Dear Members,

We have released 18th Aug’22: Special situation opportunity on the proposed delisting of shares of DFM Foods (NSE Code – DFMFOODS). The same has also been produced below. For details and other updates, please log into the website at the following link –

Note: For any queries, mail us at [email protected]

Date: 18th Aug’22

CMP – 317.30 (BSE); 316.35 (NSE)

Rating – Positive – 3% weightage; this is not an investment advice (refer rating interpretation at the end)



DFM Foods is a leading player in the packaged snack foods business.

The company sells its products under the brand names “CRAX”, “CURLS” “NATKHAT” & “FRITTS”.

In FY 20, US-based private equity (PE) firm Advent International acquired ~74% stake in the company at 249.50 per share from the promoters and through the open offer.


De-listing Offer from the Promoters

On 15th Aug’22, there was an initial public announcement on behalf of the promoters expressing their intent to acquire all the equity shares held by the public shareholders of the Company and voluntarily delist the Equity Shares from the Stock Exchanges.

The promoters hold 73.70% stake in the company.

The Board of Directors will meet on 25th Aug’22 to approve/reject the delisting proposal and consider other matters related to the same.


Important points with respect to the company

DFM Foods is the leading company in the country in the category of Extruded snacks.

In 1984, the company launched CRAX Rings, Natkhat and Namkeen. Since the past few years, it has been expanding both its product portfolio and geographical reach.

Since 2017, it has launched the following new products: Crax Curls, Cheese Balls, Fritts, Pasta Crunch and Potato Chips.

The company’s sales are concentrated in North India from where it derives 70% + of its sales.

After the takeover by Advent, Mr. Lagan Shastri was appointed as the Managing Director and Chief Executive Officer of the Company in Jan’20. He has 24 + years of experience in FMCG Industry and before joining DFM Foods, he was with Hindustan Coca-Cola Beverages Ltd for 20 Years.

The last 2 years were tough for the company due to the impact of Covid-19, nevertheless, it has been gaining market share in extruded snacks category.

In FY 22 the company incurred loss for the first time on account of raw material inflation (~300 bps impact), significant increase in advertising spends to 9.0% of net sales in FY22 vs. 3.7% in FY21 and investment in Go-to-Market expansion which increased to 2.8% of net sales in FY22 vs 1.0% in FY21.

Prior to this the company was consistently profitable with EBITDA margins in the range of 9-12%.


Rationale behind this opportunity

As mentioned above, the current promoter – Advent International, acquired around 74% stake in the company in FY 20 at 249.50 per share.

In the past 6-7 years, the stock has scaled highs of 450 and lows of 200 (barring covid-19 induced correction to 170).

While the company is yet to announce the floor price, we expect it to be around 240-250 odd levels.

In the past many de-listing cases, shareholders have tendered shares at 50-100% + premium to the floor prices and in some of the cases promoters accepted such prices.

In delisting cases, it’s difficult to predict as to what the discovered price will be and whether the promoters will actually accept the price or not.

However, here again, we would not like to participate in the reverse book building (RBB) and rather take advantage of the appreciation in the stock price (if at all) in the run up to RBB.

We expect the downside to be capped at around 250 per share.



We are still some steps away from the reverse book building; the Board’s approval is yet to come through and thereafter the company will have to seek the shareholder’s approval.

Earlier, there were not many rejections by shareholders; however, in the past 2 years we have seen a few cases of rejection by shareholders.

If the Board or the shareholder’s reject the proposal, there would be a rush to exit from the stock and one may not be able to exit before the stock has corrected by 15-20%.

The markets have appreciated steadily over the last 1-2 months. In case of a sharp melt-down, there could be a rush to exit from DFM as well and the stock could correct by 15-20%.


Disclosure: I do not have any holding in DFM Foods.


Best Regards,

Ekansh Mittal
Research Analyst
Ph.: +91-727-5050062, Mob: +91-9818866676
Email: [email protected] 


Rating Interpretation

Positive – Expected return of ~15% + on annualized basis in medium to long term for investment recommendations and in short term for Special situations
Neutral – Expected Absolute return in the range of +/- 15%
Negative – Expected Absolute return of over -15%
Coverage closure – No further update on the stock
% weightage – allocation in the subject stock with respect to equity investments

Short term – Less than 1 year
Medium term – Greater than 1 year and less than 3 years
Long term – Greater than 3 years


Research Analyst Details

Name: Ekansh Mittal     Email Id: [email protected]    Ph: +91 727 5050062

Analyst ownership of the stock: No

Details of Associates: Not Applicable

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Disclosure (SEBI RA Regulations)

Whether the research analyst or research entity or his associate or his relative has any financial interest in the subject company/companies and the nature of such financial interest – No

Whether the research analyst or research entity or his associates or his relatives have actual/beneficial ownership of 1% or more securities of the subject company (at the end of the month immediately preceding the date of publication of the research report or date of the public appearance) – No

Whether the research analyst or research entity or his associate or his relative has any other material conflict of interest at the time of publication of the research report or at the time of public appearance – No

Whether it or its associates have received any compensation from the subject company in the past twelve months – No

Whether it or its associates have managed or co-managed public offering of securities for the subject company in the past 12 months – No

Whether it or its associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No

Whether it or its associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No

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