Shares of poultry firm Venky's India ended up 18.8 per cent at Rs 2,442.15 as the initial public offer of Godrej Agrovet got underway. The Rs 1,157-crore IPO of Godrej Agrovet was subscribed 52 per cent on the first day of the issue.

Analysts believe Venky's India is likely to see valuation re-rating on the back of Godrej Agrovet.

Godrej Ag rovet on Tuesday raised Rs 341.19 crore by allotting 74.17 lakh shares to anchor investors at the upper end of the price band of Rs 450-460 per share. Government of Sing apore Investment Corporation, First State Indian Subcontinent Fund, JPMorgan India Smaller Companies Fund, Reliance Capital Trustee Co, SBI Life Insurance Company, Amansa Holdings and Goldman Sachs India were among the anchor investors.

"Venky's can re-rate based on Agrovet. Venky's has a double-digit operating margin in the poultry business, which is more than double that of Agrovet," said Geetanjali Kedia, senior research analyst at SPTulsian.com, a Mumbai-based investment research firm.

Venky's has risen 361 per cent in the last one year, benefiting from the crackdown on unauthorised abattoirs by Uttar Pradesh, which sent chicken prices rising. The net profit of Venky's rose 26.8 per cent to Rs 51.95 crore in the quarter ended June, while sales rose 2.8 per cent to Rs 663.5 crore. Last month, Kotak Securities raised its recommendation on Venky's to buy from accumulate with a target price of '2,650.

"The current upcycle and the potential for reduced ear nings volatility are likely to lead the stock to higher valuations. Our view on near-term earnings provides us confidence to believe that, purely from an ear nings perspective, downside appears limited, leading us to raise our recommendation to buy," said Kotak Securities in a note dated September 18.

The brokerage added that institutional ownership of the stock remains low, which provides further reason to believe that there is significant room for expansion in valuations over the next six to nine months.