Orkla India shares rally 10%, biggest single-day jump since listing as Citi initiates ‘Buy’ call – News Air Insight

The shares of recently listed Orkla India, the parent company of popular brand MTR Foods, recorded their biggest single-day jump of nearly 10% on Friday after Citi Research initiated coverage on the stock with a ‘Buy’ rating, stating that the company is well positioned to capitalise on India’s formalisation of the spices and convenience foods markets, given its market leadership in key states.

In its research report, Citi assigned a target price of Rs 750 per share for Orkla India, implying an upside potential of more than 34.5% from the stock’s previous closing price of Rs 557 per share on NSE. It expects Orkla’s rising product assortment, deepening household penetration and expanding distribution into underpenetrated regions to further fuel growth.

Citi estimates the company will report 9% consolidated revenue and PAT CAGR over FY26-28E, with earnings growth driven by margin expansion to 17.2% by FY28E. “This will be achieved through a favourable product mix shift towards higher-margin blended spices and convenience foods, alongside operational efficiencies. We expect ample manufacturing capacity and improved working capital management to enhance return metrics, with ROCE projected to reach 18% by FY28E,” it said.

International markets represent a strategic growth pillar, contributing over 20% to Orkla India’s revenue and thereby outpacing the company’s domestic sales, Citi said, adding that growth is supported by demand from the Indian diaspora and targeted localisation for non-Indian consumers. “Potential M&A is also a key growth strategy, enabling geographical expansion and entry into adjacent food categories,” it further said.

“Our target multiple is at the lower end of the range that we ascribe to the Indian consumer staples universe in light of Orkla India’s higher volatility (commodity price variations) and regional operations,” Citi noted.

Orkla India shares fall 18% since November listing

Orkla India shares made a tepid debut on stock markets in November last year, listing at Rs 750.10 apiece on NSE. This marked a premium of 2.75% over the IPO price band of Rs 695 to Rs 730 per share. This came despite the Rs 1,667 crore IPO seeing strong investor interest during its three days of public bidding, being subscribed around 49 times.

After Citi’s bullish note, the stock jumped nearly 10% to trade at Rs 611.25 apiece. The stock is still down more than 18% from its listing price and 16% from its IPO price.

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