Popular Indian snack maker Haldiram's valuation was the topic of discussion on Wednesday as a report said Tata Consumer Products Ltd is looking to acquire 51% stake in it and Haldiram's is demanding a whopping $10-billion valuation.
Haldiram's - which has multiple registered companies in the country - had revenue of at least $981 million in the financial year ended March 2022, according to regulatory filings.
Quoting sources, Reuters, however, said its revenue is now close to $1.5 billion and annual operating profit is around $200 million.
The $10-billion valuation sought by Haldiram's for the deal translates to 6.6 times its annual revenue of $1.5 billion, reported Reuters.
Haldiram's Chairman Manohar Lal Agrawal last year told CNBC TV18 in an interview the company wanted to attract private equity investors and debut on the stock market in 2-3 years.
Haldiram's smaller listed rival in India, Bikaji Foods International, has a market capitalisation of $1.5 billion, six times its annual revenue. Shares in Bikaji also rose on Wednesday, climbing around 3% during trade.
Last year, a CNBC TV-18 report said the three brothers who run Haldiram’s in Delhi and Nagpur have decided to merge their operations to create one snacking major.
"The merger is part of a plan to file for an initial public offering (IPO) in a bid to debut on Dalal Street in the next 18 months, as per people in the know," stated the report.
Haldiram's history goes back to the 1930s when Gangabishan Agarwal founded the snack company. Six decades later, his grandson, Shiv Ratan Agarwal, branched out to start his brand called Bikaji in 1993.
Meanwhile, Tata Consumer Products Ltd (TCPL) on Wednesday said it is not in negotiations with Haldiram's to acquire a 51 per cent stake in the company.
Reuters reported that the Tata Group's FMCG arm is not comfortable with a high enterprise value for Haldiram's.
''The company is not in negotiations as reported'' to acquire Haldiram's, TCPL said in a regulatory filing.
The filing was in response to a clarification sought by the NSE and the BSE regarding the reports.
''Tata Consumer Products does not comment on market speculation,'' a company spokesperson said earlier in the day.
Family-run Haldiram's traces its origins back to a tiny shop founded in 1937 and is well-known for its crispy "bhujia" snack sold for as little as 10 rupees across mom-and-pop stores.
It has almost 13% share of India's $6.2-billion savoury snack market, according to Euromonitor International. Pepsi, famous for its Lay's chips, also has around 13%.
Haldiram's snacks are also sold in overseas markets like Singapore and the United States. The company has around 150 restaurants selling local food, sweets and western cuisine.
Purchasing Haldiram's would significantly expand Tata's consumer products reach.
"If you want to suddenly grow big in size, no one better to provide access than Haldiram's. No other brand attacks packaged food, and food services, with equal panache," Ankur Bisen, head of consumer and retail at Indian consultancy Technopak told Reuters.
With inputs from agencies