Who does not like munching on some snacks like chips and biscuits? We are sure most of us do! Let’s take this one step further – how about investing in a company that makes these snacks? Sounds interesting, correct?
Gopal Snacks is all set to go public. Should you invest in it? Well, buying snacks is simple, but buying their stocks requires some thinking and analysis. This article will help you with the analysis and tell you everything you need to know about Gopal Snacks, its IPO, financials and more!
Also read: Navigating the vibrant landscape of the Indian consumer market
Who is Gopal Snacks?
Gopal Snacks is a producer and seller of namkeen and snacks in India and is headquartered in Rajkot, Gujarat.
History
Founded by Bipin Hadvani in 1994, Gopal Snacks is a business of passion and moral lessons that Hadvani learnt from his father. With a capital of ₹4,500 and some values from his father, Hadvani set out to Rajkot in 1990 to start his own business.
He was inspired by his father’s namkeen business in a tiny shop in his village, Bhadra. He planned to run a similar business with his relative in Rajkot. Everything went well until the two partners faced conflicts in their business approaches and decided to part ways in 1994. This gave birth to Hadvani’s solo venture, Gopal Snacks Pvt Ltd.
Mission
Gopal’s business began with his father’s principle, “Jo Hum Khana Pasand Kare Wahi Dusro Ko Khilana Hein”, which translates to “Sell the products that you enjoy eating”.
The firm works on the same principle and aims to serve Indians with delicious namkeen and snacks.
Vision: Gopal Snacks aspires to be India’s most trusted FMCG brand, leaving a lasting impression on millions of taste buds.
Gopal Snacks today
Today, Gopal Snacks is the fourth largest company in terms of market share, selling Indian savouries in the organised sector. It is also the largest manufacturer of gathiya (A Gujarati Snack) and snack pellets in India. The brand also had the largest cold storage facility in India as of 30 June 2023, with a capacity of 40,000 MT.
The brand’s products are available across ten states and two union territories, with a distribution network of over four lakh retailers. Gopal Snacks Ltd’s products list has 84 items, including namkeen, wafers, papad, flour, sweets, etc.
Gopal Snacks financials
| Particulars | FY 2023 | FY 2022 | FY 2021 |
| Revenue from operations (in ₹ million) | 13,946.53 | 13,521.61 | 11,288.61 |
| Profit after tax (in ₹ million) | 1,123.69 | 415.38 | 211.22 |
| Earnings per share (Basic) (in ₹) | 9.02 | 3.33 | 1.70 |
| EBITDA (in ₹ million) | 1,962.25 | 947.97 | 603.52 |
| Return on Equity % | 38.63% | 23.38% | 15.56% |
| Return on Capital Employed % | 43.08% | 18.69% | 13.48% |
Gopal Snacks IPO details
| IPO opening date | 06 March 2024 |
| IPO closing date | 11 March 2024 |
| Bidding date for anchor investors | 05 March 2024 |
| Issue size | ₹6,500 million |
| Face value | ₹1 |
| Minimum lot | 37 shares |
| Price band | ₹381 to ₹401 |
| Employee discounts | ₹38 |
Also read:Fast-Moving Consumer Goods (FMCG) Sector- A Safe Haven in Bear Markets?
Shareholding pattern
List of shareholders holding more than 1% on the date of filing the red herring prospectus:
| Shareholder | Shareholding percentage |
| Bipinbhai Vithalbhai Hadvani | 56.62% |
| Dakshaben Bipinbhai Hadvani | 12.15% |
| Gopal Agriproducts | 22.23% |
| Raj Bipinbhai Hadvani | 2.50% |
| Harsh Sureshkumar Shah | 1.96% |
| Axis Growth Avenues AIF – I | 1.48% |
| Ashoka India Equity Investment Trust PLC | 1.48% |
Fund utilisation plan
Since the IPO does not involve a fresh issue of shares and is entirely an offer for sale, the proceeds will be used to pay off the IPO expenses and then compensate the selling shareholders.
