Shares of Bikaji Foods International jumped 5 per cent to hit a day's high of Rs 334.7 on BSE a day after its debut on Dalal Street. It got listed at Rs 322.80 on NSE, an 8 per cent premium over its issue price of Rs 300.
The IPO received a total of 26.67 times subscriptions. The issue got a 'Subscribe' rating from many brokerage firms. However, experts noted that the IPO "appears expensive compared to its peers."
At 10:36 hours, the shares were trading 3 per cent higher at Rs 327.40 on BSE. Market cap of the firm rose to Rs 8,168.95 crore.
"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, will drive the company’s performance going forward," said Ashika Research.
Choice Broking said that the food market in which the company is operating is normally dominated by unorganised players. This might be the reason for the lower operating margin for Bikaji, despite so much value addition. In the current inflationary environment, we are cautiously optimistic about the sustainability of the profitability margins, it added.
KRChoksey believes that Bikaji is a well-established brand with a strong pan-India presence. With a continued focus on efficiency, productivity and cost rationalization, the company has been able to deliver a consistent performance despite the increase in the cost of material & packaging material
However, it also noted that inadequate or interrupted supply and price fluctuation of the raw materials and packaging materials could adversely affect its business, results of operations, cash flows, profitability and financial condition.
After comparing the asking valuations of Bikaji Foods with Prataap Snacks, Nestle India and Britannia Industries, Angle One said that the valuations are '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.
Bikaji is the third largest ethnic snacks company in India. It has four manufacturing facilities, with a total manufacturing capacity of 400 TPD, producing 300 products such as Bhujia, Namkeen, papad, Western snacks and cookies amongst others.
Bhujia accounts for nearly 35 per cent of its sales.
Disclaimer: Recommendations given by the experts are their own. These do not represent the views of Business Today.
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