Gopal Snacks IPO makes weak debut, shares list at 12.5% discount

Shares of Gopal Snacks made a disappointing debut on the stock exchanges on Thursday, which was below street expectations. The share price of FMCG company listed at ₹351 apiece on the NSE, down 12.46% against the initial public offering (IPO) price of ₹401 per equity share. On the BSE, the stock was listed at a discount of 12.7% over the issue price at ₹350 per share.

Post listing, Gopal Snacks shares fell as much as 14.7% to touch a low of ₹341.8 on the NSE and ₹342 and BSE, while it hit a high of ₹380 on the NSE and ₹384.95 on the BSE. The market capitalisation of the company declined to ₹4,750 crore at the time of reporting.

Ahead of the listing, Gopal Snacks shares were trading at a discount of ₹25 per share over the IPO price in the grey market, indicating the listing price to be around ₹376 per equity share. The stock was commanding a grey market premium (GMP) of ₹122 in the unofficial market on March 4, but it declined sharply in the last ten days due to weakness in the broader market.  

“The negative listing performance falls short of pre-listing expectations and raises concerns about investor sentiment, valuation, and the company's growth prospects in the competitive snack food market,” says Shivani Nyati, Head of Wealth at Swastika Investmart Ltd.

“The IPO price might have been perceived as too high considering the company's growth trajectory and the competitive landscape. Broader market conditions and investor cautiousness towards food companies might have dampened enthusiasm. Investors are advised to carefully consider their risk tolerance and long-term investment goals before holding onto their shares,” Nyati adds.

The ₹650 crore initial public offering (IPO) of Gopal Snacks, which was completely an offer for sale (OFS) by promoters and existing shareholders, was subscribed 9.50 times. The issue received bids of 10,80,83,438 shares against the offered 1,19,79,993 equity shares, at a price band of ₹381-401. The lot size was 37 shares and in multiples thereafter, which means the minimum application amount for retail investors was ₹14,837.

The quota reserved for qualified institutional buyers and non-institutional investors was subscribed 18.42 times and 10 times, respectively. The employee portion was booked 6.87 times, whereas, the retail quota was subscribed 4.22 times, as per the exchange data.

Prashanth Tapse, Senior VP (Research), Mehta Equities says, "Despite 100% OFS, Gopal received a healthy subscription demand from all sets of investors mainly on the back of its presence in the Indian fast-moving consumer goods sector and a prominent player with a diverse range of products including Namkeen and western snacks.”

“While considering subdued secondary market scenario and continued selling pressure seen in mid and small caps spaces, Gopal may be the victim and listing can be on a flat to muted note. The soft listing seems to be justified as the offer was 100% offer for sale and no funds would be coming into the company for growth.”

“We believe this listing gives an opportunity to investors to accumulate the growth story for the long term. Hence, considering all the parameters we recommend allotted investors to “HOLD” and while those investors who missed and wish to add can accumulate shares at any dip post listing for long term perspective only," says Tapse. 

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