Bikaji Foods IPO Day 1: Price, Financials, GMP, Should you Invest in the Snack Business?

Bikaji Foods IPO Price: Bikaji Foods International Ltd’s initial public offering (IPO) has opened for public subscription on November 3, 2022 and the three-day issue conclude on Monday, November 7, 2022.

Incorporated in 1995, Bikaji Foods International, was founded by Shiv Ratan Agarwal, grandson of the founder of the Haldiram brand. It is the third largest ethnic Indian snacks company with a 9 per cent market share. Its most popular product is Bikaneri Bhujia, which contributes close to 35 per cent to the total revenue.

Bikaji Foods IPO: Issue Price

Potential investors will be able to bid for Bikaji Foods shares in a price band of Rs 285-300 apiece under the IPO.

Bikaji Foods IPO: Lot size

Bidding will be possible in multiples of 50 shares — which translates to Rs 14,250-15,000 per lot.

Bikaji Foods IPO: Investor categories

Out of the total issue, 50 percent is reserved for qualified institutional buyers, 15 per cent for high-net-worth individuals, and the remaining 35 per cent for retail investors.

Bikaji Foods IPO: GMP Today

As per market observers, Bikaji Foods shares are commanding a premium (GMP) of Rs 52 in the grey market today.

Should you Subscribe to Bikaji Foods’ IPO?

According to Angel One, Bikaji’s post-issue price-to-earnings multiple works out to be 98.5 times earnings per share for the year ended March 2022, which is in line with peers such as Prataap Snacks, Nestle India and Britannia Industries.

“The food market in which the company is operating is normally dominated by unorganised players,” said Rajnath Yadav, an analyst with Choice Broking. “This might be the reason for lower operating margin for Bikaji, despite so much value addition. In the current inflationary environment, we are cautiously optimistic on the sustainability of the profitability margins. Thus we assign a ‘subscribe with caution’ rating for the issue.”

In terms of EV/Sales, according to Yadav, Bikaji Foods is demanding a multiple of 4.5, which is premium to the peer average.

Bikaji Foods is the third-largest ethnic snacks company in India with an international footprint, selling Indian snacks and sweets, and is the second fastest growing company in the organised snacks market. The company has operations across 23 states and four Union Territories and is also exporting products to other countries.

Apart from rich valuations, two key concentration risks are significant dependence on the sale of Bhujia and Namkeen products (70 per cent of sales) and sale from three core markets of Rajasthan, Assam and Bihar, which also amounted for 70 per cent of total sales.

Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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