Bikaji Foods International IPO sails through on day 2 of bidding process

New Delhi: The Rs 881 crore initial public offering (IPO) of Bikaji Foods International sailed through on the second day of the bidding process on Friday. The issue garnered 67% bids on the first day of the book-building process.

The issue, which kicked off for subscription on Thursday closes on Monday. The company is selling its shares in the range of Rs 285-300 apiece.

According to the data from BSE, investors made bids for 2,07,83,600 equity shares or 1.01 times compared with 2,06,36,790 equity shares on offer for subscription.

The quota for retail bidders was subscribed by 1.62 times, whereas portions for employees were subscribed 93%. HNI allocation fetched 88% bids and the portion for institutional investors was subscribed 2%.

The issue is entirely an offer for sale (OFS) of up to 29,373,984 equity shares with a face value of Re 1 each by existing shareholders and promoter group entities.

Bikaji Foods is India's third-largest ethnic snack company. The company's product range includes six principal categories: bhujia, namkeen, packaged sweets, papad, and western snacks among others.

As of June 30, 2022, the company sold more than 300 products under the Bikaji brand. The company exports products to 21 international countries, including North America, Europe, the Middle East, Africa, and Asia Pacific.

Majority of the brokerages remain positive on the issue but a few have flagged pricey valuations and a complete OFS issue as areas of concern.

We believe the current valuation of 95.2x is reasonable considering the average industry P/E of 204.4x as per the company's RHP, said KR Choksey Research in its IPO note.

"Given the market positioning, brand equity and improving penetration of the packaged food products, we are optimistic about the company’s outlook," it added with a subscribe rating for the issue.

Its revenue from operations grew 23% to Rs 1,610.96 crore in FY22 against Rs 1,310.75 crore a year ago. For the three months ending June 30, revenue from operations stood at Rs 419.16 crore, with a net profit of Rs 15.7 crore.

"Due to shifting lifestyles, rising incomes and urbanisation, India's packaged food industry has experienced tremendous growth over the past five years. Pan-Indian demand for regional snacks is booming," said .

The company's margins are on the declining side and a P/E valuation of 95.2 looks expensive, it said, adding that it is a complete offer for sale, thus we recommend a Subscribe rating, but only for high-risk investors.

The company has reserved 50% of the shares for qualified institutional buyers, whereas non-institutional investors will get 15% of the shares. The remaining 35% of the shares have been allocated to retail bidders.

, , , Intensive Fiscal Services, and Capital Company are the bankers to the issue, whereas Link Intime India has been appointed as registrar to the issue.

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