Vandan Foods IPO Listing: Stock Debuts at 8.7% Premium, Closes Lower on Day 1

Vandan Foods IPO Listing: Shares List at Premium but Slip to Lower Circuit Amid Profit Booking

Vandan Foods IPO Listing Update – Shares of Vandan Foods Ltd, a Gujarat-based manufacturer of refined castor oil and castor de-oiled cake, made a promising debut on the BSE SME platform today.

The stock opened at a premium of ₹125 per share, offering investors an initial listing gain of 8.7% over the issue price of ₹115.

However, post-listing sentiment quickly shifted, with the stock facing selling pressure that pushed it down to its lower circuit limit of ₹118.75, where it eventually closed.

Despite the fall, IPO investors ended the day with a modest gain of 3.26%, but the sharp reversal from listing highs suggests caution may be warranted in the near term.

IPO Overview: Mixed Response from Investors

The ₹30.36 crore initial public offering (IPO) of Vandan Foods was open for subscription from June 30 to July 2, 2025. The issue consisted entirely of a fresh issue of 26.40 lakh equity shares with a face value of ₹10 each.

The IPO witnessed a mixed response, with overall subscription at 1.75 times. The data indicates divergent sentiment among investor categories:

• Retail Investors: Subscribed 3.09 times their reserved portion, reflecting strong interest from small investors.
• Non-Institutional Investors (NIIs): Subscribed just 0.41 times, signaling muted institutional interest.

This disparity suggests that while retail enthusiasm was high—possibly driven by the company’s growth story and lower entry barriers—larger investors remained cautious, likely due to concerns over market volatility or limited visibility into future earnings sustainability.

Utilization of IPO Proceeds: Fueling Expansion and Operational Growth

Vandan Foods plans to utilize the IPO proceeds to strengthen its balance sheet and fund strategic business objectives. Here’s the proposed allocation:

• ₹8.57 crore: To be used for working capital requirements, aimed at supporting day-to-day operations, improving inventory cycles, and meeting demand fluctuations.
• ₹3 crore: Earmarked for the repayment of existing debt, which will help reduce interest burdens and improve profitability ratios.
• ₹8.29 crore: Directed towards the expansion of the company’s manufacturing facility in Dhinoj, Gujarat. This is expected to significantly enhance production capacity and efficiency.
• Remaining funds: Reserved for general corporate purposes, including administrative expenses, marketing, and potential strategic tie-ups.

This capital allocation strategy indicates a clear focus on operational scalability, financial stability, and long-term infrastructure enhancement.

Company Profile: Niche Focus with Industrial and Agricultural Relevance

Founded in 2015, Vandan Foods Ltd operates in a niche segment of the agro-chemical and industrial oil space. The company primarily manufactures:

1. Refined FSG (First Special Grade) Castor Oil

This product has a wide range of applications:

• Industrial: Used in lubricants, paints, adhesives, polymers, and textiles.
• Pharmaceutical: Serves as a laxative and a base for certain medicines.
• Cosmetic & Personal Care: Promotes hair growth, nourishes the skin, and is used in beauty formulations.

2. Castor De-Oiled Cake

This by-product of castor oil processing is a natural, nitrogen-rich organic fertilizer. It is widely used in:

• Agriculture: Improves soil fertility and crop yield.
• Sustainable farming: Favored by organic farmers due to its eco-friendly nature.

Business Model & Reach

Vandan Foods operates in both B2B and B2C segments:

• It supplies raw and processed materials to traders and industrial clients.
• It also sells directly to end-consumers, particularly in the agricultural segment.

Its product distribution currently spans Gujarat, Rajasthan, Haryana, Andhra Pradesh, Delhi, Bihar, and Telangana, with plans to expand its footprint post-IPO. The company operates two manufacturing units in Dhinoj Patan, Gujarat.

Financial Performance: Strong Growth Momentum

Vandan Foods has shown remarkable financial growth over the last three fiscal years, moving from losses to healthy profits:

This growth trajectory underscores:

• Operational efficiency
• Market demand
• Improved margins and cost management

From a loss of ₹11 lakh in FY22 to a profit of ₹4.54 crore in just under three years, the company’s turnaround has been swift and significant.

Additionally, the jump in revenue from ₹1.61 crore in FY22 to ₹72.66 crore in the first nine months of FY25 shows robust top-line expansion, fueled by increased production and wider market penetration.

IPO Listing Day Performance: Volatility Hits Early Optimism

While Vandan Foods’ debut on the BSE SME platform began on a positive note, the initial excitement gave way to selling pressure as the trading session progressed.

• IPO Price: ₹115 per share
• Listing Price: ₹125 per share (8.7% gain)
• Closing Price: ₹118.75 per share (3.26% gain)

This trend is consistent with recent SME listings, where quick profit booking often drives stocks down post-listing.

Such volatility, while common in SME counters, also highlights the need for investor caution and due diligence.

Investor Outlook: Long-Term Potential with Near-Term Risks

For investors considering Vandan Foods beyond the IPO listing, a few key points stand out:

Positives:

• Strong revenue and profit growth
• Niche product line with diversified applications
• Expansion plans backed by IPO funds
• Increasing domestic demand for organic fertilizers and industrial-grade oils

Risks & Considerations:

• SME stocks often face lower liquidity and higher volatility
• Heavy retail participation could trigger fluctuations based on market sentiment
• Execution risk related to expansion and capex plans
• Limited institutional coverage and analyst research

Final Thoughts: A Promising Start with Execution Key to Sustained Gains

Vandan Foods has demonstrated a strong financial turnaround and tapped the capital markets at a time when demand for sustainable, organic, and industrial-grade oils is on the rise.

While the stock’s post-listing dip may disappoint short-term investors, the company’s growth trajectory and expansion roadmap offer long-term potential.

However, as with all SME investments, caution is warranted. Investors should closely monitor quarterly performance, the pace of capex implementation, and market expansion before making further investment decisions.