(Bloomberg) -- Shadow banker Authum Investment and investor Mahi Madhusudan Kela will buy a large stake in Indian light meal-maker Prataap Snacks Ltd. from Peak XV Partners for 8.5 billion rupees ($102 million) in cash, according to a stock exchange filing Friday.
The stock surged as much as 12% to hit its highest level in more than seven months after the announcement, but erased gains to trade below Thursday levels at 11:30 Mumbai time. Authum also announced an offer to buy another 26% stake from public holders at 864 rupees a share, a price that is significantly below the market level.
The deal comes in the backdrop of a stellar run in shares of leading snack makers this year. Stocks of competitors Bikaji Foods International Ltd. and Mrs Bectors Food Specialities Ltd. have gained more than 70% as investors bet that a combination of changing demographics and lifestyle patterns will drive consumption for light meals in the world’s fastest growing major economy.
Market research firm IMARC expects India’s snacks market size to more than double in size to $10.6 billion by 2032 from around $5.1 billion in 2023.
Reflecting some of the growth potential, Advent International LP had to almost double its offer to close a 2022 deal with snackmaker DFM Foods Ltd. Another snackmaker, Haldiram’s, is exploring an initial public offering. Food products maker and retailer, Haldiram’s, is exploring an initial public offering.
Shares of Prataap, which sells chips, nuts and crisps under the Yellow Diamond brand, have had a middling run in 2024 so far, shedding around 6%. Prataap shares are trading at a one year forward price earning multiple of 46 times, according to data compiled by Bloomberg. That compares with between 63 and 84 times for rivals like Hindustan Foods, Mrs Bectors and Bikaji International.
--With assistance from Hemal Savai.
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