Abram Foods Makes Weak Market Debut on BSE SME with 7.75% Listing Discount

Abram Food IPO Listing

The food processing and manufacturing specialist, Abram Food Limited, made a disappointing debut on the BSE SME platform on July 1, 2025. After closing its IPO bidding between June 24 - June 26, 2025, the company commenced trading at a significant 7.75% discount to its issue price, reflecting cautious market sentiment towards the food processing sector despite India's growing FMCG market. This fixed price IPO raised ₹13.99 crore with a subscription of 28.49 times, though the negative listing performance indicated investor concerns about sustainability of recent financial improvements and competitive challenges in the fragmented food processing industry.

Abram Food Listing Details

Abram Food Limited launched its fixed price IPO at ₹98 per share with minimum investment of 1,200 shares costing ₹1,17,600. The IPO received moderate response with subscription of 28.49 times - NII segment leading at 40.92 times and retail at 16.05 times, demonstrating mixed investor sentiment across categories. The share price opened at ₹90.4 on BSE SME, delivering a disappointing 7.75% discount from the issue price of ₹98, subsequently recovering marginally to ₹90.5 showing continued weakness in early trading.

Listing Price: The Abram Food share price opened at ₹90.4 on BSE SME on July 1, 2025, representing a discount of 7.75% from the issue price of ₹98, delivering disappointing returns for investors and reflecting market concerns about business sustainability.

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First-Day Trading Performance Outlook

Abram Food experienced weak debut performance, opening significantly below issue price despite moderate subscription levels, reflecting investor scepticism towards small-scale food processing operations. The company, incorporated in 2009, specialises in manufacturing and trading chana dal, flour, besan, spices, and cattle feed under the "Kherliwala" brand across Rajasthan, Delhi/NCR, and Uttar Pradesh through distributor networks with a 3,000 sq. meter facility in Alwar, Rajasthan.

Growth Drivers and Challenges

Growth Drivers: 

• Regional Brand Presence: Established "Kherliwala" brand recognition in northern markets including Rajasthan, Delhi/NCR, and Uttar Pradesh 
• Diversified Product Portfolio: Comprehensive range including chana dal, atta, besan, spices, edible oils, and cattle feed catering to multiple segments 
• Strong Financial Growth: Revenue growth of 77% and exceptional PAT growth of 220% in FY25 demonstrating business expansion

Challenges: 

• Listing Discount: Opening at 7.75% discount validates market concerns about overvaluation and business sustainability 
• Sustainability Questions: Boosted financial performance raises concerns about long-term sustainability in competitive food processing sector 
• Small Scale Operations: Limited facility size and employee base of 15 indicate scale constraints for significant expansion 
• Fragmented Market: Operating in highly competitive food processing segment with established players and pricing pressures

Utilisation of IPO Proceeds

• Machinery Purchase: ₹3.85 crore for capital expenditure towards purchasing machineries to enhance production capacity 
• Working Capital: ₹6.70 crore for funding working capital requirements to support business operations and growth 
• General Purposes: ₹2.05 crore for general corporate purposes and strategic initiatives 
• Issue Expenses: ₹1.40 crore for IPO-related expenses and regulatory requirements

Financial Performance of Abram Food

• Revenue: ₹64.09 crore for FY25, showing impressive 77% growth from ₹36.14 crore in FY24, though sudden surge raises sustainability concerns 
• Net Profit: ₹3.26 crore in FY25, demonstrating exceptional 220% growth from ₹1.02 crore in FY24, with dramatic improvement questioned by market response 
• Financial Metrics: Strong ROE of 38.62%, impressive ROCE of 56.02%, moderate debt-to-equity of 0.85, healthy PAT margin of 5.08%, though small operational scale limits scalability

Abram Food's disappointing listing performance with a 7.75% discount reflects significant market concerns about the sustainability of recent financial improvements and competitive challenges in the food processing sector. Despite impressive subscription levels of 28.49 times and strong recent financial growth, investor scepticism about the company's small scale operations, sustainability of boosted performance, and ability to compete in the fragmented food processing market resulted in weak debut performance, serving as a cautionary tale for investors in small-scale FMCG companies.