Ethnic snack company, Bikaji Foods International, is launching its IPO for a subscription later this week. This will be the 26th IPO in 2022.

The IPO will start on November 3, will close on November 7, and the anchor book will open on November 2. The price range for the public offering is Rs 285-300 per share.

Bikaji Foods targets gains of Rs 837.15 – Rs 881.22 crore at the upper and lower ends of the price band.
The initial public offering of 2.93 crore equity shares is an offer from promoters and investors. The offer will represent 11.77% of the post-offer paid-up share capital.

Promoters Shiv Ratan Agarwal and Deepak Agarwal will each sell 25 lakh shares through an offer sale, while the remaining 2.43 crore shares in the offer will be sold by investors, including India 2020 Maharaja, IIFL Special Opportunities Fund, IIFL Special Opportunities Fund – Series 2 to 5, and the Avendus Future Leaders Fund I.

The sale offering includes 2.5 lakh shares reserved for employees. They will get these shares at a discount of Rs 15 per share on the final offer.

The main object of this offer is to list shares on the stock exchange and the offer for sale. The selling shareholders will receive all issuance proceeds. Therefore, the company will not receive any proceeds from the offer.

Investors can bid for at least 50 shares and then bid in multiples of 50 shares. With this, retail investors can invest a minimum of Rs 15,000 per lot with a maximum investment of Rs 1.95 lakh for 13 lots.

Half of the offer is reserved for qualified institutional buyers, 15% for non-institutional investors or high-net-worth individuals, and the remaining 35% for retail investors.

Founded in 1993, Bikaji Foods International claims to be India’s third-largest ethnic snack company with international reach, selling Indian snacks and confectionery, with 300 products sold in 23 states and four federal territories as of June 2022.

It is the second and third fastest-growing company in the Indian snack and confectionary market, respectively. In its core markets of Rajasthan, Assam and Bihar, it has a significant market share in the overall organised Indian ethnic snack category.

For the quarter that ended fiscal June 2023, the company exported products to 21 countries, representing 3.2% of total sales.

Its main competitors include Haldiram Foods International, Bikanerwala, Prataap Snacks, Balaji Wafers, ITC, Pepsico India Holdings and DFM Foods.

Bikaji Foods posted a CAGR of 22.44% in FY20-FY22 to Rs 1,610.96 crore in FY22. Profit and EBITDA grew at CAGR of 16.13% and 21.45% (FY22: Rs 760 crore and Rs 1395 crore, respectively) during the same period, but EBITDA margin contracted to 8.66 11.04% in FY22 and 8.8% in FY20.

Return on Equity (RoE) and Return on Capital Employed (RoCE) fluctuate. The RoE in FY22 was 9.5% compared to 14.89% in FY21 and 10.65% in FY20, while the RoCE was 13.89% compared to 20.88% and 12.79% in the same period.

Most of the company’s business contributions come from two divisions, bhujia and namkeen, which account for about 70% of revenue, followed by packaged confectionery, which accounts for nearly 13% of total sales.

Promoter Shiv Agarwal and his sons Deepak Agarwal, Shiv Ratan Agarwal (HUF) and Deepak Agarwal (HUF) hold a 76.5% stake in the company.

Shiv Agarwal, the grandson of Gangabishan Agarwal (founder of the Haldiram brand), serves as chairman and a full-time director. Deepak Agarwal is MD, and his wife, Shweta Agarwal, are full-time directors.

Sachin Kumar Bhartiya is a non-executive director of the India 2020 Maharaja and Lighthouse India Fund III nominee, while Nidhi Ghuman is another non-executive director, a nominee of the IIFL Special Opportunities Fund.

Siraj Azmat Chaudhry, Richa Manoj Goyal, Pulkit Anilkumar Bachhawat, Nikhil Kishorchandra Vora and Vipul Prakash are independent directors. Rishabh Jain is the CFO, and Divya Navani is the Company Secretary and Compliance Officer.

The company will complete its IPO stock allocation on November 11. Refunds will be credited to failing investors’ bank accounts by November 11, and IPO shares will be transferred to accredited investors’ Demat accounts by November 14.

Bikaji Foods will be listed on the BSE and National Stock Exchange on November 16. JM Financial, Axis Capital, IIFL Securities, Intensive Fiscal Services and Kotak Mahindra Capital Company are the lead underwriters on the offer, while Link Intime India is the registrar.

Analysts said Bikaji Foods International’s shares traded at a premium of about 25% to the grey market cap.
Grey markets are unofficial platforms for trading pre-IPO stocks. Often, investors use the grey market to understand the likely listing price for any IPO stock.