Orkla India
IPO Size: Rs. 1,667 cr, Entirely Offer for Sale (OFS)
- 90% of OFS by Norwegian promoter (90% stake to drop to 75% post IPO)
- 10% of OFS by the promoters of Eastern (10% stake to shrink to 8%)
Price band: Rs. 695-730 per share
M cap: Rs. 9,782 cr, implying 17% dilution
IPO Date: Wed 29th Oct to Fri 31st Oct 2025, Listing Thu 6th Nov 2025
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
Legacy Foods Brand Owner
Orkla India is a spices and convenience food (ready-to-eat, ready-to-cook) company owning brands MTR and Eastern, which are 101 and 41 year old brands respectively. Company enjoys 19% all India market share, in convenience foods, with leading presence in South Indian states of Karnataka, Kerala, Andhra Pradesh, Telangana.
Acquisition of ‘Eastern’
In Sep 2020, Orkla acquired 68% stake in Eastern Condiments, India’s largest branded spice exporter, for past 24 years, for close to Rs. 1,400 cr, at a valuation of Rs. 2,000 cr, when historic topline was at Rs. 900 cr and 12% operating margin.
20% of Orkla India’s topline now comes from exports, mainly to Middle East and North America, with exports growing at 15% CAGR in past 2 fiscals.
Topline Growth Impacted
Due to 30% drop in chilly prices in FY25, which accounts for 30% of company’s product basket, FY25 revenue growth was limited to mere 1.6% YoY to Rs. 2,395 cr, on 3.5% volume growth. Even in FY23 and FY24, volume growth was <2%, although surged to 8.5% in Q1FY26. Indian spices and ready-to-eat, ready-to-cook industries are growing in double digit, but company’s revenue growth track record fares poorly.
Margins Expand
On lower material cost, operating EBITDA margin (excluding other income) strengthened to 16.6% in FY25, from 14.6% in FY24. Operating EBITDA stood at Rs. 396 cr in FY25, with PAT of Rs. 256 cr and net margin of 11%.
Q1FY26 revenue rose 6% YoY to Rs. 597 cr, with operating EBITDA up 9% YoY to Rs. 112 cr. Q1FY26 PAT was at Rs. 79 cr, with 13% net margin and Rs. 6 EPS (FY25 EPS was at Rs. 19). Q1 is seasonally strong for company’s margin as inferred from Q1FY25 EBITDA of 18.2% slipping to 16.6% in full year FY25. Thus,
Pricing factors-in the Growth Track Record
M cap of about Rs. 9,800 cr, leads to a PE multiple of 35x, on an estimated FY26E EPS of Rs. 21. This is not expensive for a branded food player with double digit net margin, but factors in a patchy growth track record. Company’s Q1FY26 volume growth and margins must not be extrapolated due to seasonality.
Comparison with fast growing food companies such as Tata Consumer, Bikaji Foods, Mrs Bectors is futile. But smaller convenience food exporter ADF Foods, has m cap of Rs. 2,500 cr, on Rs. 600 cr topline and 12% net margin, implying a PE of 35x. FMCG sector has varied multiples, with even a biggie like Emami trading at a PE of 29x, on Rs. 3,800 cr topline, 21% net margin but low growth. Thus, Orkla IPO must not be viewed merely from a PE multiple point of view only.
30th Oct 2025 at 06:15 pm
29th Oct 2025 at 08:16 pm