Galaxy Cloud Kitchens – Don’t get carried away by its name

After news surfaced of cloud kitchen player Rebel Food becoming a unicorn, a company with cloud kitchen in its name was seen locked in 5% UC on Monday and Tuesday.

Galaxy Cloud Kitchens (only BSE listed) is a B2B player supplying bakery products and other food items under private label to retailers and QSR (quick service restaurants) in Mumbai and Bangalore. Company was earlier called Galaxy Entertainment Corporation Limited and had changed its name in Feb 2019.

Company clocked revenue of Rs. 30 cr in FY21, which halved from Rs. 68 cr in FY20, due to the pandemic. But what is surprising is that even in the non-pandemic year of FY20, it reported operating loss, with net loss of Rs. 18 cr. In Q1FY22, while net profit was in the black, at Rs. 32 lakh, it was mainly on account of other income, which stood at Rs. 1.83 cr in Q1FY22,  against Rs. 1.58 cr for FY21.

Company’s net worth (as of 31.3.21) has been reduced to just Rs. 60 lakh. As against this, current m cap stands at Rs. 78 cr. 49% is held by the promoters, one of which is Future Enterprises, with 18.6% holding, while shareholding pattern does not indicate even a single institutional shareholder.

Caution to drawn to such stocks and investors must not get carried away by ‘fancy’ names!

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