IGI Logo

Bikaji Foods Ltd : Avoid

Key Highlights

* Company Background: Bikaji Foods is the third largest ethnic snacks company in India with an international footprint, selling Indian snacks and sweets. They are the second fastest growing company in the Indian organized snacks market and manufactures products like Bikaneri bhujia, namkeen, western snacks, papad, sweets, etc. In India, their core markets are in the states of Rajasthan, Assam and Bihar but also have expanded footprint across 23 states and four union territories in India as of June 30, 2022. Amongst, international countries they serve in North America, Europe, Middle East, Africa, and Asia Pacific.

* Diversified portfolio and a well-established brand: The company sells all of their products under its well-established Bikaji brand. They are focused on a diverse range of quality products, authentic ethnic Indian taste and innovative packaging. Over the years, Bikaji have established their products across all key price points, enjoys strong brand recognition and consumer loyalty in India as well as international markets which is positive. Amongst the product portfolio, ~75% is contributed via its bhujia and namkeen segments and remaining comes from papad, sweets and western snacks.

* Growing distribution network and e-commerce channel in India: As of June 30, 2022, they had 6 depots, 38 super stockists, 416 direct and 1,956 indirect distributors, located across 23 states and 4UT in India. They have developed long standing relationships with super stockists and direct distributors which ensures that their products reach the end retailer in an efficient manner. Further, they have entered into arrangements with various modern retail channels including supermarkets, hypermarkets and retail store chains either directly or through super-stockists. In addition, they have listed their products on various large popular ecommerce platforms, distribution start-ups as well as on their own website. (www.bikaji.com)

* Future growth plans: Going ahead, Bikaji plans to strengthen its presence by adding products and investing behind its brand. Besides, its plan is to add 2 new manufacturing facilities in Bihar by FY24, for manufacturing of frozen snacks and sweets products. Lastly, focus will be on expanding distribution reach and capturing new markets.

* Financial: On the financials front, the company has seen strong growth wherein revenue/PAT grew by 22.8% and 6.1% CAGR over FY20-22. However, on the valuation front, Bikaji is trading at 94x P/E multiple FY22 basis which seems expensive. Hence, we would suggest avoiding the IPO.

* Key Risk: 1) Intense competition in the Indian food market. 2) Expensive valuation.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://www.religareonline.com/disclaimer

SEBI Registration number is INZ000174330

Views express by all participants are for information & academic purpose only. Kindly read disclaimer before referring below views. Click Here For Disclaimer