Temasek’s pricey bite of Haldiram is a risky bet on India’s consumer market
At its best, Haldiram Snack Food Pvt. Ltd is a great example of a successful Indian family business. At its worst, it is a purveyor of products that have become an unhealthy addiction for India’s middle class. Private equity feeds on such dichotomies. Which explains why Temasek picked up a 10% stake in India’s largest snack brand—almost two years after the Haldiram’s promoters, the Aggarwal family, decided to dilute their holding in it.
Several other investors including Bain, Blackstone, and Abu Dhabi Investment Authority (ADIA) also eyed a bite of Haldiram. But most of those conversations floundered over valuation issues.
The ₹8,500 crore (nearly $977 million) that Temasek is paying for a 10% stake in Haldiram values the snacks company at nearly $10 billion, a significant premium over what its financials suggest. Haldiram’s total revenue in 2023-24, including that of its overseas business, was about ₹10,000 crore, or $1.2 billion. The Temasek deal’s valuation multiple of nearly 9 times Haldiram’s revenue is higher than Bikaji Foods International Ltd’s 7 times valuation multiple.
The price tag for Haldiram, though, may be a reflection of the Singapore state-owned investment firm’s belated entry into a business that’s been a PE favourite for over 10 years. Urbanization, changing lifestyles, and young consumers are driving demand for convenience foods in India even as the market for packaged snacks transitions from the unorganized to the organized sector.
Market research company IMARC in a report pegged the Indian snack foods market at ₹46,571 crore in 2024, projecting it to grow to ₹1,01,811 crore by 2033 at a compound annual growth rate of 8.63% during 2025-2033. Margins in the business are high, ranging from 25-40%.
This explains the private equity rush to capture a piece of India’s snacks market, and investments like Sequoia India’s in Fingerlix and Wow! Momo, the Belgium-based Verlinvest’s in Veeba Foods and Epigamia, General Atlantic’s in Anand Sweets, and Premji Invest’s in ID Fresh Food.
Haldiram: A prize catch with challenges
Haldiram’s well-diversified product portfolio spanning traditional and modern sweets and snacks, its strong heritage with high consumer trust, an expansive distribution network across India, along with a strong presence in overseas markets populated by the Indian diaspora, and its vertically integrated manufacturing, make it a big prize in the food space.
But increasingly, Haldiram faces intense competition from large companies like ITC, PepsiCo, Britannia, and Parle. The shift toward organized retail and quick commerce requires distribution strategies different from Haldiram’s traditional strengths in general trade.
In addition, growing health consciousness among urban consumers poses a threat to the 87-year-old firm’s traditional oil-rich and fried snacks portfolio.
Besides, global snacks giants are also increasingly targeting the Indian market with localized offerings and competing in higher-margin premium segments, which requires different capabilities from what Haldiram is used to in its mass market of traditional snacks.
The merger of the Nagpur and Delhi factions of the family business two years ago brought a semblance of unity. The two sides spun off the fast-moving consumer goods business of the Delhi’s faction’s Haldiram Snacks Pvt. Ltd (HSPL) and the Nagpur side’s Haldiram Foods International Pvt. Ltd (HFIPL) into a newly incorporated entity named Haldiram Snacks Foods Pvt. Ltd—56% owned by HSPL and 44% by HFIPL.
But the Kolkata faction that wasn’t part of the family agreement remains at large and it isn’t clear how its rights to the use of the brand name will be affected by the stake sale to Temasek.
That Temasek has chosen to ignore these threats suggests it is convinced that some of Haldiram’s other suitors will also come on board in the next one year. An initial public offering (IPO) could give Temasek an exit option though the PE firm is known to hold.
Temasek’s India gambit
Philosophically, Temasek groups its portfolio companies into four structural trends—digitization, sustainable living, longer lifespans, and future of consumption. Haldiram clearly doesn’t fit the first three, so by default it goes into the last bucket.
India, now Temasek’s third-largest investment destination outside Singapore, is crucial to the PE firm’s future after many of its bets in China slumped following a market slowdown. Temasek has committed to investing $10 billion in India over the next three years.
The Haldiram deal may be one of more in the Indian consumer space that offers a promise of higher rewards than in banking and finance. But for Temasek’s latest deal to pay off, Haldiram will have to overcome its internal and external challenges.
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