Gopal Snacks IPO draws brokerage attention with growth prospects: Should you buy into Rs 650-cr issue?

FMCG company Gopal Snacks tapped the primary market on March 6 with a Rs 650-crore public issue that has attracted the brokerage attention with robust growth prospects for the maker of ethnic and western snacks and other products for both domestic and international markets.

Reliance Securities has put a 'subscribe' rating on the issue. "A first-generation entrepreneur with a strong understanding of the savouries markets, vertical manufacturing, backward integration of logistics, and strong industry growth rates in existing and new markets will add multifold revenues and profitability in the coming years," the brokerage firm said in a note.

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Analysts at Sharekhan believe that at the upper and lower price band, Gopal Snacks is valued at a discount to its nearest peers Prataap Snacks and Bikaji Foods International. "A diversified and strong product portfolio, vertically integrated manufacturing, along with the company’s strategies of focusing on increasing market share in core and new markets, and enhancing brand awareness make it a good play," it said.

Master Capital Services recommended investors to 'subscribe' to the issue with a medium-to-long-term perspective. This is because the company intends to further enhance its presence in the core market of Gujarat and accelerate expansion in focus markets of Maharashtra, Rajasthan, Madhya Pradesh and Uttar Pradesh. These locations have been strategically chosen based on their geographical proximity to the company’s manufacturing facilities and the potential for expanding the product portfolio in those regions.

On the financial front, the company recorded a revenue of Rs 1,394.65 crore for FY23, marking a CAGR of 11.15 percent during FY21-FY23. Its net profit CAGR was 130.65 percent or Rs 112.4 crore during the same period largely aided by a strong operating performance. Gopal Snacks was founded in 1999.

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