp based foods and supply to US and Europe…

They don’t have any brand in the supply and they supply to distributors and retailers…so no brand power here and company does not have any intention to create a brand

The farms they hold and lease supply only 10 to 15% of their RM and remaining is received from farms where the shrimp prices are increasing so hence the input cost will also increase, the EBIDTA margins clearly tell this.

They give advance to farms and also give lot of credit to customers…working capital is stretched and their sales has increased only once to last five years which falsely shows the cagr as 23%

I feel this is not a great business to own at this point in time unless they develop own farms for meeting all the RM requirements and should also create a brand in the customer front…

Another risk is client concentration…I think 5 clients contribute 70%…if one customer is lost and with expanded WC…seems to be risky

They mentioned Avanti has a competitor and not sure why it is so…

Pls correct me if I am wrong


@rkothuri - thanks for pointing out, I am editing my original post, I missed it in the end

Did any buy Apex Frozen in preopen or subsequently when it was available ? Now at UC at 212 vs IPO at 175

I bought in preopen at 199.9 and 202 at BSE & NSE? Also allotted a good qty in IPO.

With tripling of capacity what will be the EPS estimate of FY 18 & 19?


maybe because avanti is goin into the shrimp processing business?

I don’t see any sellers on Apex Frozen food since the listing.

http://www.sebi.gov.in/filings/public-issues/aug-2017/apex-frozen-foods-ltd_35588.htmlead care

Friends I strongly urge you to read the well written RHP of Apex Frozen for a better understanding of company & sector. Apex on its way to becoming Indias largest shrimp processing co.

Also go through Equirus report on Avanti & Apex. Superb high quality reports.Equirus guys analyses their co very well.

Can u please share the link of equirus report

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Thanks. I have missed the Avanti bus. Now looking at Apex. There are lot many triggers in the story provided the promoters are able to manage the growth properly. Want to monitor the performance for sometime before jumping on.

Can you please share the Equirus link for Apex?

Disc : Looking to invest in Apex. Currently holding Avanti.

Target 290 was already achieved …

Are the promoters of Karuturi Global related to this company in any way?

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