Bikaji Foods Debuts at 7.5% Above IPO Price; Should you Buy, Hold or Sell?

Snacks company Bikaji Foods made a firm start on the bourses on November 16. The shares traded 7.6 per cent above the IPO price of Rs 300, listing at Rs 321.15 on the BSE and at Rs 322.80 on the National Stock Exchange.

The Rs 881-crore initial public offering (IPO) was subscribed 26.67 times during the November 3-7 period backed by qualified institutional buyers. QIBs subscribed more than 80 times their quota of shares and high net-worth individuals over seven times. The portions set aside for retail investors and employees were subscribed 4.77 and 4.38 times.

The company’s Rs 881-crore IPO was sold in the range of Rs 285-300 per share and received a strong investor response. It was subscribed over 26.67 times between November 3-7.

Bikaji Foods is India’s third-largest ethnic snack company. The company’s product range includes six principal categories: bhujia, namkeen, packaged sweets, papad, and western snacks among others.

Its revenue from operations grew 23 per cent to Rs 1,610.96 crore in FY22 against Rs 1,310.75 crore a year ago. For the three months ending June 30, revenue from operations stood at Rs 419.16 crore, with a net profit of Rs 15.7 crore.

Bikaji Foods competes with Haldiram’s, the market leader in traditional savouries and snacks in India. Owners of Haldiram’s are related of the promoters of Bikaji Foods. Bikanerwala Foods, Balaji Wafers, Prataap Snacks, DFM Foods, Pepsi and ITC are the other players in the segment.

What Should Investors Do Now?

Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd., said: “Bikaji Foods has debuted at Rs. 322.80 i.e. 7 per cent over its issue price. The company’s muted listing but the issue had received a good response from investors on both the institutional as well as Retail side. Nevertheless, the company’s margins are on the declining side and a P/E valuation of 95.2 looks expensive. Therefore, we advise only aggressive investors should consider making a long-term commitment to the company. Those who applied for listing gains can maintain a stop loss of Rs. 310”

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