Bikaji Foods IPO: Issue subscribed nearly 27 times on Day 3

The initial public offering (IPO) of Bikaji Foods International got subscribed nearly 27 times on the final day of bidding on Monday. The initial share sale received bids for 54,94,47,200 shares against 2,06,36,790 shares on offer, according to BSE data.

The qualified institutional buyers' category received 80.63 times subscription by 4:27 pm, while non-institutional investors quota got subscribed 7.08 times. The retail individual investors' portion was booked 4.69 times, taking the total IPO subscription to 26.62 times.

The issue is purely an offer for sale (OFS) of 29,373,984 shares, with a price band between Rs 285 and Rs 300. As the IPO is completely an OFS, the company would not receive any proceeds from the issue.

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Bikaji Foods International Ltd has mobilised Rs 262 crore from anchor investors ahead of its IPO.

Latest grey market premium

Market participants said Bikaji Foods IPO grey market premium (GMP) today is at Rs 17. It implies that the grey market is expecting the lender to list around Rs 317 (Rs 300 + Rs 17), which is more than 5 per cent higher than the IPO's upper band price of Rs 300 per equity share.

Bikaji is the largest manufacturer of Bikaneri bhujia with an annual production of 29,380 tonnes and is a leading maker of packaged 'rasgulla', 'soan papdi' and 'gulab jamun'.

Axis Capital, Intensive Fiscal Services, JM Financial, IIFL Securities and Kotak Mahindra Capital are the managers to the offer.

Brokerage view

Choice Broking said Bikaji is demanding an EV/Sales multiple of 4.5 times, which is premium to the peer average.

"The food market in which the company is operating is normally dominated by unorganised players. 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. We assign a 'Subscribe with Caution' rating for the issue," it said.

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Angel Broking compared the asking valuations of Bikaji Foods with Prataap Snacks, Nestle India and Britannia Industries and finds the valuations 'in line'. It said Bikaji saw better revenue and PAT growth over the last two years and also has a strong brand recall. This brokerage has a 'subscribe' rating on the issue.

Geojit Financial Services said that the IPO "appears expensive compared to its peers."

Considering Bikaji's consistent top-line growth, industry-leading position, future expansion plans, new product launches, investments in strengthening the brand recall and good future prospects for the packaged food business, we assign a 'Subscribe' rating on a short-term basis for high-risk investors, the brokerage said.