Orkla India IPO subscribed 78% on Day 1, GMP declines: Should you apply?

Orkla India Limited has a strong brand recall and has established a leading position in the South Indian market.

The Rs 1,667-crore initial public offering of Orkla India, the company which owns popular packaged food brands MTR, opened for public bidding on October 29. The IPO has been subscribed 78 percent on Day 1.

The maiden public issue of the company received bids 1.26 crore shares, as against the offer size of nearly 1.6 crore shares. Employees and Non Institutional Investors have fully subscribed the portions reserved for them. Retail investors meanwhile subscribed 90 percent of their reserved portion. Qualified Institutional Buyers (QIB) booked 2 percent of the portion kept for them.

Ahead of listing, the unlisted shares of the company were trading with nearly 9 percent grey market premium (GMP) over the IPO price, according to data on Investorgain. While this indicated towards a decent listing, the GMP quoted by the site has fallen from the 11 percent quoted yesterday, and 20 percent quoted on October 24.

According to IPO Watch, the unlisted shares of the company were trading with more than 14 percent GMP over the IPO price.

Orkla India launched its IPO to raise Rs 1,667 crore entirely through an offer for sale (OFS) of 2.28 crore shares by the existing promoter Orkla Asia Pacific, and other selling shareholders Navas Meeran and Feroz Meeran. This means that none of the IPO proceeds will go to the company as there is no fresh issue component in the IPO.

The company has set a price band of Rs 695-730 per share for its maiden public issue. Retail investors can bid for a minimum of 20 shares, requiring a minimum investment of Rs 14,600, and in multiples thereafter.

The IPO will remain open for public bidding between October 29 and October 31. The share allotments are likely to be finalized by November 3, and the shares are scheduled to debut on stock exchanges on November 6.

A day before the IPO opened for public bidding, Orkla India announced that it has raised Rs 499.6 crore from 30 institutional investors via anchor book on October 28. Nippon Life India, Aditya Birla Sun Life AMC, Ashoka WhiteOak, Nomura Funds, Government Pension Fund Global, Jupiter Global Fund, Pinebridge Global Funds, Baroda BNP Paribas MF, LIC MF, and Edelweiss were the institutional investors who participated in the anchor book.

Tata Investment Corporation, Bajaj Finserv MF, Aurigin Master Fund, Viridian Asia Opportunities Master Fund, Societe Generale, and Copthall Mauritius Investment also invested in the company.

India’s spices and convenience foods market is witnessing strong growth, driven by evolving consumer preferences, rising incomes, rapidly growing quick-commerce platforms and rapid urbanization, said Master Capital Services.

With a strong heritage, local flavor expertise, and focus on automation, quality, and brand trust Orkla India Limited, through its flagship brands MTR and Eastern, is strategically positioned to capitalize on the strong growth in India’s spices and convenience foods sectors, Mater Capital further said, while adding that investors can consider the IPO as a potential long-term investment opportunity.

Angel One gave a ‘Subscribe’ rating to the IPO. “At the upper band price of ₹730, Orkla India is valued at a post-IPO P/E of 31.68x, which appears fairly priced considering its diversified product portfolio, strong market presence across key FMCG categories, resilient financial performance and long-term growth visibility,” it said.

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