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Bikaji Foods International Ltd : Subscribe

Issue Open: November 03, 2022

Issue Close: November 07, 2022

Incorporated in 1995, Bikaji Foods International Limited (Bikaji Foods) is among the India’s leading fast-moving consumer goods ("FMCG") brands. The company was the largest manufacturer of Bikaneri bhujia, and were the second largest manufacturer of handmade papad in Fiscal 2022. Its product range includes six principal categories: bhujia, namkeen, packaged sweets, papad, western snacks as well as other snacks which primarily include gift packs (assortment), frozen food, mathri range and cookies. As of June, 2022, company has footprint across India including 23 states and four union territories.

Positives: (a) Well-established brand with pan-India recognition. (b) Strategically located, large-scale sophisticated manufacturing facilities with stringent quality standards. (c) Extensive pan-India and global distribution network, arrangements with reputed retail chains and growing eCommerce and exports channel.

Investment concerns: (a) Inability to anticipate and adapt to evolving consumer tastes, preferences. (b) Ensure product quality or reduction in the demand of bhujia products. (c) An inability to maintain or enhance the popularity of “Bikaji” brand.

Outlook & Valuation: In terms of valuations, the post-issue P/E works out to 98.5x FY22 EPS (at the upper end of the issue price band) which is in line with its peers like Prataaap Snacks Ltd, Nestle India Limited and Britannia Industries Limited. Further, Bikaji has better revenue/PAT growth (CAGR of 22%/16% respectively) over 2 years, Also company has a very strong brand recall with the name “Bikaji” and pan india presence. Considering all the positive factors, we believe this valuation is at reasonable levels. Thus, we recommend a SUBSCRIBE rating on the issue.

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