Prime fresh ltd

Business model:
They have tie up with farmers, buy the entire produce, sort, grade, store and distribute it.
they have tie up with food processing units, modern e-commerce players, and F&V outlets.

its simple trading business, but not everyone can do, important part is they have built relationship with modern e-commerce players and F&V outlets.

farmers get peace of mind, customer get reliable supply, its a win-win for entire ecosystem.

Its not easy to be in this business, there is only one way, you have to be asset light, run it so ruthlessly cutting costs wherever possible.
They run the business without much tangible assets, as they grow they will be more efficient, it will further push unorganised players out of the game.

Growth:
Their business model support 15% growth CAGR from internal accruals, but they are targeting 30-35% CAGR due to which they will have to keep diluting some equity every few years.

Growth avenues:

1. Modern trade is growing like 20-25% CAGR
2. They can form JV with food processing units( They will supply raw material and also sale finished good by leveraging their existing relationships)(Asset light model)
3. Planning to cater to export market
4. They can lease the farms and produce in bulk
5. can add more cold storage facilities
6. can grow number of customers
7. can increase number of items etc

there are many growth avenues and management is smart enough to do everything within their means (asset light model)

Their collection and distribution centers are recently expanded and are highly underutilised, so as utilisation increase there is possibility of margin expansion in near future.

They hardly have any organised competitor, its mostly unorganised market and they have opportunity to gain from it, which they are already doing( Growing at 30-35% CAGR by gaining market share from unorganised players).
Huge scope of growth for many-many years ahead.

Risks:

1. I don’t see much risk from competition
2. New age cash burning deep pocket players can come, but building this entire ecosystem from scratch is difficult and they would not want to burn cash in such a low margin business.
3. Customer concentration risk is there
4. Change is business model is biggest risk, if promoter decide to go from asset light to asset heavy model then its a sell for me.

Notes :
Promoters are rational people and really understand how to run such a business.
Taking out reasonable salaries and not much related party transactions found.
Promoter have past experience in FMCG sector.

They are talking about setting culture, employing right people and need of a head for each department as business grow.

I really do think they can achieve their target of 2000cr revenue if they keep walking the rational path.

Disc: Invested, not SEBI registered, not a recommendation, I use this forum as personal notes, please do your due diligence.

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