Why Prataap Snacks Share Price is Rising

The Indian snacks industry is thriving, catering to the nation's love for affordable, quick bites. With a vast array of regional and modern snacks, this sector is largely immune to economic downturns due to its affordable pricing and mass appeal.

Even during challenging times, consumers continue to indulge in ready-to-eat snacks, ensuring consistent demand.

One prominent player in this sector is Prataap Snacks, known for its popular Yellow Diamond brand. The company offers a variety of products, including chips, namkeen, and extruded snacks, making it a strong competitor in India's diverse snack market.

However, 2024 was a difficult year for Prataap Snacks, with its share price falling by 5.1%, reflecting investor concerns.

Despite this downturn, the stock has made a remarkable recovery, rallying by 23% in just the past five days.

Let's explore what factors are driving this sharp rise in Prataap Snacks share price.

Stake Acquisition

Prataap Snacks share price rallied significantly after announcing a major stake acquisition deal on 27 September 2024.

Authum Investment & Infrastructure and Mahi Madhusudan Kela are set to acquire 46.9% of the company's shares in a deal worth Rs 8.5 billion (bn). This acquisition comes through a share purchase agreement with three private equity promoters, who held stakes of 2.5%, 34.7%, and 9.7%, respectively.

The deal involves the purchase of 10.2 million (m) equity shares at Rs 746 per share. Following this acquisition, the company announced an open offer to buy an additional 26% of shares from the market, which was triggered by the controlling stake acquisition.

Despite this, Prataap Snacks will remain a publicly listed company, with no intention from the acquirers to de-list the stock.

The market reacted positively to this news, as investors see this acquisition as a move that aligns with Authum Investment's long-term strategy.

Authum aims to diversify its portfolio and help Prataap Snacks grow further, which creates optimism for future business expansion. The deal is expected to unlock more value for shareholders, which is driving the rise in the company's share price.

As Prataap Snacks is known for its well-established potato chips brand, the new leadership is expected to help the company expand and maximise its potential. This acquisition has boosted investor confidence, leading to an upward momentum in the stock price.

What Next?

Prataap Snacks is focusing on several strategies to drive future growth and profitability. The company is planning to expand its namkeen segment, which currently contributes about 16% to revenue, even though it makes up 44% of the overall snacks market.

The company is also implementing sales force automation (SFA) to improve distribution and range selling, alongside entering modern trade and quick commerce channels to boost volumes.

On the cost side, Prataap Snacks is optimising its distribution model by reducing trade margins and freight costs through a direct distribution strategy. This move should help the company lower operational expenses and improve margins.

By discontinuing less popular products, the company aims to further enhance productivity and profitability.

Prataap Snacks is also investing in capacity expansion in underpenetrated markets, leveraging government initiatives like the Production Linked Incentive (PLI) scheme to strengthen its presence. Hubs are being established across manufacturing facilities to ensure efficient distribution and cost management.

Looking ahead, the company targets consistent revenue growth of 15%, faster than the industry average, with an EBITDA margin exceeding 10%.

The company also aims for capital efficiency, with a return on capital employed (RoCE) of 15-20%. These efforts indicate a strong focus on sustainable long-term growth, operational efficiency, and profitability.

How Prataap Snacks Share Price has Performed Recently

In the past five days, Prataap Snacks share price is up 23%. In the last month, it is up 26.2%.

In 2024, so far its share price has tumbled 5.1% and it has rallied 26.1% in the last year.

The stock touched its 52-week high of Rs 1,450 on 18 January 2024 and a 52-week low of Rs 750 on 4 June 2024.

About Prataap Snacks

Prataap Snacks is a leading Indian snacks food company.

It offers multiple variants of products across categories of potato chips, namkeen including extruded snacks, pellets and traditional Indian namkeen under the popular Yellow Diamond and Avadh brands.

The company has separate range of sweet snacks under the distinctive Rich Feast brand. It is focused on offering deep value to consumers through a variety of pack sizes at attractive price points.

Its products are present across India and it is one of the fastest growing companies in the organized snacks industry.

Over the years, Yellow Diamond has become a well-known national brand of India's highly competitive snacks market.

For more details about the company, you can have a look at see the Prataap Snacks company fact sheet and Prataap Snacks quarterly results on our website.

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Happy investing!

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