Of the ₹6,500 million IPO size, Bipinbhai will sell shares up to ₹800 million, Harsh Sureshkumar Shah will sell shares up to ₹500 million, and ₹5,200 million will be sold by Gopal Agriproducts Private Limited.
The firm’s objective behind issuing the IPO is to reap the benefits of being listed on the stock exchange. Gopal Snacks Ltd will be listed on National Stock Exchange and Bombay Stock Exchange, from 14 March 2023.
Is Gopal Snacks IPO for you?
| Peer comparison | ||||||
Company | Face value (₹) | P/E ratio | Revenue from operations (₹ million) | EPS (₹) | NAV(₹ per share) | RoNW (%) |
| Gopal Snacks Limited | ₹1 | – | ₹13,946.53 | ₹9.02 | ₹23.34 | 38.63 |
| Bikaaji Foods International Limited | ₹1 | 104.67 | ₹19,660.72 | ₹5.15 | ₹38.22 | 14.15 |
| Prataap Snacks Limited | ₹5 | 137.87 | ₹16,529.32 | ₹8.51 | ₹288.33 | 3.10 |
Consider investing because:
- The organised market holds 57% of the market share in India’s snacks market, with a CAGR of 11.7% between FY 2023 and FY 2027. Gopal Snacks holds a significant position in this space and stands number four in market share. The firm constantly works on promoting the brand by investing in marketing on digital media, radio and other sources. The firm has also sponsored Gujarat Giant in the Women’s Cricket Premier League.
- The firm has a diverse product portfolio, including ethnic snacks, western snacks and FMCG products. Gathiya and namkeen are the major products contributing to 68% of the firm’s revenue. Besides these, the firm has 82 other products, with 276 stock-keeping units. This variety helps the firm cater to the different needs of consumers. 75% of the firm’s revenue comes from SKUs sold at ₹5, making Gopal’s products highly affordable to consumers.
- The market for gathiya, in particular, is ₹14 billion in the Indian organised market for snacks and is expected to grow at 11.7% CAGR. Besides being a popular snack in Gujarat, gathiya is gaining popularity in other states, as well. This increasing popularity for gathiya is a positive aspect for Gopal since more than 35% of the firm’s revenue comes from here.
- The firm has six manufacturing facilities, of which three are primary and three are ancillary units. The average annual capacity of primary units in September 2023 was 303,668.76 MT. The company focuses immensely on quality across the different segments of manufacturing, from procuring raw materials to packing the end products.
- As of September 2023, Gopal had three depots and a distribution network of 617 distributors. It has 263 logistic vehicles helping in the timely delivery of products. The company has a long-standing relationship with distributors, with 69 of them being affiliated with Gopal for over ten years. These 69 distributors contribute to over 25% of the firm’s revenue.
Watch out for the following:
- The brand’s business is concentrated on gathiya, namkeen and snack pellets. Over 80% of the firm’s revenue has come from these categories in the last three fiscals. A dip in the demand for these products in the market can impact the firm’s business negatively.
- Over 70% of the firm’s business comes from Gujarat. This concentration again can harm the business if the state’s policies undergo rapid changes.
- Since the brand’s business deals with food products, the quality of the products is immensely important. The business is constantly exposed to risks like contamination, damage, etc., which can affect the quality, thereby harming the brand’s reputation.
- The brand has received several notices in the past from the Food Safety and Standards Act, about substandard quality of products and misleading advertisements. This can repeat in the future, again affecting the brand’s reputation and share prices.
Also read: Amul’s 50 years of excellence: PM Modi launches mega projects in Gujarat
Bottomline
Gopal Snacks is a well-known producer and seller of Indian and Western snacks. The firm is going public on 06 March 2024, to avail the benefits of stock market listing.
While the firm is profitable and has a good position in the industry with a significant market share, it also has encountered issues in the past about the quality of its products. Hence, it is essential for investors to analyse their risk appetite thoroughly before deciding to invest in Gopal Snacks.
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