Potato chips maker Prataap Snacks Ltd. had a stellar debut on the markets today with its shares closing at nearly 26 percent above the issue price as investors bet on growing consumption in Asia's third-largest economy.
The stock debuted at Rs 1,270 apiece on the BSE Ltd., a premium of 35.4 percent over its issue price of Rs 938. It rose as much as 40 percent to an intraday high of Rs 1,318 before paring some gains on the National Stock Exchange.
The snacks maker is among more than two dozen companies that have launched IPOs amid a stock market rally and increasing domestic inflows this year.
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The company sold 51 lakh shares the Rs 482 crore IPO that was subscribed 47 times. It raised Rs 282 crore through an offer for sale by promoters and investors while the rest came through the issue of fresh shares.
Qualified institutional buyers and high net-worth individuals put in bids for 77 and 101 times the shares on offer, respectively. The portion reserved for retail buyers was subscribed 8.5 times. At the issue price, Prataap Snacks commands a market capitalisation of more than Rs 2,200 crore, according to BloombergQuint's calculations.
The snacks maker will use majority of its fresh issue proceeds to scale up and Rs 42 crore to repay debt.
Financial Highlights
- The company's net worth was close to Rs 238 crore as of March 31, translating into a book value of Rs 102 a piece after issuing the new shares.
- Revenue rose at a CAGR of 27.3 percent and EBITDA increased at 10.4 percent over five years to March.
- Net profit showed a negative CAGR of 10 percent, as company's profit fell 63 percent to Rs 10 crore in the year to March due to potato crop-related issues.
- The company's debt will reduce by Rs 40 crore as it uses part of the proceeds to that end. Its total debt stood at Rs 101 crore, while the debt-to-equity was 0.4 times.
OUTLOOK
Going ahead the company expects its revenue to grow at 20 percent compared to the compound annual growth rate of 27.5 percent.
“On this base CAGR performance looks difficult, we have grown at 27.3 percent CAGR, going forward it will be close to 20 percent,” Amit Kumat, managing director of Prataap Snacks told BloombergQuint in an interview post listing.
One of the reasons for the slowdown in revenue is due to wholesalers not being able to get onto the GST network.
The snack major plans to get into the sweets category this festive season and expects 10-15 percent of its revenue to come from this segment over the next five years, said Kumat.
He further added that the margins of healthy snacks and sweets will be higher compared to margins of its existing products as they are niche.
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