On the morning of 3rd November, as investors log in to check lottery results for their allotment in the Orkla India IPO, the mood in the Indian capital markets will be one to watch. The Rs 1,667 crore offering for sale (OFS), which closed on Friday, attracted bids for 77,96,28,300 shares against 1,59,99,104 on offer, an oversubscription of about 48.73 times.
Institutional buyers led the charge. The QIB portion was taken up at 117.63 times, the non-institutional share at 54.42 times, and even the retail lot, typically the slowest mover, clocked a solid 7.05 times oversubscription. Meanwhile, the grey-market premium (GMP) for Orkla India shares grew to Rs 86, implying a listing price near Rs 816 and an 11.78 per cent premium over the upper band of Rs 730.
This demand points to more than just an IPO frenzy. It possibly signals something deeper in the Indian consumer foods landscape: the rise of regional powerhouses with national ambitions and the hunger of investors for brands that sit deeply in the pantry of the Indian household.
Spice Racks To Stock Charts
Orkla India, the Indian arm of Norway-based Orkla ASA, has built its business on time-tested regional brands: the 100-year-old MTR and the 40-year-old Eastern. At a press meeting in Bengaluru ahead of the IPO, CEO Sanjay Sharma out the spotlight not just brand heritage but local manufacturing, mandi-sourcing from the heart of South India, and high shelf penetration in southern states including Karnataka, Kerala, Tamil Nadu, Andhra Pradesh and Telangana, arguing that this regional dominance provides a strong foundation.
“Orkla India is deeply committed to the Indian consumer landscape with a very well-thought through strategy tailored to the regional diversity of this country,” says Sanjay Sharma, MD and CEO at Orkla India.
The company’s own red herring prospectus (RHP) backs this up with numbers: nine manufacturing plants, 1,82,270 tonne of installed capacity as of 30 June 2025, plus 18 contract manufacturers in India and three overseas. With two central distribution centres and 20 regional warehouses (all enabled by digital warehouse systems), Orkla India claims supply-chain sophistication that many of its smaller rivals cannot match.
Valuation, Business Model And What It Means For Retail Investors
At the upper price band of Rs 730 per share and a valuation of roughly Rs 10,000 crore, investors are paying about 4.1 times revenue (based on FY25 sales of Rs 2,455 crore). On that multiple, and given the listing estimates, the implied listing pop of around 12 per cent is modest compared to some recent IPOs, but the strong institutional demand suggests a belief in longer-term value rather than just a quick trade.
However, a wrinkle: the IPO is entirely an offer-for-sale (OFS). In other words, all the cash raised flows to the selling shareholders (promoter Orkla Asia Pacific Pte and shareholders Navas Meeran and Feroz Meeran), not to the company itself. For investors, this means that while you’re buying a strong brand and business, you’re not directly helping fund its expansion via this listing. Growth, therefore, will depend on organic cash flows and incremental capex, instead of a large cash injection from the market.
The strength of Orkla India lies in several interlocking advantages. The company enjoys deep brand loyalty in its core markets, with penetration levels far above national averages in South India. Its integrated supply-chain strategy combines procurement from mandis, a mix of in-house manufacturing and outsourced production, along with technology-enabled warehousing and distribution. This operational efficiency gives it an edge in ensuring quality and consistency.
Moreover, the company has a clear growth runway, as packaged spices currently account for only about 40 per cent of India’s total spices market. The remainder being largely unorganised, leaving ample room for branded players to expand. Orkla India also benefits from strong backing by its Norwegian parent, Orkla ASA, which provides access to global procurement networks, compliance standards and technological know-how.
However, the Red Herring Prospectus (RHP) points to several risks investors should be mindful of. Materials and packaging costs form a significant portion of expenses, ranging between 52 and 59 per cent of revenue, leaving margins vulnerable to commodity price volatility and supply disruptions. The company’s geographic concentration, with much of its dominance in southern India, could limit its national growth potential if traction in northern markets remains slow. Additionally, while converting unorganised, unbranded spice users to branded products presents a major opportunity, it is also a structural challenge requiring sustained marketing and pricing efforts. Orkla India’s expansion into new categories such as ready-to-eat and value-added convenience foods further introduces execution risks, demanding flawless operational management and distribution scalability.
What To Watch Next
Investors will be watching several key developments closely in the coming weeks. The share allotment is expected on 3 November, with listing scheduled for 6 November on the BSE and NSE. Market participants will be eager to see whether the listing price aligns with the strong grey market premium (GMP) expectations.
Post-listing share-supply dynamics also warrant attention, particularly the lock-in details of selling shareholders and the potential for large institutional blocks to enter the market soon after listing. In the quarters ahead, trends in margins will be closely watched, especially how raw material inflation and packaging costs evolve, and whether operational efficiencies begin to reflect in profitability.
Lastly, the company’s progress in geographic and product expansion will be pivotal. Its ability to move beyond its southern stronghold, leverage e-commerce channels and scale value-added categories will show whether its current market optimism and valuation are sustainable. |
