Gopal Snacks Private Limited
Founded in 1999 in Rajkot, Gujarat, by the Hadvani family, Gopal Snacks began its journey by supplying snacks to the local market. With a focus on quality and authentic flavors, the company quickly gained popularity, expanding its product line to include a variety of namkeens, gathiyas, western snacks, and even sweets. Today, Gopal Snacks boasts a presence across 10 states and 2 Union Territories, offering over 80 products under its flagship brand "Gopal."
Gopal Snacks' success stems from several key strengths. Their extensive distribution network, coupled with a strong sales and marketing team, ensures widespread reach and brand visibility. Additionally, their focus on quality ingredients and unique flavors, particularly in the gathiya segment, sets them apart from competitors.
However, the Indian snack market is a battleground, with established national players like Nestle and Britannia, as well as regional powerhouses like Bikaji, vying for market share. Emerging players focusing on healthier alternatives also pose a challenge.
Revenue and Profit
Gopal Snacks has shown impressive growth in its revenue, sales, and profit over the years. According to its draft red herring prospectus (DRHP) filed with SEBI, the company's revenue from operations increased from Rs 4,068.9 million in fiscal 2021 to Rs 5,551.2 million in fiscal 2023, representing a compound annual growth rate (CAGR) of 16.7%. Its net profit also increased from Rs 247.8 million in fiscal 2021 to Rs 403.6 million in fiscal 2023, representing a CAGR of 25.8%. The company's earnings before interest, tax, depreciation, and amortization (EBITDA) margin improved from 13.9% in fiscal 2021 to 15.4% in fiscal 2023.
Unique Features
Gopal Snacks has a strong focus on product innovation and quality that sets it apart from its competitors. The company offers a variety of products that cater to different tastes and preferences of its customers. Some of its unique products include gathiya (a traditional Gujarati snack), vanela gathiya (a soft and fluffy version of gathiya), fulvadi gathiya (a crispy and spicy version of gathiya), moong dal (a roasted split green gram snack), extruded snacks (such as cheese balls and rings) and snack pellets (such as pasta shapes and wheels). The company also offers a premium range of products such as dry fruits gathiya, kesar pista gathiya, and chocolate-coated wafers.
The company ensures that its products are made with high-quality ingredients and adhere to strict hygiene standards. The company has obtained various certifications such as ISO 22000:2005, FSSAI, HACCP, and BRC for its manufacturing facilities. The company also uses advanced technology such as automated frying systems, nitrogen flushing machines, and metal detectors to ensure consistent quality and freshness of its products.
Investment in Research and Development
Gopal Snacks has invested significantly in research and development (R&D) to enhance its product portfolio and improve its operational efficiency. The company has a dedicated R&D team comprising food technologists, engineers, and quality control experts who work on developing new products, improving existing products, optimizing processes, and reducing costs. The company has also collaborated with external agencies such as the Central Food Technological Research Institute (CFTRI) and the Indian Institute of Food Processing Technology (IIFPT) for technical assistance and guidance.
The company's R&D expenditure increased from Rs 18.4 million in fiscal 2021 to Rs 32.7 million in fiscal 2023, representing a CAGR of 32%. Some of the outcomes of the company's R&D efforts include launching new products such as cheese wafers, multigrain wafers, ragi wafers, and nacho chips; introducing new packaging formats such as zipper packs; reducing oil consumption by using vacuum frying technology; and increasing shelf life by using modified atmosphere packaging technology.
Upcoming IPO
The subscription period for Gopal Snacks' initial public offering (IPO) begins today, March 6, and ends on Monday, March 11. The anchor investors have contributed ₹193.94 crores to the company. On Tuesday, March 5, the business informed the stock exchanges that it had allotted 48,36,657 equity shares, valued at ₹401 each, to anchor investors.
The initial public offering (IPO) price band for Gopal Snacks has been set at ₹381 to ₹401 per equity share with a face value of Re 1. The lot size is 37 equity shares, further divided into multiples of 37 equity shares.
For qualified institutional buyers (QIBs), non-institutional institutional investors (NIIs), and individual investors, it has reserved a minimum of 35% of the shares in the public offering, but not more than 50% of the shares overall. Shares of reserved equity amounting ₹3.5 crore have been allocated to the employee part. Employers who are qualified to bid in the employee reservation category will receive a discount of ₹38 per equity share.
The promoters of the company are Gopal Agriproducts, Bipinbhai Vithalbhai Hadvani, and Dakshaben Bipinbhai Hadvani. The company sells a variety of savoury goods under the "Gopal" name. Fast-moving consumer items including papad, spices, noodles, rusk, besan flour, and soan papdi are among them. Other snacks from different cultures, like namkeen and gathiya, are also included, as are wafers, extruded snacks, and snack pellets.
