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Distribution expansion to drive future growth

We interacted with the management of Bikaji Foods International (BFL) to gain insights into the evolving trends across BFL’s business segments and its growth outlook. Below are the key highlights from our discussion:

* Distribution expansion remains the key growth lever for BFL, with numeric distribution at ~60% in core states and ~5% in focus markets. Growth in Rajasthan (~90% weighted distribution) will be driven by higher throughput per store, while states like Bihar, Assam, UP, Punjab, and Haryana will contribute through outlet expansion, with the company targeting ~50k direct outlet additions annually. Management expects ~12%+ growth in core states and ~18% in focus states, supported by A&P campaigns such as “Bhujia Ho To Bikaji” and “Kya Baat Hai Ji,” with marketing spends of ~2-2.5% of revenue.

* Strong positioning in bhujia and namkeen, with region-specific offerings such as murukku in the south and aloo bhujia in UP. Namkeen remains one of the fastest-growing segments with mid-teen growth aspirations, while western snacks’ contribution is expected to rise to 10-11% in the next three years. BFL has expanded its manufacturing footprint through a mix of in-house facilities and contract manufacturing, with total capacity of ~325,320 MT. BFL is currently operating at ~46-48% utilization, which is expected to improve to ~70% over the next 3-4 years.

* Margins and growth outlook: We expect BFL to deliver industry-leading growth, with revenue, EBITDA, and PAT (excluding PLI) CAGRs of 15%, 29%, and 39%, respectively, over FY25-28. We expect gross margin in the range of ~34% and operating margin to reach ~14% (excl. PLI) by FY28.

Distribution expansion would be the key growth driver

Distribution expansion remains the key growth lever for BFL. Based on the total industry distribution outlets, numeric distribution for BFL stands at ~60% in core states and ~5% in focus markets, indicating significant headroom for further distribution expansion. In Rajasthan, weighted distribution is already ~90%, where growth is primarily driven by higher throughput per store, while Bihar and Assam are expected to contribute through expansion in distribution outlets. Focus states (UP, Punjab, Haryana) are gaining traction, while Delhi remains relatively weaker. The company targets 50k direct outlets annually (50% from core states where the target would be small towns and 50% from focus states where town population is more than 100k) for the next 2-3 years. Management expects core states to grow by 12%+ and focus states to grow ~17-18%. On A&P, management has launched two major campaigns—“Bhujia Ho To Bikaji” and “Kya Baat Hai Ji”—by Pankaj Tripathi for the UP market and expects marketing investments to remain around ~2-2.5% of revenue, along with ~4-6% BTL spending to strengthen market capture.

Strategic capacity, localized product to support demand growth

BFL has strategically expanded its manufacturing footprint, operating in-house production facilities across key regions and few contract manufacturing partnerships to ensure scalable capacity and extensive reach. The total production capacity stands at 325,320mt with current utilization at ~46-48%, which is expected to improve to ~70% over the next 3-4 years. The company continues to leverage its strong positioning in bhujia, which remains a staple snack in Rajasthan and Assam, while tailoring its portfolio for regional preferences across other markets. The company anticipates mid- to high-teen growth in namkeen and high single digits in bhujia over the next 2-3 years. Further, management expects western snacks to grow ~18-20%, increasing their contribution to ~10-11% of total sales from ~8% currently.

Leveraging strategic alliances and acquisitions

BFL is driving growth through strategic acquisitions, JVs, and a cautious QSR foray under its “House of Brands” strategy. Key moves include buying stakes in The Hazelnut Factory (THF), Ariba Foods, and Bhujialalji, a JV with Mr. Khaleel Brand and a 50-50 JV with Nepal’s Chaudhary Group to localize production and expand the total addressable market. In THF acquisition, management expects INR2.5b in revenue over two years, with per-store throughput of INR70-80m, a ~two-year payback and ~25% store-level EBITDA. Mr. Khaleel Brand is expected to generate INR1b in revenue over the next two years, focusing on premium breads and cakes. Nepal JV is expected to generate INR200-500m in revenue within the next two years. Currently, these acquisitions contribute ~5-6% of total sales and are expected to clock ~20%+ CAGR over the next 2-3 years.

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. The company is driving growth through expansion into new categories, such as western snacks, cookies, and frozen foods, supported by distribution gains in both urban and rural markets. BFL is set to deliver industryleading growth, with a CAGR of 15% in revenue, 29% in EBITDA, and 39% in PAT (excluding PLI) over FY25-28. We reiterate our BUY rating with a DCF-based TP of INR900 (based on an implied P/E of 55x on FY28E).

* Key risks: geographical concentration risk due to heavy reliance on core markets and the potential entry of new competitors in Rajasthan (refer to our IC note dated Jan’26).

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