Shares of Inghams Group Limited (ASX: ING) have landed on the ASX today following what has been one of the most hotly anticipated initial public offers (IPOs) of 2016.

Inghams’ shares began trading at 12pm Sydney time, at a price of $3.15. That is considerably below the indicative price range presented in the group’s prospectus, which indicated the shares would trade between $3.57 and $4.14 with a market capitalisation somewhere around $1.3 billion to $1.5 billion. Instead, it listed with a market capitalisation just under $1.2 billion.

The shares fell 2 cents on debut to $3.13.

Inghams Group is one of Australia’s biggest poultry producers, selling products such as roast chickens, chicken nuggets and schnitzels as well as turkey drumsticks. As you’d expect, most of these are sold in supermarkets across Australia and New Zealand. The company generated between 55% and 60% of its revenue from its top five customers in financial year 2016 (FY16).

Source: Inghams Group prospectus

Source: Inghams Group prospectus

As we’ve seen with Coca-Cola Amatil Ltd (ASX: CCL) in recent years, Inghams’ reliance on businesses such as Woolworths Limited (ASX: WOW) and Coles (owned by Wesfarmers Ltd (ASX: WES)) to get its products to market does pose a key risk for investors. These companies have the ability to pass pricing pressure on to suppliers, and Inghams isn’t immune.

Indeed, Inghams showed in its prospectus that a 1% decline in the average selling price of its products would reduce its net profit in 2017 (forecast to be $98.8 million) by almost $17 million.

It also faces stiff competition. Inghams controls 40% of the Australian market, according to its prospectus, compared to 33% for its rival Baiada. Meanwhile across the Tasman, TEGEL GRP FPO NZX (ASX: TGH), or Tegel Group, is the dominant player with 48% market share compared to Inghams’ 34%.

Although Inghams’ shares are trading at a discount compared to the price many expected to pay, an investment in the business still has its risks. As indicated above, Woolies and Coles could choose to flex their purchasing power at some point in the future, while seed and grain costs could also rise which would increase Inghams’ cost base.

If you’re still interested in buying shares of Inghams, I’d suggest having a read of this article first. Otherwise, there are plenty of other great shares across the ASX to consider – especially following the recent pull back in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.