The Ganesh Consumer Saga: A Cautionary Tale of Blind Following in the IPO Market

[Michael Gonsalves]

The recent listing of Ganesh Consumer Products Ltd. has delivered a harsh lesson to investors who blindly followed the steps of market veterans, reigniting the perennial debate about celebrity endorsements and personal due diligence in the stock market. Shares of the Kolkata-based FMCG company, in which prominent investor Ashish Kacholia holds a 1.46% stake, listed at an 8% discount to the IPO price of ₹322, leaving many retail followers "in the red."

The initial public offering (IPO) of ₹409 crore, which closed on September 24, was moderately subscribed 2.68 times overall. The tepid response was largely driven by subdued retail participation, which stood at just 1.17 times, suggesting a degree of caution among small investors from the outset. In contrast, Qualified Institutional Buyers (QIBs) and Non-Institutional Investors (NIIs) showed greater interest, subscribing 4.03 and 4.41 times, respectively.

However, for those who did invest, the listing day proved disappointing. The stock opened at ₹295 and ₹296 on the BSE and NSE, respectively, sinking below the anchor investor price of ₹322.

The Blind Following Conundrum

The immediate losses prompted a public exchange on social media between an investor and Ashish Kacholia, who was associated with the stock through his holding. When confronted about the losses, Mr. Kacholia responded with a succinct piece of market wisdom: "Crowd should not follow blindly, right?"

This exchange encapsulates a critical issue in the Indian equity market. While investments by "celebrity investors" generate immediate headlines and draw retail attention, the underlying risks and entry points are often vastly different for an HNIs/QIBs versus a small retail investor. As one user aptly put it, "When celebrity investors invest, they get headlines. When you copy them, you get headaches."

A Buying Opportunity or a Value Trap?

Despite the current negative sentiment and below-par listing, some investors see a silver lining. Proponents of the company point to its strong regional presence, particularly in West Bengal, where it is a dominant FMCG brand for wheat-based derivatives like *atta*, *maida*, and *sooji*, and its diversification into packaged instant mixes and spices. The company's B2C segment drives nearly 77% of its revenue, highlighting its consumer connect.

Financially, Ganesh Consumer reported revenues of ₹855.16 crore in FY25, up 12% year-on-year, with Profit After Tax (PAT) growing 31% to ₹35.43 crore. However, the business operates in a high-volume, low-margin segment, reflected in its FY25 EBITDA margin of 8.61% and PAT margin of 4.17%.

The company plans to use the fresh issue proceeds for debt repayment and setting up a new gram flour manufacturing unit in Darjeeling.

The current situation highlights that while a company's fundamentals and regional dominance (as evidenced by the West Bengal presence) might appeal to long-term value investors, a "star" investor's backing is not a guarantee against short-term volatility or a poor listing. The Ganesh Consumer episode serves as a powerful reminder that every investor, regardless of who they follow, must conduct independent research before committing capital. The risk—and the reward—ultimately belongs to the individual.