Is Bikaji Foods headed towards crispier returns in the long run?

The scrip, in comparison to the issue price of Rs 300, got listed at a premium of 8% at Rs 322.80 on National Stock Exchange (NSE) and at a premium of 7% at Rs 321.15 on BSE.

However, following the listing, the stock rose further to Rs 335, taking the entire listing gains to about 12% but only to see profit booking at higher levels.

Analysts remain concerned over the high valuations and diminishing margins of the company. A few of them have suggested booking profits after the debut, whereas others believe that Bikaji is poised to offer crispier returns in the long run.

Pravesh Gour, Senior Technical Analyst,

said the company saw a muted listing but the issue received a good response from investors on both the institutional as well as retail side.

“We advise only aggressive investors to consider making a long-term commitment to the company. Those who applied for listing gains can maintain a stop loss of Rs 310,” he said.

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.

Manoj Dalmia, Founder and Director, Proficient Equities said Bikaji had an expected listing following a strong subscription. “Short-term investors can book profits whereas long-term investors can park their funds in this issue.”

Its margins are declining on account of higher sales, in line with the general trends of the industry, and sustainability of such margins going forward amidst stiff competition remains a concern, he added.

The company’s Rs 881-crore IPO was sold in the range of Rs 285-300 per share and received a strong investor response. It was subscribed over 26.67 times between November 3-7.

The quota reserved for qualified institutional buyers (QIBs) was subscribed 80.6 times while those reserved for non-institutional investors (NIIs), retailers and employees were subscribed 7.1 times 4.77 times and 4.38 times, respectively.

Arafat Saiyed, Senior Research Analyst,

Securities remains positive on the issue in the longer run and suggested that one can add the stock at current levels for the long term.

Ravi Singhal, CEO, GCL Securities said Bikaji made its debut in the expected range. “Since the valuations were high and the issue was richly priced, profit booking at the higher range will be a prudent approach,” he said.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)