Bikaji Foods makes steady debut; stock lists 8% higher to issue price

Bikaji Foods International listed at Rs 322.80, a 8 per cent premium when compared with its issue price of Rs 300 per share on the NSE.

Bikaji Foods International made a steady debut on the bourses with its shares listed at Rs 322.80, a 8 per cent premium to its issue price of Rs 300 per share on the National Stock Exchange (NSE). The stock started trade at Rs 321.15 on the BSE. Post listing, the stock moved higher to Rs 335 on the BSE and Rs 334.70 on the NSE.

At 10:03 am, Bikaji Foods traded at Rs 320.70, a 7 per cent gain over its issue price. So far in the day, the stock hit a low of Rs 317.65. A combined 8.7 million equity shares changed hands at the counter on the NSE and BSE.

Bikaji Foods is the third largest ethnic snacks company in India along with a presence in international markets. BFL is the second fastest growing company in the Indian organised snacks market.

The Rs 881 crore initial public offering (IPO) of Bikaji Foods received good response from all types of investors, with the issue subscribed 26.67 times. The qualified institutional buyers' category received 80.63 times subscription, while non-institutional investors quota got subscribed 7.10 times. The retail individual investors' portion was booked 4.77 times, data showed.

Bikaji Foods has a growing domestic and global presence with a well-diversified product basket of more than 300+ products. Namkeen is the highest selling category followed by bhujia, sweets, papad and others contributing to 35.6 per cent, 34.9 per cent, 12.7 per cent, 6.7 per cent and 10.0 per cent, respectively, to total sales in FY22.

The company has developed a large pan-India distribution network. As of June 30, 2022, it had six depots, 38 super stockists, 416 direct and 1,956 indirect distributors that work with super stockists, across 23 states and four union territories in India.

At the IPO price, the stock was available at 98x FY22 EPS. Though FY22 earnings were depressed due to high commodity prices, even on normalised earnings, the valuation multiple is premium to peers, analyst at ICICI Securities had said in IPO note.

The raw material volatility could continue to pressurise margins, sales concentrated in small number of states, high competitive intensity and high dependence on wholesale network are key risks & concerns, the brokerage firm said.

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, Pravesh Gour, Senior Technical Analyst, Swastika Investmart said.