Orkla India IPO: A Hefty Dividend Payout Raises Eyebrows
Just days before its upcoming initial public offering (IPO), MTR Foods’ parent company, Orkla India Ltd., distributed a hefty Rs 600-crore dividend for fiscal 2025 — its first-ever dividend payout in 17 years and one that exceeds the company’s annual profits for any previous year.
According to the company’s prospectus, foreign promoter Orkla Asia Pacific Pte Ltd, which holds a 90% stake in Orkla India, received Rs 540 crore from this distribution. The remaining two promoters — Navas Meeran and Feroz Meeran, who each own a 5% stake — pocketed about Rs 30 crore apiece.
Understanding the Dividend Payout
What is interesting is that the total dividend payout far surpasses Orkla India’s recent earnings. The company reported a net profit of Rs 255.69 crore in fiscal 2025, up from Rs 226.33 crore in financial year 2024.
Financial statements show that Orkla India’s retained earnings fell sharply from Rs 1,072 crore at the end of financial year 2024 to Rs 727 crore by March 2025, indicating that the Rs 600-crore dividend was drawn primarily from accumulated reserves rather than current profits.
Management Clarifies the Payout Decision
Responding to concerns about the unusually high dividend, Orkla’s management described dividends as a “sensitive topic”, particularly for multinational corporations. “People think MNCs want to take high dividends because money will go abroad,” the management said at the press conference on Friday.
The management further clarified that the payout decision was driven by a lack of capital allocation plans for the next 12–18 months, especially with the company headed for a public listing. “The Board of Orkla India will now decide on future dividends,” it added.
Orkla India IPO: What Investors Need to Know
The Norway-listed Orkla ASA-backed entity, which houses well-known brands such as MTR and Eastern Spices, is set to open its IPO on Oct. 29, with the anchor book opening a day earlier on Oct. 28 and the offer closing on Oct. 31.
The issue is structured entirely as an offer-for-sale (OFS) of 2.28 crore equity shares by Orkla Asia Pacific and the two other promoters, meaning no new capital will be raised for the company itself.
Orkla India operates in the spices and convenience foods category, offering ready-to-cook and ready-to-eat products under its portfolio of around 400 items. The company has built a dominant presence across Karnataka, Kerala, Andhra Pradesh, and Telangana, with MTR and Eastern continuing to be household names in southern India.
Investment Opportunities in the Indian Stock Market
For investors looking to diversify their portfolio, the Indian stock market offers a wide range of opportunities. With the Nifty 50 and Sensex being the benchmarks, investors can choose from various sectors, including FMCG stocks, pharma stocks, and IT stocks.
Conclusion
In conclusion, the Orkla India IPO is an interesting opportunity for investors to participate in the growth of a well-established company. With its strong brand presence and dominant market position, Orkla India is poised for long-term growth. However, investors must carefully evaluate the company’s financials and growth prospects before making an investment decision.
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