Astron Multigrain Ltd IPO Analysis

A ready-made spicy noodle, something we Indians love eating. With a lot of choices in the market, here is a new emerging player raising money and gearing up to expand and join our midnight cravings.

Let’s explore our upcoming noodle company, Astron Multigrain Ltd, further:

(The Astron Multigrain Ltd Share Price will be finalised post-allotment, while grey market cues through the Astron Multigrain Ltd IPO GMP will likely reflect market sentiment closer to listing.)

Indian Noodle Industry

The Noodle market involves manufacturing and selling ready-to-cook noodles that require minimal preparation time. Our Indian noodle market is currently valued at $1.6B in FY25, and is expected to double by FY30 with a CAGR of around 13%-14%. The growth drivers include increase in urbanisation, a change in lifestyle, a younger population, etc. 

Currently, the industry is heavily dominated by well-established brands we like, such as Maggie, Patanjali and Marico. High competition, rise in health awareness and price sensitivity are some of the biggest challenges for the noodle market in India. 

It will be interesting to see how Astron moves to our platter despite so many options available.

Located in Gujarat, Astron was established in 2018 by its promoters, Mr Jenish Parshottambhai Khunt and Ms Poonam Jenish Khunt. The company is engaged in manufacturing instant noodles under its brand name ‘Swagy’. 

Apart from noodles, the company also manufactures other ready-to-eat products, such as noodle papad and bhujiya. Astron is also involved in contract manufacturing of the instant noodle for Gokul Snacks Pvt Ltd. 

The company derives the majority of its revenue from the state of Gujarat, and is currently aiming to expand its operations across other regions of the country. In terms of product-wise revenue, the company generates 90% of its revenue from manufacturing instant noodles. 

Business Model

The companies follow a B2B distribution model, with products being sold through super-stockists rather than directly to the consumer. With the manufacturing facility located in Gujarat, the company sources its raw material from local suppliers and performs an intensive quality check before manufacturing.

The majority of revenue, around 90% comes from the state of Gujarat. Coming to the contract manufacturing part, the company makes instant noodle products for Gokul snacks Pvt Ltd, and drives around 20% of revenue from it. 

Management aims to maintain good relations with its suppliers and overall distribution agents. To introduce new ready-to-eat products and bring new flavours for its instant noodle segment, which will drive future growth and profitability.

Buyer & Supplier Concentration

The company is effectively moving towards diversification, it can be observed that the company is fairly concentrated in terms of its customer and supplier base. 

With around 20% of its revenue coming from its top customer, Astron does not carry a risky in term of dependency of its top line to few customers.

Similarly, on the supplier side, Astron is fairly concentrated. Over the years, it can be observed that the company is also moving in the right direction of making both its supplier & buyer concentration at a right level.

The company is currently engaged in the manufacturing of instant noodles and Papad. The management aims to expand its product portfolio by making other ready-to-eat products and introducing new flavours to its noodle category. 

Positive: 

• The company is focused towards its core product, Instant noodles, generating the majority of its revenue from it. 

• Astron’s noodle brand ‘Swagy’, is now accepted and has an increasing consumer base in state of Gujarat.

Negative:

• Astron’s revenue is heavily dependent (~90%) on its noodle segment, apart from competition from other well-established brands, lack of market responsiveness can have a significant impact.

• Rise in health awareness and a typical reversive view of the society against instant foods, especially noodles, is a major threat for the company in the coming time.

It must also be noted that the sales growth is highly correlated with the Indian instant noodles market’s growth, which is expected to be 13%+ CAGR in the next decade. 

In order to grow at a higher rate, companies must focus on gaining market share through effective marketing and product enrichment.

Around 90% of the revenue comes from the Instant Noodles category. It can be observed that the company is heavily concentrated in terms of generating revenue from a single product. However, with the further diversification in the future as claimed by the management, Astron will witness revenue from other product categories.