According to the red herring prospectus (RHP), Prataap Snacks Ltd. (P/E of 137.87) and Bikaji Foods International Ltd. (P/E of 104.67) are the company's listed rivals.
Gopal Snacks Limited saw a 170.52% increase in profit after tax (PAT) between March 31, 2022, and March 31, 2023, despite a 3.1% increase in revenue.
Gopal Snacks IPO Subscription Status
The first day of the issue generated good interest in the employee component, despite its slow start. The day's IPO subscription status for Gopal Snacks was 14% at 14:48 IST as per NSE data. The retail portion has been subscribed to 24%, Non-Institutional investors have been booked 7%, Qualified Institutional Buyers portion is yet to be booked. The employee portion has been subscribed 57%.
Gopal Snacks IPO has received bids for 17,23,201 shares against 1,19,79,993 shares on offer, at 14:48 IST, according to data from the NSE.
IPO Detail
The promoters and other investors are offering ₹650 crore worth of equity shares for sale as part of the Gopal Snacks initial public offering (IPO).
There will be another selling stakeholder, Harsh Sureshkumar Shah (selling shares worth ₹50 crore), in addition to promoter Bipinbhai Vithalbhai Hadvani (selling shares worth ₹80 crore) and Gopal Agriproducts Private Ltd (selling shares worth ₹520 crore).
Intensive Fiscal Services Private Limited, Axis Capital Limited, and JM Financial Limited are the book-running head managers for the Gopal Namkeen IPO, while Link Intime India Private Ltd is the registrar.
Should You Subscribe?
Here are some factors to consider when deciding whether to subscribe to the Gopal Snacks Limited IPO:
Strengths:
Strong brand recognition: Gopal Snacks enjoys a strong brand image, particularly in its core market of Gujarat.
Diversified product portfolio: The company offers a wide range of products, catering to diverse consumer preferences.
Vertically integrated operations: Gopal Snacks controls its production process from raw material procurement to final packaging, potentially leading to cost efficiencies.
Focus on quality: The company prioritizes using high-quality ingredients, fostering brand loyalty and customer trust.
Financial stability: Gopal Snacks has demonstrated consistent profitability, indicating a strong financial foundation.
Weaknesses:
Limited operational history: As a relatively young company, Gopal Snacks may have a shorter track record compared to established competitors.
Reliance on regional markets: A significant portion of the company's revenue comes from Gujarat, which could pose a risk if they struggle to expand into new markets.
Competition: The Indian snack market is highly competitive, with established players and emerging brands vying for market share.
Opportunities:
Growing snack market: The Indian snack market is expected to reach ₹5.3 trillion by 2025, presenting an opportunity for growth.
Expansion plans: Gopal Snacks aims to expand its geographic reach and product portfolio, which could fuel future growth.
Investment in R&D: The company's focus on innovation could help them stay ahead of the curve in a dynamic market.
Threats:
Volatile raw material prices: Fluctuations in the prices of key ingredients could impact profitability.
Changes in consumer preferences: Consumer preferences can shift quickly, and Gopal Snacks needs to adapt to these changes to remain relevant.
Regulatory changes: New regulations or changes in tax policies could impact the company's operations and profitability.
FAQs
Q: What is an IPO?
An Initial Public Offering (IPO) is the first time a private company sells its shares to the public on a stock exchange.
Q: How can I apply for an IPO?
You can apply for an IPO through your brokerage account or a participating bank's online platform.
Q: What is ASBA?
ASBA (Application Supported by Blocked Amount) is a method of applying for IPOs where your bid amount gets blocked in your bank account only if your application is selected for allotment.
Q: Can everyone apply for an IPO?
While most IPOs are open to retail investors, some may have eligibility criteria based on income, investment experience, or other factors. Check the IPO prospectus for details.
Q: What is the minimum investment amount for an IPO?
The minimum investment amount varies depending on the IPO and the lot size (minimum number of shares) set by the company.
Q: What happens if my IPO application is not selected?
If your application isn't selected, the blocked amount (if applied through ASBA) will be released back to your bank account.
Q: When will I receive the shares if my application is successful?
Shares are typically credited to your Demat account within a few days after the allotment is finalized.
Q: Can I sell my IPO shares immediately after listing?
Yes, you can generally sell your IPO shares as soon as they are listed on the stock exchange. However, consider market conditions and investment goals before making any decisions.
Q: Can I make payment for an IPO through UPI (Unified Payments Interface)?
While not all platforms offer UPI yet, some online platforms and brokerages are increasingly integrating UPI as a payment option for IPO applications. Check with your chosen platform for confirmation.
Q: What are the risks involved in investing in IPOs?
IPOs involve inherent risks, as they are often from younger companies with less established track records. Their future performance is uncertain, and the share price can be volatile after listing. Carefully research the company and the IPO details before investing.