Vandan Foods Delivers Steady Market Debut with 9% Listing Premium

The castor oil manufacturing specialist, Vandan Foods Limited, made a modest debut on the BSE SME platform on July 7, 2025. After closing its IPO bidding between June 30 - July 2, 2025, the company commenced trading with an 8.7% premium to its issue price, delivering decent returns despite strong analyst warnings about sustainability and aggressive pricing. 

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Vandan Foods IPO Listing Details

Vandan Foods Limited launched its fixed price IPO at ₹115 per share with minimum investment of 1,200 shares costing ₹1,38,000. The IPO received moderate response with subscription of 1.75 times - retail segment showing enthusiasm at 3.09 times whilst HNI participation remained underwhelming at just 0.41 times, demonstrating polarised investor sentiment across categories.

Listing Price: The Vandan Foods share price opened at ₹125 on BSE SME on July 7, 2025, representing a premium of 8.7% from the issue price of ₹115, delivering modest gains despite analyst concerns about business sustainability.

First-Day Trading Performance Outlook

Vandan Foods IPO experienced modest debut performance with decent premium despite weak HNI participation and analyst warnings, reflecting mixed investor sentiment towards small-scale manufacturing companies. The company, incorporated in 2015, manufactures refined F.S.G. castor oil and castor oiled cake through facilities in Dhinoj Patan, Gujarat, serving markets across Gujarat, Haryana, Andhra Pradesh, Delhi, Bihar, Rajasthan, and Telangana with just 16 permanent employees as of December 2024.

Growth Drivers and Challenges

Growth Drivers:

• Diversified Product Portfolio: Manufacturing both refined castor oil for industrial applications and castor de-oiled cake as natural fertiliser catering to multiple market segments
• Strategic Market Position: Operations across seven states providing diversified revenue streams and reduced geographical concentration risk
• Expansion Plans: Capital expenditure for facility expansion and working capital enhancement to support business growth
• Strong Financial Growth: Impressive revenue growth from ₹48.73 crore in FY24 to ₹72.66 crore in 9M FY25 demonstrating business momentum

Challenges:
 

• Analyst Warnings: Strong recommendation to avoid due to quantum jump in financials raising sustainability concerns and aggressive pricing making it "High Risk/Low Return" bet
• Weak Institutional Interest: HNI subscription at only 0.41 times indicates limited institutional confidence in business model and growth prospects
• Small Scale Operations: Limited workforce of 16 employees and small operational scale raising questions about scalability and capacity expansion
• Sustainability Concerns: Dramatic financial improvements in pre-IPO years raise questions about long-term performance authenticity and market positioning

Utilisation of IPO Proceeds

• Working Capital: ₹8.57 crore for meeting working capital requirements to support manufacturing operations and business expansion
• Debt Repayment: ₹3.00 crore for prepayment or repayment of outstanding borrowings to improve capital structure
• Facility Expansion: ₹8.29 crore for capital expenditure requirements for expansion of Dhinoj facility to enhance production capacity
• General Corporate Purposes: ₹7.51 crore for strategic initiatives and operational requirements

Financial Performance of Vandan Foods IPO

• Revenue: ₹72.66 crore for 9M FY25, showing substantial growth from ₹48.73 crore in FY24, though dramatic improvement patterns raise sustainability concerns
• Net Profit: ₹4.54 crore in 9M FY25, demonstrating strong growth from ₹2.64 crore in FY24, with sudden profitability surge questioned by analysts
• Financial Metrics: Strong ROE of 45.41%, healthy ROCE of 37.33%, modest RoNW of 27.92%, low EBITDA margin of 7.48%, though high price-to-book value of 6.92 indicating premium valuation

Vandan Foods' modest listing performance with 8.7% premium reflects measured investor sentiment towards small-scale manufacturing companies despite strong analyst warnings about sustainability and aggressive pricing.