IPO Note : Orkla India Ltd by Choice Broking Ltd
Salient features of the IPO:
* Orkla India Ltd.(Orkla) The Company is a multi-category Indian food enterprise with operations spanning several decades, offering a broad and diverse range of products that cover every meal occasion — from breakfast, lunch and dinner to snacks, beverages and desserts. Under the two flagship brands, MTR and Eastern, the Company delivers authenticity and tradition, deeply rooted in South Indian culinary heritage. In Fiscal 2024, according to a report by Technopak Advisors, the Company ranked among the top four companies in terms of revenue from operations in the select universe of leading branded spices and convenience food peers.
* The public issue comprises solely of OFS of Rs. 1,587.6 - 1,667.5cr, thus the company will not receive any proceeds from the public issue. The promoter and promoter group entities are participating in the OFS and offloading 2.06cr shares and Individual public shareholders are also participating and offloading 0.23cr shares.
Key competitive strengths:
* Market leader — building & scaling household food brands with local taste insight.
* Multi-category innovation-driven food company.
* Broad distribution — deep regionally, wide globally.
* Large-scale manufacturing with strong quality & supply chain.
* Experienced, tenured management backed by global parent.
* Capital-efficient model delivering consistent profitable growth.
Business strategy:
* Drive household penetration and usage of its products in core markets.
* Expand presence in international markets through a robust growth strategy.
* Selectively expand the product portfolio to strengthen and extend core offerings.
* Drive operational efficiencies to improve margins and cash conversion.
* Continue to enhance capital efficiency.
* Strategically acquire leading brands and businesses.
Risk and concerns:
* General slowdown in the global economic activities
* Raw and packaging-material price volatility could squeeze margins.
* Spoilage or damage from improper processing/storage poses quality risks.
* Manufacturing interruptions or under-used facilities may hurt operations.
* Regulatory actions or compliance failures in food safety can impact reputation and business.
* Heavy food-health & safety regulation imposes cost and operational burdens.
* High sales concentration in South India increases regional risk exposure.
* Competition V
Valuation Overview and IPO Rating
At a current trailing P/E of approximately 38.1× and an FY25E P/E of roughly 31.7×, Orkla India Ltd is trading at a discount relative to its peer group. While PAT dipped in FY24, the decline was driven solely by a nonrecurring tax adjustment and is not expected to repeat. The company enjoys strong brand equity (notably through MTR), a low leverage position, and excellent returns—ROIC of approximately 30.8% and ROE around 10.4%. Given the modest risk profile, we assign it a SUBSCRIBE rating.
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SEBI Registration no.: INZ 000160131
