The public subscription period for Bikaji Foods’ initial public offering (IPO) will be from Thursday (03 Nov 2022) to Monday (07 Nov 2022)
The IPO price per share range is Rs. 285–300. 2.93 crore shares will be made available to the public in the Bikaji Foods IPO, which will be a pure offer for sale (OFS) by the company’s promoters and current shareholders. The company will not receive any revenues from the issue because the IPO is just an OFS.
Should you subscribe when GMP rises and the public period for the IPO of Bikaji Foods starts?
The initial public offering (IPO) of Bikaji Foods has a general subscription period that started on 03 Nov and ran through Monday.
The initial public offering (IPO) of Bikaji Foods has a public subscription period that started on 03 Nov and ran through Monday. 2.93 crore shares will be made available to the public in the Bikaji Foods IPO, a pure offer for sale (OFS) by the company’s promoters and current shareholders. The price per share range for the IPO is Rs. 285-300. Because the IPO is only an OFS, the corporation won’t make any money.
Should you invest in the IPO of Bikaji Foods?
Option Brokering: Subscribe
Bikaji is asking for an EV/Sales multiple of 4.5x at higher price bands than the industry standard. The unorganised players typically control most of the food market, where the corporation competes. This could cause Bikaji’s lower operating margin despite significant value addition. We are cautiously optimistic about the sustainability of the profitability margins in the current inflationary climate. As a result, we rate the issue as “Subscribe with Caution.”
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The post-issue P/E works out to 98.5x FY22 EPS (at the upper end of the issue price band), comparable to its peers like Prataaop Snacks Ltd, Nestle India Limited, and Britannia Industries Limited. Bikaji also had more substantial revenue/PAT growth over the past two years. Additionally, the company’s “Bikaji” brand and presence across India have a solid brand recall. This valuation is appropriate given all the favourable aspects. As a result, we advise SUBSCRIBING for the issue.
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According to the company’s record, Bikaji will outperform the industry growth rate over the next four years. As a result, we advise SUBSCRIBING to the issue with a long-term perspective.
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“Bikaji Foods is sold at a P/E of 98.5x (FY22), which seems high compared to its competitors at the upper price range of Rs 300. We offer a “Subscribe” grade on a short-term basis for high-risk investors based on its sustained top-line growth, industry-leading position, future expansion plans, new product launches, investments in improving brand memory, and promising prospects for the packaged food company.
Marwadi Financial Services: Use caution when subscribing
We rate this IPO as “Subscribe (With Caution)” since the company is the third-largest producer of ethnic foods in India with a global presence. We remain cautious from a long-term view because the IPO is highly-priced, and the company will need to expand rapidly to justify its value.
LKP Securities: Register
“Bikaji Foods is in an excellent position with a positive outlook thanks to its strong market position throughout its diverse product portfolio, robust distribution, strategically located manufacturing facilities, strong brand recognition, and consistent financial success. Investors are advised to SUBSCRIBE to the IPO.
Subscribe to Swastika Investment.
The company’s management team is solid, and promoter holdings account up a sizable portion of its equity.
In the past three years, it has had significant revenue growth, increasing from Rs. 1082.9 crores in FY2020 to Rs. 1621.45 crores in FY22. However, the company’s margins are on the decline, and a P/E valuation of 95.2 appears high. Last but not least, this issue is a comprehensive offer for sale, so we only suggest a Subscribe rating for high-risk investors.