Gopal's not-so-namkeen listing

There was a new listing and as way widely expected, it was muted. Gopal Snacks got listed on the BSE at Rs.350 v/s IPO price of Rs.401. It went down to Rs.342 and it is now trading at Rs.378 levels.

The IPO was overall subscribed 9.02x of which QIBs portion was at 17.5x, HNIs at 9.5x and Retail investors at 4.01x.

Gopal Snacks is a 30 year old Rajkot based company and India’s largest gathiya maker, with 70% of its Rs. 1,400 cr revenue generated from SKUs priced at Rs. 5 per unit. It is a regional player with 78% revenue from Gujarat. Thus, company’s strength lies in cost and local distribution and it is not really a brand play.   

In our IPO Analysis we had concluded – the company’s brand strength is not apparent, and it needs to demonstrate healthy topline growth. Hence, our recommendation is to ‘skip’ the IPO and track financial performance post-listing.