Gopal Snacks seems headed for a weak debut on March 14, with analysts saying that a subdued secondary market and continued selling seen in mid and smallcaps could weigh on the listing.
"The soft listing seems to be justified as the offer was 100 percent offer for sale and no funds would be coming into the company for growth. We believe this listing allows investors to accumulate the growth story for the long term," Prashanth Tapse of Mehta Equities said.
Amit Goel from Pace 360 said Gopals' fundamentals appear weak due to its reliance on a narrow set of products and regions.
"While it has a robust presence in Gujarat, it lacks strength in other regions. Operating in a fragmented market with tight margins, it faces strong competition", the analyst said.
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StoxBox's Parth Shah said the company leveraged its experience and understanding of the preferences of its customers and target markets to develop a variety of products, which enabled it to strengthen its foothold in the Indian snacks industry. But, he, too, expects a tepid debut, “without fetching any premium over its subscription price".
The issue, a pure offer for sale, was subscribed 9.02 times, as investors picked 10.81 crore equity shares against an offer size of 1.19 crore.
Qualified institutional buyers took the lead in supporting the public issue, picking 17.50 times their allotted quota of shares, followed by non-institutional investors who bought 9.5 times the portion set aside for them.
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