IPO Size: Rs. 409 cr

• Fresh Issue of Rs. 130 cr for (i) Rs.60 cr debt repayment of Rs. 205 cr working capital loan (ii) Rs. 45 cr greenfield capex for processing plant in Darjeeling
• Offer for Sale (OFS) of Rs. 279 cr: 80% by Motilal Oswal PE (25% stake to drop to 5%) and balance by promoters (75% stake to drop to 64% post IPO)

Price band: Rs. 306-322 per share  

M cap: Rs. 1,301 cr, implying 31% dilution

IPO Date: Mon 22^nd Sep to Wed 24^th Sep 2025, Listing Mon 29^th Sep 2025

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

West Bengal focused Kitchen Staples Company

Ganesh Consumer is a Kolkata based manufacturer of packaged staples like atta, besan, spices, being the 3^rd largest brand for packaged whole wheat flour and largest in sattu and wheat-based derivatives (maida, sooji, dalia) in East India. Sold under the ‘Ganesh’ brand, 77% of Rs. 850 cr revenue is B2C sales while ~85% is generated from West Bengal alone, implying a regional play.

Stagnant Bottomline

In past 3 fiscals, margin have contracted, with PAT remaining stagnant at Rs. 27 cr between FY22 to FY24, despite a 29% revenue CAGR during this period. Just before the IPO, PAT jumped to Rs. 35 cr, which creates doubts on financials.

Material cost is 78% of revenue, leaving little scope for margin expansion, especially in food business with low value-add and commoditized nature of product.

On equity of Rs. 36 cr (FV Rs. 10), FY25 EPS stood at Rs. 9.7, with RoE of 15% on networth of Rs. 226 cr. Working capital is well managed with negligible debtors and outstanding inventory at ~1.2 months, at year end.

Objects of Fresh Issue

Company’s gross debt stood at Rs. 50 cr as of 31.3.25, which surged to Rs. 205 cr, as of 31.7.25, may be for raw material procurement. Company is raising Rs. 60 cr via IPO for debt repayment but has also given Rs. 26 cr loans to promoter and related parties, which indicates poor capital allocation.

Also, interest income on these loans to related parties accounts for 10% of PBT, inflating net margin, to 4.2%, which is actually 3.8%, excluding other income.

Company is establishing a new processing plant for sattu and besan, to be funded via IPO, and estimated commencement by Mar 2027. Thus, margin benefit is unlikely over the next 18 months.

Aggressively Priced

Mcap of Rs. 1,301 cr implies a PE multiple of 29x, on FY26E EPS of Rs. 11. This is expensive for low single-digit margin, stagnant profits for 3 years, regional play with no significant brand strength (only Rs. 650 cr of B2C sales after being in business for 25+ years).

It is futile to compare Ganesh Consumer to large diversified players AWL Agro or Patanjali, which are national brands with 50x topline. Anyways, Fortune brand owner AWL Agro is ruling at a PE of 29x. Instead, company can be benchmarked to rice producers like LT Foods, KRBL, Chamanlal Sethia, or maize-to-starch processors like Sukhjit Starch or Regaal Resources, all ruling between PE multiples of 14x to 25x, for similar or larger topline, single digit margin and median RoE in mid-teens. Thus, Ganesh Cosumer’s IPO pricing is steep.