Orkla India Ltd IPO: Bringing India’s Spice & Convenience Food Revolution to the Market-Should You Subscribe?

At a Glance

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Company and Its Business Operations

Orkla India Ltd., formerly MTR Foods Pvt Ltd, is a multi-category Indian food company operating under the global Norwegian parent Orkla ASA. The company’s business model spans two core product segments—spices (blended and pure) and convenience foods (ready-to-cook and ready-to-eat) under legacy brands such as MTR and Eastern. Its geographic presence covers India (with a strong market share in states such as Karnataka and Kerala) and exports to 40+ countries. The company has undertaken milestones such as the acquisition of Eastern Condiments in March 2021 and in October 2023 reorganised operations into three business units: MTR, Eastern and International Business.

Industry Outlook

India’s packaged food industry is estimated to grow at ~11 per cent CAGR by FY29, driven by rising demand for convenience and branded products. The domestic market is supported by urbanisation, changing food habits, growth in e-commerce and a shift from traditional to branded products. Globally, the convenience food market continues to expand as consumers seek ready-to-eat options and premiumisation. Orkla India is well placed to benefit from both domestic tailwinds and global export opportunities.

Objects of the Issue

The entire offer comprises an Offer for Sale (OFS) of up to 22,843,004 equity shares, with no fresh issue component, aggregating to a total issue size of approximately Rs 1,667.54 crore.

SWOT Analysis

Strengths:
The company boasts strong brands such as MTR and Eastern with deep regional penetration, supported by an asset-light and low-debt business model that consistently generates stable cash flows.

Weaknesses:
The company’s single large parent ownership structure, coupled with a high dividend payout, raises governance concerns, while its revenue growth remains modest despite favourable industry tailwinds.

Opportunities:
The company stands to benefit from the rising consumer preference for branded convenience foods in India and the opportunity to drive export growth by leveraging its parent’s extensive global network.

Threats:
The company faces intense competition from large FMCG players, while raw material inflation and supply chain risks pose potential challenges to maintaining its profitability and margins.

Financial Performance

(a) Profit & Loss (Rs crore)

(b) Balance Sheet (Rs crore)

Peer Comparison

Outlook & Relative Valuation

The long-term outlook for Orkla India Ltd is promising, backed by its strong brands, regional leadership, and growing focus on convenience food categories. With India’s packaged food market expected to expand at around 11 per cent CAGR through FY29, the company is well positioned to benefit from the shift toward branded and ready-to-eat products. Financially, it stands out with a P/E of 31.68×, far below Tata Consumer Products’ 88.1×, suggesting attractive relative valuation. Orkla’s ROE of 8.66 per cent and ROCE of 11.8 per cent indicate efficient use of capital, supported by a debt-free balance sheet (Debt/Equity 0.00×). Although growth remains moderate, the company’s clean balance sheet, stable margins, and scalable business model offer resilience. In the medium to long term, Orkla’s combination of brand strength and valuation comfort provides an appealing opportunity for investors seeking steady, sustainable returns.

Recommendation

Subscribe (Long-term): Given strong business fundamentals, brand strength and industry tailwinds, the issue merits consideration for long-term investors. However, since growth is modest and valuations are elevated, apply with a medium-to-long horizon rather than for short-term gains.