Manufacturing Capacity 

The utilised capacity (%) is currently in a downtrend from 92% in FY23 to 68.3% in FY25. Though the explanation is not given by the company, it can be anticipated that a higher revenue % from contract manufacturing in past years probably led to a higher capacity utilisation. 

Apart from that, a lower capacity utilisation shows that the company has more room for growth and does not require incurring heavy capex in the coming years

The promoters of the company, including Mr. Jenish Parshottambhai Khunt and Ms. Poonam Jenish Khoont, both have experience of around 7 years in the ready-to-eat market. The company has 4 directors, out of which 2 are independent. 

Mr. Siddharth and Ms. Drashti are currently serving as the independent directors, and both have experience in secretarial and compliance matters.  The audit and remuneration committee are led by independent directors only. The company has also been the promoter of our Company since its inception.

The promoter’s holding Pre-IPO was 99.9% and Post IPO will be 66.1%. Thus, keeping the control in their hands to lead the company towards growth with their decisions.

Financial Performance

With the revenue rising from 19.5Cr in FY23 to 34 Cr in FY25, Astron Multigrain Ltd showcases a strong sales growth of around 30% along with margin stability. The EBITDA margins have shown a slight reduction, while the PAT margins have been resilient. 

The return on equity (ROE) is in a downtrend on account of an increase in reserves & surplus. The company has witnessed a positive return on capital employed (ROCE) trend due to a simultaneous increase in profit and reduction in debt. 

However, it must be noted that the surge in Astron’s revenue is backed by an increase in trade receivables, which has grown by a high 2-year CAGR of 158%.

Overall, it can be said that the company has a decent quality of balance sheet, with high sales and profit growth, but a concerning increase in trade receivables.

On performing a peer comparison, while the company seems to be undervalued in terms of PE & EV/EBITDA ratio, the debt to equity is higher when compared to other FMCG leaders. 

The P/E is 17x post listing, while the EV/EBITDA ratio stands at 11x, which is lower than the other industrial players, providing Astron with room for shareholder value creation.

Astron is demonstrating a moderate performance with its margins relatively lower than the industrial standard. The current EBITDA margin is 12% while the PAT margin is around 7%. 

The ROE stands at 21.9% & ROCE is 24% which are near the industrial median. However, the company needs to work on improving the margins, creating an impact on its earnings. 

Astron has a higher debt-to-equity ratio of 0.41. Though the company has been reducing debt in the past year, the D/E ratio is significantly higher than the industrial average. 

IPO Objectives

• Capex Expansion: Funding expenditure required to increase its plant and machinery base.

• Working Capital: Maintaining inventory and debtors for sales & business expansion.

• General Corporate Purpose: Required for administrative and operational-related expenses. 

Overall, the company aims to raise funds to expand its production and inventory base. The management targets to increase its product sales & outreach and anticipates higher demand. It can be said that the money is being used for the company’s primary purpose of manufacturing and selling its ready-to-eat related products.

Strength and Risk

Final Words

At Alpha Venture X Fund, we assess opportunities through our LMVT framework — Leadership, Moat, Valuation, and Tailwinds — enabling us to identify scalable businesses with durable fundamentals. 

Astron Multigrain Ltd. is entering the market with moderately experienced Leadership primarily led by the founding partners with around 7 years of experience. However, the expansion of its product in a relatively short period of time shows a reliable potential of the management. 

The company does not stand when it comes to having a firm Moat as the noodle market is backed by intense competition and product similarity. The market is currently dominated by other well-established brands. 

From a Valuation standpoint, the issue appears underpriced compared to its listed FMCG peers. While the industrial average PE stands at around 55x. Astron Multigrain will trade at a PE of 17x post listing. With the increase in sales and stability of margins, and, as the PE expands, the company is expected to give higher returns. 

Increase in urbanization, younger population and convenient food preferences of people are some of the major Tailwind for the company and the overall industry. 

Overall, Astron Multigrain is an emerging FMCG company with the high potential to expand its customer and product base. On the industrial level, the instant-noodle market is backed by high competition and dominance, the company is positioned to capture its regional market which can lead to the value creation for the shareholders.