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High single-digit volume growth; margins hit by higher RM costs

Bikaji Foods (BFL)’s 1Q revenue grew 12.5% to INR7.3b, led by ~7.7% YoY volume growth. Its EBITDA/APAT grew 2.8%/ 1.6% YoY. Western Snacks (+21.3% YoY) was the fastest-growing category, followed by Ethnic Snacks (+11.4% YoY) and Packaged Sweets (+4.4% YoY), while Papad declined by 6.5% YoY. Management highlighted that June and July witnessed strong demand across product categories and channels, with the last 45 days of the quarter delivering ~20% growth. Total direct coverage stands at 371k outlets; the company added ~17k outlets during the quarter with a reach of 1.5m outlets and aims to reach ~500k outlets over the next three years. The company expects mid-teen growth to resume from 2Q onwards, supported by healthy demand across core and focus markets. The margin is expected to be 13.0-13.5% for FY27 (including PLI). The retail business grew by around 72% YoY, with the store network expanding from 15 to 28 stores

High single-digit volume growth; outlook remains strong

Management stated that the quarter was hit by temporary production disruptions during the first 45 days due to the Chairman's demise and labor shortages. However, demand recovered strongly from Jun’26 onwards with healthy momentum continuing into Jul. The company remains confident of delivering more than 15% growth in FY27, supported by a strong festive season, expanding distribution, and robust performance in focus markets. While edible oil and pulse inflation continue to pressure input costs, the company has implemented selective price hikes and expects margins to improve through operating leverage and a favorable product mix. Quick commerce and retail businesses continued to witness strong growth, while exports were temporarily affected by higher freight costs and tariff-related uncertainties. We expect revenue to clock ~15% CAGR over FY26-28, fueled by higher growth in Western snacks and followed by ethnic snacks.

Operating margin (including PLI) to reach 13.5% by FY27

Gross margin remained resilient despite sharp inflation in edible oil and packaging materials as margins increased by 70bp YoY to 35.7%. BFL implemented ~4.5% price hikes along with selective grammage reductions to offset inflationary pressures. EBITDA came at INR990m (+2.8% YoY), settling EBITDA margin at 13.5% (-130bp YoY). Ex-PLI, EBITDA margin was 11.8% (-85bp YoY). Management expects EBITDA margin for FY27 to remain in the range of 13% to 13.5%, including PLI benefits due to higher A&P spend over the next three quarters

Valuation and view: Reiterate BUY

We expect BFL to benefit from accelerating demand for branded snacks, shifting consumer preferences, and increasing traction within modern trade and ecommerce channels. BFL is set to deliver industry-leading growth, with revenue, EBITDA (ex PLI), and PAT (ex PLI) CAGRs of 15%, 20%, and 26% over FY26-28. We trim our earnings by 9% for FY27/FY28 due to lower margin guidance and reiterate our BUY rating with a DCF-based TP of INR770 (based on an implied P/E of 55x on FY28E). Key risks: geographical concentration in core markets and the potential entry of new competitors in Rajasthan.

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