“At P/E (price to earnings) valuation of 95.2, the stock 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,” said Pravesh Gour, senior technical analyst, Swastika Investment.
Snacks company Bikaji Foods made a firm start on the bourses on November 16 as the stock traded 7.6 percent 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 ethnic snacks company had fixed the price band for the issue at Rs 285-300 a share.
Analysts like that the company leads in its core states (Rajasthan, Assam, and Bihar) and boasts an international footprint, a healthy top line, and a strong management team. Revenue from operations grew 22.90 percent to Rs 1,610.96 crore for FY22 from a year ago.
However, net profit declined to Rs 76.03 crore in FY22 as against Rs 90 crore in FY21 on the back of high input costs. “Sustainability of margins going forward amidst stiff competition raises concerns,” said Manoj Dalmia, founder, and director, Proficient Equities.
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.
“At P/E (price to earnings) valuation of 95.2, the stock 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,” said Pravesh Gour, senior technical analyst, Swastika Investmart.
