The snack maker has been able to hold its crunch around Rs 450 apiece in the pre-IPO market, rising about 30 per cent in the last six month. The counter kicked off to trade in the market by late September 2021 around Rs 350 per share.
Recently, Bikaji Foods International filed for an Rs 1,000 crore IPO which is entirely an offer for sale (OFS) of up to 29,373,984 shares by existing shareholders and promoter group entities.
Avendus, IIFL Asset Management, Intensive Softshare are among the key shareholders offloading their stake, including a few others. Being a OFS, the company will not receive any proceeds from the issue.
According to the dealers, active in the unlisted markets, the IPO is expected to be in the range of Rs 300-325 and the current valuations in the informal market is quite pricey.
The scrip is trading at a hefty premium in the unlisted market, compared to the expected issue price for the IPO, said Narottam Dharawat, Equity Strategist as Mumbai based Dharawat Securities.
“After the latest hammering in the IPO markets, there must be some cushion for the retail investors and the current pricing is not providing it to the investors,” he added. “One should be cautious.”
Bikaji claims to be the largest producer of Bikaneri bhujia, an Indian munching snack, with an annual production of 26,690 tonnes. It is the second-largest manufacturer of handmade papads with an annual capacity of 9,000 tonnes in FY21.
The company’s revenue from operations grew 22 per cent to Rs 1,310.75 crore for FY21 against Rs 1,074.55 crore for fiscal 2020, primarily due to increase in volume and realisation of products across all major segments.
It is also active in the packaged sweets segments, including rasgulla, gulab jamun, and soan papdi. It recently launched Bikaji Cafe and Bikaji Funkeen brands to promote western snack segment and launched an online retail platform.
Dinesh Gupta, co-founder, UnlistedZone, a Delhi-NCR based boutique firm, said that the issue is in the buzz due to strong brand identity and being a household name for many. “We expect the euphoria to continue.”
The company has decent fundamentals and balance sheet but at the current levels, the issue is fully priced in, he added. “We would not recommend buying lock-in shares, until one has a long term view over the counter.”
Its net profits grew 60 per cent to Rs 90.34 crore in financial year 2020-21 from Rs 56.37 crore in FY20. For the six months ending September 2021, revenue from operations stood at Rs 771.73 crore and net profit was Rs 40.93 crore.
JM Financial, Axis Capital, IIFL Securities, Intensive Fiscal Services Private and Kotak Mahindra Capital Company are the book running lead managers to the issue.
