Despite stiff valuations, Prataap Snacks (PSL) saw its Rs 482-crore initial share sale offer oversubscribed by 4.22 times on the final day.

Analysts were cautious about the IPO, pointing out that the company has 4% of share of the organized snacks market, and while this is expected to expand in the post-GST years, the valuation still seems over the top. At the higher price band of Rs. 938 per share, PSL’s shares are being valued at a P/E multiple of 222.3x, compared to 92.9x for its industry peer DFM Foods. 

The initial public offer (IPO) received bids for 1.53 crore equity shares against the total issue size of 36,27,518 shares, excluding anchor investors' portion. The portion set aside for qualified institutional buyers (QIBs) has been oversubscribed 6.29 times, while the reserved portion of non institutional investors saw a subscription of 27 percent. For retail investors, the portion was oversubscribed 4.83 times.

The company has championed competitive advantages including higher grammage per pack, and the fact that it generates around 80% of the revenue from its Rs. 5 packets. However, the question remains whether these differentiators are those that create a substantial moat around its business.