Gopal Snacks' initial public offering (IPO) opens for bidding on Wednesday, March 6 and investors can apply for the issue till Monday, March 11. The company has fixed the price band of Rs 381-401 for the issue and interested investors can bid for a minimum of 37 equity shares and its multiples thereafter. Gopal Snacks, incorporated in 1999, is a FMCG company dealing in ethnic and Western snacks, and other products in India and across the globe. The company offers a variety of snack products including ethnic snacks like namkeen and gathiya, as well as western snacks such as wafers, extruded snacks, and snack pellets. The issue is entirely an offer-for-sale (OFS) by the promoters and other shareholders of the company including Bipinbhai Vithalbhai Hadvani, Gopal Agriproducts and Harsh Sureshkumar Shah. The cumulatively will offload shares worth Rs 650 crore and the company will not receive any proceeds from the issue. Gopal Snacks raised Rs 193.95 crore from anchor investors, allocating them 48,36,657 shares at a price of Rs 401 apiece. Optimix Wholesale Global Emerging Markets Share Trust, BNP Paribas Funds, Bay Capital, India Fund, BofA Securities Europe SA, Copthall Mauritius Investment, Leading Light Fund VCC, Ashoka Whiteoak ICAV, Natixis International and others participated in the anchor book. Gopal Snacks provide fast-moving consumer food products such as papad, spices, gram flour or besan, noodles, rusk, and soan papdi. The company had 276 SKUs with 84 products from different categories, catering to various tastes and preferences as of November 2023. It has sold its products to over 523 locations across 10 states and two Union Territories, as of September 2023. The company has six manufacturing units out of which three are primary manufacturing units and three are ancillary manufacturing units. The primary manufacturing units are in Nagpur, Maharashtra; Rajkot, Gujarat; and Modasa, Gujarat. The two ancillary units are situated in Rajkot, Gujarat and one unit is located in Madosa, Gujarat. For the period ended on September 30, 2023, Gopal Snacks reported a net profit of 55.57 crore with a revenue of Rs 677.97 crore. The company's net profit came in at Rs 112.37 crore with a revenue of Rs 1,398.54 crore for the financial year ended on March 31, 2023. Gopal Snacks has reserved 50 per cent of the net offer for qualified institutional investors (QIBs), while non-institutional investors (NIIs) will have 15 per cent of shares reserved for them. Retail investors will have 35 per cent of the net issue reserved for them. Intensive Fiscal Services, Axis Capital and JM Financial are the book running lead managers of the Gopal Snacks IPO, while Link Intime India is the registrar for the issue. Shares of the company are likely to be listed on both BSE and NSE with March 14, Thursday as the tentative date of debut. Here's what brokerage firms say about the IPO of Gopal Snacks:Arihant Capital Markets Rating: Avoid Gopal Snacks exhibits strengths and opportunities for growth but, it must address challenges such as competition from peers and overreliance on specific product categories and regions. By leveraging its brand reputation, distribution network, and focus on innovation, the company can navigate challenges and capitalize on opportunities to sustain growth and profitability, said Arihant Capital. At the upper band of Rs 401, the issue is valued at an EV/EBITDA of 25.9 times based on FY23 EBITDA of Rs 196.2 crore and P/E of 44.5 times based on FY23 EPS of Rs 9.02 which we think is expensive and recommend an 'avoid' rating for this issue, said the brokerage.Anand Rathi Research Rating: Subscribe for long term Gopal Snacks is one of the largest and prominent FMCG player in India, offering Indian ethnic snacks and other products. The company intends to accelerate expansion in its focus markets, comprising Maharashtra, Rajasthan, Madhya Pradesh, and Uttar Pradesh. It will be focusing on geographical markets which are proximity to existing manufacturing facilities, said Anand Rathi. The move will not only enable them to increase their topline growth but will also rationalize its operating expenses. At the upper price band, the company is valued at P/E of 44.5 times with a market cap of Rs 4,996.6 crore post issue of equity shares. We believe that valuations of the company is fairly priced and recommend a 'subscribe for long term' rating to the IPO, it said.Choice Broking Rating: Subscribe with caution At higher price band, GSL is demanding an EV/TTM sales multiple of 3.7 times, which is in-line to the peer average of 3.9 times. Thus, the issue is fully priced, said Choice Broking. "Considering the above observations, we are assigning a 'subscribe with caution' rating for the issue," it added.Reliance Securities Rating: Subscribe Gopal Snacks has gained leadership position in its local savory snacks and chartered its national move over the last 5 years aiming to achieve higher sales growth in its key products and increase its shift in western snacks to further diversify its product range, expand wallet share with consumers and grow consumer base with an focused market for its differentiated offerings, said Reliance Securities. "A first generation entrepreneur with 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," added the brokerage firm with a 'subscribe' rating to the issue.StoxBox by BP equities Rating: Subscribe Gopal Snacks possesses the perfect mix of macroeconomic opportunities and a well-established brand image that will cater to a robust growth story for the company. On the financial performance front, the company’s Revenue, EBITDA and PAT grew at a CAGR of 11.2 per cent, 80.3 per cent and 130.6 per cent, respectively, during the FY2021-23 period, said StoxBox in IPO note. "The constant reduction of debt over the years have led to better PAT margins and improved return on capital employed during FY 2021-23. On the upper price band, the issue is valued at a P/E of 44.5 times based on FY2023 earnings which we feel is fairly valued. We recommend a 'subscribe' rating for the issue," it said.
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