Bikaji Foods lists at a 7% premium in line with grey market expectations

• Shares of Bikaji Foods listed at ₹321.15 against the allotment price of ₹300 per share.
• The IPO was subscribed 26.67 times, with good interest from institutional buyers.
• The market capitalisation of the company stood at ₹8,013 crore.

Shares of Bikaji Foods International closed at ₹317.45 on the day of its market debut with nearly 6% gains, on Wednesday. The stock listed at a 7% premium over its allotment price.

The stock listed at ₹321.15 moving up ₹21.15 from its allotment price of ₹300 per share.

This was slightly lower than the grey market’s expectations, which predicted a gain of ₹25-30 per share. GMP is the premium at which IPO shares are traded in an unofficial market before they are listed on the stock exchanges.

The market capitalization of the company stood at ₹8,013 crore, according to BSE.

The IPO was subscribed a whopping 26.67 times amidst volatile market conditions. Demand for the IPO was huge amongst qualified institutional investors who subscribed 80.63 times the IPO offer. Meanwhile, the retail portion of the IPO saw a subscription of 4.77 times.

Analysts were of the opinion that investors must book listing gains considering falling margins and expensive valuation.

“The issue had received a good response from investors on both the institutional as well as retail side, and the current GMP is 30 i.e. ~ 10% over its issue price. Nevertheless, the company's margins are on the declining side and a P/E valuation of 95.2 looks expensive. Therefore, we advise investors to lock in listing gains, and only aggressive investors should consider making a long-term commitment to the company,” said Pravesh Gour, senior technical analyst at Swastika Investmart.

So far, 26 IPOs made their stock market debut this year on the BSE mainboard. Most of them gave positive listing gains, except seven issues. Here are the top five IPOs with highest listing gains in 2022.

Source: BSE

Competing with Haldirams and Balaji
Bikaji Foods’ products fall broadly into six categories – bhujia, namkeen, packaged sweets, papad, western snacks as well as gift packs (assortments), frozen food, mathri range and cookies.

The company will not receive any funds from the IPO as it is a complete offer for sale by promoters and shareholders.

Bikaji Foods International is the third largest player in the Indian branded ethnic snack industry with 9% market share after Haldiram and Balaji.

Some key competitors of the FMCG brand include Haldiram Foods International, Bikanerwala, Prataap Snacks, Balaji Wafers Private, ITC, Pepsico India Holdings and DFM Foods.

In FY22, Bikaji Foods’ profit came down by 15.5% to ₹76 crore from ₹90 crore in FY21 due to raw material inflation. Meanwhile, its revenue rose to ₹1,610 crore in FY22 from ₹1,310 crore from the previous year.
Source: DRHP


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