Multi-category food maker Orkla India, which owns the MTR and Eastern brands, is tapping the domestic market with a ₹1,667-crore public issue (October 29–31). Shares are being offered in a price band of ₹695–₹730 in this 100 per cent Offer for Sale of up to 2.28 crore shares by existing shareholders, valuing the company at an implied m-cap of around ₹10,000 crore. Norwegian promoter Orkla ASA will hold 75 per cent post-listing, while the Meeran brothers are also diluting their stake through the offer.
At the upper band, the stock is priced at about 39 times FY25 earnings per share, an over 50 per cent discount to Tata Consumer Products Ltd (TCPL) although they are not exactly comparable. The valuation looks fair, rather than cheap. Orkla India’s operational strength is balanced by mixed recent performance — slowing sales growth and profit decline in the FY23–25 period. However, EBITDA and Profit before Tax (PBT) have grown in the same period, which lends comfort. Q1 FY26 showed early signs of improvement, with 8.5 per cent volume growth, 9-10 per cent PBT and PAT growth.
Backed by heritage brands with South India leadership, a debt-free balance sheet, efficient operations and 30+ per cent-plus RoCE, the 400-product-strong company stands to benefit from the strengthening of organised spice market and the rise of quick-meal demand. Thus, investors with a long-term horizon can consider subscribing, though a sustained double-digit revenue rebound will remain key to any re-rating.
Brands, business
The MTR brand was established in 1924. In 2007, as part of an internal reorganisation undertaken before the acquisition by Orkla ASA, MTR Foods (now Orkla India Ltd) formally acquired the exclusive rights to the MTR brand for use in processed and packaged foods and beverages. These rights are held in perpetuity by Orkla India for packaged-food operations.
The Eastern brand, founded in 1983 in Kerala, built leadership in spices and regional convenience foods. Orkla India acquired Eastern Condiments from members of the Meeran family and McCormick Ingredients SE Asia in March 2021, blending MTR’s Karnataka dominance with Eastern’s Kerala and export strength. Together MTR (spices for vegetarian cuisine) and Eastern give Orkla India a dual-heritage moat: two regional power brands with decades of consumer trust.
Spices remain Orkla India’s core, contributing about two-thirds of FY25 revenue. This segment enjoys an estimated high-teen to low-20 per cent EBITDA margins, driven by brand strength and scale. The company competes with Everest, MDH, Aachi, Goldiee, Sunrise, JK, Suhana and others. Private labels from Reliance Retail and BigBasket, and broader peers like TCPL’s Tata Sampann, add to the competition.
The convenience-foods portfolio — ready-to-cook mixes, ready-to-eat Indian dishes, vermicelli and beverage mixes — brings in one-third of revenue, operating at estimated lower-teen margins due to higher innovation and packaging costs. Overall, Orkla India reported ₹2,358 crore in total revenue and a blended EBITDA margin of 16.6 per cent in FY25. Note that annual advertising and sales promotion as a share of total expenses for the firm is around 6-7 per cent.
Regional dominance is pronounced: across packaged spices, the company holds roughly 31 per cent share in Karnataka, 42 per cent in Kerala, and 15 per cent in Andhra Pradesh–Telangana. In total, sale of products in South India contributes 70 per cent of overall pie. Exports, accounting for 20 per cent of revenue, reach the GCC, US, and Canada. With nine in-house factories and 21 outsourced units located near sourcing hubs, Orkla India benefits from strong logistical and cost efficiencies. As of June 30, 2025, it had a base of 216 raw material suppliers and 125 packaging material suppliers.
Financials
Orkla India’s recent performance reflects a year of commodity deflation rather than weak demand. In FY25, prices of key raw materials — notably chilli, which forms about 30 per cent of the company’s input cost — dropped sharply. This led to a 7 per cent fall in price realisation, even as spice volumes grew 5.5 per cent. By passing on the benefit of lower costs to consumers, the company’s revenue growth appeared muted, though it may have strengthened long-term brand loyalty.
The impact is visible in the numbers. Looking at the last three years, sales have risen only from ₹2,173 crore in FY23 to ₹2,395 crore in FY25, while net profit has declined from ₹339 crore in FY23 to ₹256 crore in FY25. The last two years have therefore been a mid-cycle reset rather than a steady growth phase. However, profit before tax grew from ₹257 crore in FY23 to ₹355 crore in FY25, which shows that profitability at the operating level has strengthened despite the decline in reported PAT, reflecting underlying earnings resilience and effective cost control.
Adjusted EBITDA margins expanded by 200 basis points y-o-y to 16.6 per cent in FY25, aided partly by lower input costs and partly by mix improvement and efficiency measures.
The company remains debt-free, generates ₹300-400 crore in annual operating cash flows, and delivers RoCE above 30 per cent.
If spice inflation returns, margins may normalise around 15 per cent, but cost discipline and product diversification should help protect profitability.
Orkla India’s next phase of growth rests on key priorities: deeper market penetration, a wider product portfolio, and higher efficiency. The company plans to build brand salience through regional advertising, predictive stocking, and stronger modern trade presence (13-14 per cent now). It is expanding convenience foods and blended spices, adding new regional offerings such as Arabic and Asian ranges. Internationally, it seeks to scale up in the GCC, US, and Canada while catering to diaspora markets like Australia and Malaysia. Growth via selective acquisitions in new geographies remains an option.
Valuation, risks
At the upper price of ₹730, the stock is valued at 39x FY25 EPS, versus 90x for TCPL. The steep discount reflects slower growth and cyclical margin gains.
Assuming Orkla India sustains 10–12 per cent annual revenue growth as volumes recover and margins normalise near 15–16 per cent, EPS could compound at roughly 12–13 per cent CAGR over FY25–28, taking FY28 EPS to ₹26–27. At the IPO price, this implies a forward valuation of about 27–28x FY28 earnings, a level that appears reasonable, given its brand strength, balance sheet quality, and improving mix. Any acceleration in revenue growth beyond the mid-teens, or a sustained move toward higher-margin convenience foods, could justify a re-rating. But slower category growth or muted convenience-food adoption could delay it.
Note, the “Orkla” mark is owned by parent Orkla ASA (Norway) and used by the Indian entity under a revocable, royalty-free authorisation granted in May 2025. Any future royalty arrangement would require shareholder approval under SEBI norms.
In March 2025, Orkla India declared its first-ever dividend of ₹600 crore, with the Norwegian parent receiving about ₹540 crore. Though the payout was 2.4x of FY25 profits, such pre-listing repatriation of accumulated earnings is not unusual. Hyundai Motor India followed a similar approach before its IPO. Many multinationals repatriate retained earnings before listing to “reset” the balance sheet. The company has cash and bank balances of around ₹125 crore as on June-2025. The key will be future alignment of dividend policy with minority investors.
Risks for the company stem from regional concentration, commodity volatility and any steep royalty demands from parent.
Published on October 28, 2025
