Smallcap Stock: Packaged Food Company's Share Rallied By 14% In 1 Day And The Reason Is FMCG Giant ITC

Bulls roared mightily in packaged foods company, Prataap Snacks on Thursday after buzz escalated that FMCG behemoth ITC is eyeing a stake purchase in the company. Prataap, a smallcap stock, shot up to nearly 14% in a single day and touched an intraday high of Rs 1,336.40 apiece. However, Prataap Snacks have clarified about the reports.

After market hours, Prataap Snacks' share price closed at Rs 1,226.80 apiece, up by 4.46% on BSE with a market cap of Rs 2,927.09 crore. But during the trading hours of Thursday, Prataap shares flew up by 13.8% to hit an intraday high of Rs 1,336.40 apiece.

Prataap Snacks' 52-week high and low are at Rs 1,450 and Rs 662.00 respectively.

The buzz was that ITC was looking to buy a whopping 47% stake in Prataap Snacks from Peak XV Partners (erstwhile Sequoia Capital). Stock exchanges sought clarification from Prataap. However, ITC made no clarifications.

In its regulatory filing, Prataap said, the Company is not in negotiations as reported in the above-referred news article. Further, it said, "We are not aware of any information that has not been announced to the Exchanges, which requires disclosures under Regulation 30 of the SEBI (LODR) Regulations, 2015."

During Q3 of FY24, Prataap Snacks reported a PAT of 107.9 million, an increase of 106% on a YoY basis, while its Operating EBITDA stood at Rs 347.4 million, higher by 49%. Also, EBITDA margin stood at 8.5%, higher by 303 basis points. Sales / Income from operations were at Rs 4,062.4 million.

Earlier, in February month, Amit Kumat - MD, Prataap Snacks Limited said, "We undertook a consolidation of facilities in the Eastern Region, moving surplus capacity and machinery from the Guwahati-I unit to other manufacturing units to improve operational efficiencies and synergies. New units in Jammu and Rajkot are scheduled for commissioning in the fourth quarter, adding to capacity and reach while also augmenting our product portfolio."

Kumat added, "In light of resilient EBITDA margin trend, we plan to step up investments in advertising and marketing activities to capitalize on these favourable tailwinds and drive accelerated growth."

As per Trendlyne data, the consensus recommendation from 2 analysts for Prataap Snacks Ltd. is BUY. EPS is expected to grow by 164.4% in FY24. However, the 1-year average price target is at Rs 1,167, which would indicate a downside of 5%.

Prataap Snacks Limited (PSL) is a leading Indian snack food Company. It offers multiple variants of products across categories of Potato Chips, Extruded Snacks, and Namkeen (traditional Indian snacks) under the popular and vibrant Yellow Diamond and Avadh brands. It has recently launched a range of sweet snacks under the distinctive Rich Feast brand. PSL is focused on offering deep value to consumers through a variety of pack sizes at attractive price points. Its products are present across 27 states and 4 union territories in India, and it is one of the fastest-growing companies in the organized snacks industry.

Meanwhile, ITC is a leading multi-business Indian enterprise with a presence in FMCG, Paper, Packaging, Agribusiness, Hotels and IT, and is a global Sustainability exemplar.