Orkla India's initial public offering (IPO), which opens on October 29, 2025 and closes on October 31, 2025, has generated considerable interest in the market. The IPO aims to raise ₹1,667.54 crore entirely through an offer for sale (OFS). With established brands like MTR and Eastern under its umbrella, the company holds a significant position in the Indian packaged food sector. The price band for the IPO is set at ₹695-₹730 per share, valuing the company at around ₹10,000 crore at the upper end of the issue.

Company Overview

Orkla India, formerly known as MTR Foods Limited, has a long-standing presence in the Indian food industry. Its portfolio includes approximately 400 products, including blended and pure spices, ready-to-cook (RTC) and ready-to-eat (RTE) meals. The company sells an average of 2.3 million units daily and ranks among the top four players in its segment by revenue. Orkla India has three business units: MTR, Eastern, and International Business. The International Business unit caters to the Indian population in over 40 countries.

Financial Performance

Orkla India's financial performance presents a mixed picture. While the company has demonstrated consistent revenue growth, its profit after tax (PAT) slipped slightly between FY23 and FY25. However, the company's total debt has decreased by 24% over the same period.

• Revenue: Orkla India has shown consistent revenue growth, driven by strong brand loyalty and repeat purchases in its core spices segment. In FY25, the company's revenue grew by 1.6% YoY to ₹2394.7 crore. Reported consolidated total income for FY25 was ₹2,455.24 crore.
• Profitability: The company's EBITDA margin improved to 16.15% in FY25 from 14.39% in FY24 and 14.19% in FY23. Net profit in FY25 stood at ₹255.69 crore. Between FY22 and FY25, EBITDA and PAT grew 18.6% and 29.7% CAGR, respectively, due to strong export and cost efficiency improvements.
• Debt: Orkla India is virtually a debt-free company, generating stable cash flows of ₹300-400 crore annually.

Growth Drivers and Strategies

Several factors contribute to Orkla India's growth potential:

• Strong Brands: MTR and Eastern are well-recognized brands with a strong market share, particularly in Karnataka and Kerala. The company's dual-brand strategy enhances market penetration and brand loyalty.
• Wide Distribution Network: Orkla India has a strong distribution network with over 800 distributors and 1,800 sub-distributors across 28 states and six union territories. The company also has a growing presence in e-commerce and quick commerce.
• Export Presence: Orkla India exports to 45 countries, including the Middle East, US, Canada, Australia, and New Zealand.
• Market Trends: The Indian food market exhibits strong fundamentals, driven by a growing population, rising disposable incomes, and increasing demand for quality packaged foods. The shift towards nuclear families, urbanization, income growth, and a rising female workforce are also boosting demand for convenience foods and packaged spices.

Risks and Concerns

Despite its strengths, Orkla India faces certain risks:

• Revenue Concentration: A significant portion of the company's revenue comes from South India, making it vulnerable to regional economic fluctuations. Approximately 70% of total revenue is contributed from South India.
• Commodity Price Volatility: Fluctuations in the prices of raw materials such as chili, turmeric, and coriander can affect profit margins.
• Competition: The company faces intense competition from other FMCG giants like ITC, Tata Consumer Products, and MDH.
• Regulatory Scrutiny: The company faces regulatory scrutiny, with 124 FSSAI-related proceedings, mostly related to labelling and acceptable levels of pesticide residues.

Valuation and Investment Perspective

At the upper end of the price band (₹730), the stock is expected to be valued at over 38 times its TTM earnings and 3.9 times its book value. In comparison, Tata Consumer Products trades at a higher P/E and P/B ratio. The grey market premium (GMP) for Orkla India's IPO is positive, indicating investor interest.

SBI Securities has assigned a "Neutral" rating to the IPO, while Arihant Capital has recommended a "Subscribe for long term" stance.

Conclusion

Orkla India's IPO presents a mixed bag for investors. The company has strong brands, a wide distribution network, and a growing export presence. The Indian packaged food market also offers significant growth opportunities. However, investors should be mindful of the company's regional concentration, commodity price volatility, and competitive landscape. Investors with a long-term investment horizon and a moderate risk appetite may consider subscribing to the IPO.