Karachi: Agro Processors & Atmospheric Gases Limited, a prominent player in Pakistan's edible oil industry, has announced plans to offer 15% of its shares to the public through an Initial Public Offering. The company, known for its Soya Supreme brand, aims to raise approximately Rs1.86 billion to fund plant improvements, working capital, and marketing efforts.

According to JS Global, APAG is set to release 58 million shares at a floor price of Rs32 per share. The funds will be utilized to enhance cost efficiencies, such as increasing production speed by 20%, reducing power costs via solar capacity and a biomass boiler, and cutting process losses. The company expects these improvements to boost overall oil production capacity by 33%, reaching 120,000 tons.

Soya Supreme is currently the leading oil brand in Sindh and is expanding its presence in Khyber Pakhtunkhwa and Islamabad. However, APAG's presence in Central Punjab remains limited due to strong competition from brands like Dalda and Sufi. To address this, APAG plans to allocate Rs455 million, or 24% of the IPO proceeds, toward supply-chain expansion and marketing strategies to bolster its position in Punjab.

The IPO's floor price implies a valuation of 0.6x the company's trailing price-to-sales ratio and 14x its trailing price-to-earnings ratio, compared to an average of 1.4x P/S and 20x P/E for other listed food companies. On projected earnings for the fiscal year 2027, APAG's valuation is set at 9.0x, 9.9x, and 9.3x P/E based on management, JS Research, and consensus estimates, respectively. This offers an appealing investment opportunity considering the company's earnings potential and valuation discount relative to its peers.