What is the potential margin in the spice business, and how should it be valued?
-ITC acquired Sunrise Food for 2150 crores 2021- at that time Sunrise Food was doing a revenue of 591 crores with operating margin of 88 crores. OPM of Sunrise was around 18%.
-Based on news reports of HUL acquisition of MDH- MDH is working on 42% OPM. almost 500 crores operating profit on 1200 crores topline.
-Badshah Masala was working on 25% OPM, when acquired by Dabur.
-Eastern Condiment was acquired by Okra [MTR Foods] for around 2000 crores.
Based on these reports, a spice company can work on 20-25% OPM. A strong brand equity, purity and quality of products may also result in higher margins.
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