Baba Food Processing, an agro-food manufacturing company, experienced a mixed debut on the National Stock Exchange (NSE) SME platform today, with its shares opening at the issue price of Rs 76 but subsequently declining by 5% to close at Rs 72.2. Despite this initial dip, the company's shares still enjoyed a 13% premium over the issue price in the grey market.
The initial public offering (IPO), which launched on November 3 with a price band of Rs 72-76, aimed to raise Rs 33 crore through the issuance of approximately 43.42 lakh shares. By Sunday, the offering was heavily oversubscribed, drawing significant interest from various investor groups. Retail investors subscribed 60 times their allocated quota, non-institutional investors subscribed 84 times, and qualified institutional buyers showed robust demand by subscribing 147 times their quota.
Proceeds from the IPO are earmarked for strategic investments in Panchakanya Foods Private Limited (PFPL), a wholly owned subsidiary of Baba Food Processing. The funds are intended for:
- Establishing a state-of-the-art manufacturing unit in Patna, Bihar which will include an ultra-modern automated roller flour mill and a chakki whole wheat atta mill.
- Enhancing the company's existing factory in Nagri, Ranchi with machinery to produce chickpea flour (Besan) and roasted gram flour (Sattu).
- Repaying certain unsecured borrowings to strengthen the company's financial position.
Horizon Management served as the lead manager for the IPO, with Mas Services Limited acting as the registrar. Nikunj Stock Brokers was appointed as the market maker, ensuring liquidity for the shares post-listing.
The IPO's performance comes amidst other market activities, including ASK Automotive's successful debut and Tata Technologies' anticipated public offering scheduled for November 22.
Investors have shown interest in Baba Food Processing due to its role in the agro-food sector, a vital industry in India's economy. The company's focus on expanding its manufacturing capabilities and product offerings may have contributed to the strong subscription rates observed during the IPO period.
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