Orkla India IPO sails through on Day 2 despite soft grey market cues

The ₹1,667.54-crore initial public offering (IPO) of Orkla India Ltd., the parent company of packaged foods maker MTR Foods, was fully subscribed on the second day of bidding, Thursday, October 30. The issue has been subscribed 1.18 times so far.

The IPO will remain open for subscription until Friday.

Retail investors have subscribed to 1.24 times their allotted quota of 79.84 lakh shares, while Non-Institutional Investors (NIIs) have bid for 2.58 times their 34.21 lakh share allocation.

However, the Qualified Institutional Buyers (QIBs) segment has seen muted participation so far, with just 2% of the shares reserved for them being subscribed.

In the grey market, Orkla India's shares are quoting at a modest premium of ₹68 over the issue price of ₹730 apiece. This implies a potential listing price of around ₹798, translating into a limited upside of about 9%.

However, it is important to note that grey market premiums are just an indicator of how the company's shares are stacked up in the unlisted market and are subject to change rapidly.

The company is raising ₹1,667.54 crore through an offer for sale (OFS) of 2.28 crore shares. The issue aims to provide an exit opportunity and liquidity to existing shareholders, rather than raise fresh capital for the business.

The IPO has a price band of ₹695-₹730 per share. Investors can bid for a minimum of one lot comprising 20 shares (₹14,600 minimum investment at the upper band) and in multiples of 20 shares thereafter.

As the entire issue is an OFS, the company will not receive any proceeds from the offer. The funds will go to existing shareholders, Orkla ASA, Orkla Asia Holdings AS, and Orkla Asia Pacific Pte Ltd., who are partially offloading their stakes.

At the upper end of the price band, Orkla India is valued at a P/E of 39x based on FY25 diluted earnings per share (EPS).

Company overview

Orkla entered India in 2007 with the acquisition of MTR Foods and later expanded through acquisitions such as Eastern Condiments, a heritage spice brand in Kerala, acquired in 2021.

The company has built a strong presence in the branded food segment, with spices contributing about 66% of total revenue and the remainder coming from convenience foods.

In an interaction with CNBC-TV18, the company said its revenue growth of around 5% CAGR over FY23-FY25 reflects the ongoing consumption slowdown and high food inflation. Historically, MTR clocked 13% revenue growth between 2010-2020 and 13.3% between 2022-2024.

For the first quarter of FY26, Orkla India reported volume growth of 8.5%. The company said half of its margin expansion was driven by a fall in raw material costs, while the rest came from value-added products, outsourcing of low-value manufacturing, digitisation, and cost efficiencies.

Despite inheriting seven factories from Eastern Condiments, capacity utilisation remains low at 46%, offering ample scope for expansion.

The management added that the company does not require fresh capital infusion, as it generates ₹300-400 crore in annual cash flow and carries no debt on its balance sheet.

Following the IPO, Orkla India shares are scheduled to list on the NSE and BSE on November 6, 2025.