Bad timing? Gopal Snacks slips 10% below issue price on debut day

• The stock listed at ₹360, which is ₹41 below its issue price of ₹401.
• Analysts had been worried that its listing would be affected by the small-cap stock crash.
• The stock of J G Chemicals slipped 16% below the issue price on its debut on Wednesday.

Rajkot-based namkeen maker Gopal Snacks listed at a 10% discount to its issue price on Wednesday. The stock closed at ₹360, which is ₹41 below its issue price of ₹401. Its market capitalization is at ₹4,486 crore, as per the Bombay Stock Exchange.

Gopal Snacks makes a wide variety of savoury snacks under the Gopal brand. Its portfolio has 84 products across 276 stock-keeping units.

Low expectations and bad timing

Analysts had been worried that the company’s listing would be affected by the small-cap stocks crash. Yesterday, the stock of J G Chemicals slipped 16% below the issue price on its debut, in line with a crash in the broader stock markets.

“While considering subdued secondary market scenario and continued selling pressure seen in mid & small caps spaces, Gopal may be the victim and listing can be on a flat to muted note,” said Prashanth Tapse, senior VP of research at Mehta Equities.

Yet it has seen good subscription levels, and interest before the small stocks’ crash.

A long-term prospect?

The popular ghatia maker’s ₹650 crore initial public offer was subscribed nine times the shares on offer with good interest from institutional investors. It also raised ₹194 crore from anchor investors like DSP Mutual Fund, Quant Mutual Fund, IIFL Wealth & Asset Management and more; ahead of the offer.

“We believe this listing gives an opportunity to investors to accumulate the growth story for the long term. Hence, considering all the parameters we recommend allotted investors to ‘hold’ and those who missed and wish to add can accumulate it at any dip post listing for long-term perspective only," adds Tapse.

The last few market debuts have given mixed listing gains, even ahead of the recent market correction. Here are the listing gains of the last few market debuts.

Company	Listing gains
J G Chemicals	-16%
Bharat Highways InVit	2%
R K Swamy	-13%
Mukka Proteins	57%
Exicom Tele-Systems	87%

Company overview

Apart from ethnic snacks like namkeen and gathiya, Gopal Snacks also makes wafers, extruder snacks and snack pellets. It also manufactures other semi-perishable FMCG products like papad, spices, gram flour or besan, noodles, rusk and soan papdi. Its products are sold across 523 locations in ten states and two union territories.

Gopal Snacks distribution network comprises three depots and 617 distributors. It operates six manufacturing facilities in India, two of the three primary manufacturing facilities located in Rajkot and Modasa in Gujarat and one in Nagpur, Maharashtra. It also has three ancillary manufacturing facilities located in Rajkot and Modasa.

“Gopal Snacks enjoys a 31% share in the gathiya sub-segment within ethnic namkeens with eight varieties of gathiya. It is the second-largest ethnic snack manufacturer in competitive Gujarat and the fourth largest in India,” said Anand Rathi in its IPO note.