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Prataap Snacks Ltd jumped as much as 40.6 per cent to Rs 1,318.80 in its trading debut on Thursday against the IPO price of Rs 938. The shares got listed at Rs 1,250 on the BSE, a 33.23 per cent premium to the issue price of Rs 938.
Prataap's P/E ratio valued at 202 times its fiscal 2017 earnings, say Angel Broking estimates.
The company's gross margins during fiscal years 2013-2017 have been between 26 per cent and 31 per cent, which were lower compared with the gross margin of about 40 per cent for peer DFM Foods Ltd in fiscal 2017, it says.
To justify such high valuations, remarkable improvement in profitability is required, which may come at the cost of lower growth, analysts at Angel Broking say.
DFM Foods surged as much as 5.5 per cent.
The Rs. 482-crore initial public offer (IPO) was oversubscribed 47.39 times during September 22-26.
According to NSE data, qualified institutional buyers (QIBs) portion was oversubscribed 76.89 times, non-institutional investors 101.15 times and retail investors 8.48 times. The IPO was in a price band of Rs. 930-938 per share.
The company, which makes products under the ‘Yellow Diamond’ brand, aims to use the proceeds for expanding capacity, marketing and brand-building activities and for clearing the debt on its books.
Edelweiss, JM Financial and Spark Capital were managing the issue.
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