Ethnic snacks company Bikaji Foods International is set to launch its maiden public issue for subscription later this week. This would be the 26th IPO of 2022.
Here are 10 key things to know before subscribing to the initial public offering (IPO):
1) IPO dates
The bidding for IPO shares will start on November 3 and close on November 7. The anchor book opened for a day on November 2.
2) Price band
The price band for the public issue is Rs 285-300 per share.
3) Offer size
Bikaji Foods aims to raise Rs 837.15-881.22 crore at the lower and upper ends of the price band, respectively.
The initial public offering of 2.93 crore equity shares is entirely an offer for sale by promoters and investors. The offer will constitute 11.77 percent of the post-offer paid-up equity.
Promoters Shiv Ratan Agarwal and Deepak Agarwal are going to offload 25 lakh shares each via offer for sale, while the rest of 2.43 crore shares in the offer will be sold by investors including India 2020 Maharaja, IIFL Special Opportunities Fund, IIFL Special Opportunities Funds - Series 2 to 5, and Avendus Future Leaders Fund I.
The offer for sale includes a reservation of 2.5 lakh shares for employees. They will get these shares at a discount of Rs 15 per share to the final offer price.
4) Objective of the issue
The main objects of this offer are to list equity shares on the stock exchanges and carry out the offer for sale.
All the issue proceeds will be received by selling shareholders. Hence, the company will not receive any proceeds from the offer.
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5) Lot size
Investors can bid for a minimum of 50 equity shares and in multiples of 50 shares thereafter. With this, retail investors can invest a minimum of Rs 15,000 per lot and their maximum investment would be Rs 1.95 lakh for 13 lots.
Half of the offer is reserved for qualified institutional buyers, 15 percent for non-institutional investors or high net-worth individuals and the balance 35 percent for retail investors.
6) Company profile
Incorporated in 1993, Bikaji Foods International claimed to be the third largest ethnic snacks company in India with an international footprint, selling Indian snacks and sweets, with 300 products, and with operations across 23 states and four Union territories as of June 2022.
It is the second and third fastest growing company in the Indian organised snacks and sweets market, respectively. It has a significant market share of total organised Indian ethnic snack category in its core markets of Rajasthan, Assam and Bihar.
In the quarter ended June FY23, the company exported products to 21 countries, which contributed 3.2 percent to total sales.
Its key competitors include Haldiram Foods International, Bikanerwala, Prataap Snacks, Balaji Wafers, ITC, Pepsico India Holdings and DFM Foods.
7) Financial performance
Bikaji Foods recorded a compound annual growth rate of 22.44 percent in revenue from operations during FY20-FY22, coming in at Rs 1,610.96 crore for FY22. Profit and EBITDA (earnings before interest, taxes, depreciation and amortisation) in the same period grew at a CAGR of 16.13 percent and 21.45 percent (at Rs 76 crore and Rs 139.5 crore in FY22, respectively), but the EBITDA margin contracted to 8.66 percent in FY22 against 11.04 percent in FY21 and 8.8 percent in FY20.
There was volatility in return on equity (RoE) and return on capital employed (RoCE). RoE stood at 9.5 percent in FY22 against 14.89 percent in FY21 and 10.65 percent in FY20, while RoCE was 13.89 percent against 20.88 percent and 12.79 percent in the same period.
Most of the company’s business contribution comes from two segments, bhujia and namkeen that accounted for around 70 percent of revenue, followed by packaged sweets with nearly 13 percent of total sales.
8) Promoters and management
Promoters Shiv Agarwal, his son Deepak Agarwal, Shiv Ratan Agarwal (HUF), and Deepak Agarwal (HUF) hold 76.50 percent shareholding in the company.
Shiv Agarwal, the grandson of Gangabishan Agarwal (the founder of Haldiram’s brand) is chairman and whole-time director. Deepak Agarwal is the managing director and his wife Shweta Agarwal is a whole-time director.
Sachin Kumar Bhartiya is a non-executive director as the nominee of India 2020 Maharaja and Lighthouse India Fund III, while Nidhi Ghuman is another non-executive director, the nominee of IIFL Special Opportunities Funds.
Siraj Azmat Chaudhry, Richa Manoj Goyal, Pulkit Anilkumar Bachhawat, Nikhil Kishorchandra Vora and Vipul Prakash are independent directors.Rishabh Jain is the chief financial officer, and Divya Navani is the company secretary and compliance officer.
9) Listing date
The company will finalise the IPO share allotment on November 11. Refunds will be credited to bank accounts of unsuccessful investors by November 11 and the IPO shares will be transferred to demat accounts of eligible investors by November 14.
Bikaji Foods will debut 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 book running lead managers to the offer, while Link Intime India is the registrar.
10) Grey market premium
Bikaji Foods International shares traded at around 25 percent premium over upper price band in the grey market, analysts told Moneycontrol.
The grey market is an unofficial platform for trading in pre-IPO shares. Generally, investors look at the grey market to get an idea about the likely listing price of any IPO stock.