About the company:
Bikaji Foods International Limited
About the Company
Bikaji Foods is the third largest ethnic snacks company in
India with an international footprint, selling Indian snacks and sweets, and
are the second fastest growing company in the Indian organised snacks market.
Its revenue is generated from 6 business segments namely,
bhujia, namkeen, packaged sweets, papad, western snacks and other snacks. In
2008, they also set up a restaurant-cum- retail store Bikaji Food Junxon in
Mumbai.
Issue Details
|
Price Band
|
Rs. 285 to Rs. 300 per share
|
|
Issue Open Date
|
Nov 3, 2022
|
|
Issue Close Date
|
Nov 7, 2022
|
|
Minimum Bid Lot
|
50 Equity Shares
|
|
Approx. IPO Size
|
Rs. 881 Cr.
|
|
IPO Proceeds
|
Offer for Sale
|
Segment Contribution
as of 30th June 2022
|
Bhujia
|
35%
|
|
Namkeen
|
39%
|
|
Packaged sweets
|
7.6%
|
|
Western snacks
|
8.7%
|
|
Papad
|
7%
|
|
Other snacks
|
1.4%
|
|
Other (Restaurants)
|
1.3%
|
Key Positives
Strong retail
presence: Bikaji has developed a large pan-India distribution network. As
of June 30, 2022, they had six depots, 38 super stockists, and 416 direct and
1,956 indirect distributors on board. These are located across 23 states and
four union territories in India.
Brand Value: The
Company has deep penetration in its core markets, with a 45% market share in
Rajasthan and 58% in Assam.
Resilient
Distribution Network: As of June 30, 2022, Bikaji had six depots, 38 super
stockists, 416 direct and 1,956 indirect distributors that work with their
super stockists, located across 23 states and four union territories in India
managed by the on-ground sales team comprising of 119 employees.
Market Leadership:
In Fiscal 2022, Bikaji was the largest manufacturer of Bikaneri bhujia with an
annual production of 29,380 tonnes. The company is the second largest
manufacturer of handmade papad with an annual production capacity of 9,000
tonnes in 2022. Also, it is the third largest player in the organized sweets
market with an annual capacity of 24,000 tonnes for packaged rasgulla 23,040
tonnes and 12,000 tonnes for Soan Papdi and Gulab Jamun respectively.
Financial Snapshot
|
Particulars (In Rs. Crores)
|
FY2020
|
FY2021
|
FY2022
|
For Quarter Ended June 30, 2021
|
For Quarter Ended June 30, 2022
|
|
Revenue from Operations
|
1,074.6
|
1,310.7
|
1,611.0
|
334.1
|
419.2
|
|
Gross Profit
|
329.6
|
373.9
|
440.7
|
85.4
|
102.2
|
|
Gross Margin (%)
|
30.68%
|
28.52%
|
27.35%
|
25.56%
|
24.37%
|
|
EBITDA
|
94.6
|
144.8
|
139.5
|
26.0
|
30.8
|
|
EBITDA Margin (%)
|
8.80%
|
11.04%
|
8.66%
|
7.78%
|
7.35%
|
|
Profit After Tax for the Period
|
56.4
|
90.3
|
76.0
|
12.4
|
15.7
|
|
PAT Margin (%)
|
5.25%
|
6.89%
|
4.72%
|
3.72%
|
3.75%
|
|
ROE (%)
|
10.65%
|
14.89%
|
9.50%
|
2.08%
|
1.94%
|
|
ROCE (%)
|
12.79%
|
20.88%
|
13.89%
|
3.01%
|
2.63%
|
|
Debt / Equity
|
0.1
|
0.14
|
0.17
|
0.16
|
0.19
|
Risks
·
The company has 70-72% of its revenue derived
from Assam, Bihar and Rajasthan. There is a risk of high geographical
concentration.
·
70% of revenue is derived from ethnic snacks
namely, bhujia and namkeen. The company's revenue can be affected if it fails
to maintain its product mix.
·
There is tough competition from the unorganised
sector, especially for sweets. Bikaji should manage to scale up its sweet
business in order to gain market share. This might put downward pressure on the
margins.
Conclusion
Bikaji Foods has market dominance in Bhujia and Namkeen with
an expanding foothold in packaged sweets and western snacks. The increasing
market share bodes well for the company. However, the company has seen
declining financials. The company comes at an FY22 earnings valuation of 95x PE
which seems expensive. Currently, we advise our investors with a high-risk
appetite to SUBSCRIBE FOR LISTING GAINS.
Nevertheless, given the growth potential, investors should keep Bikaji Foods on
their radar and reconsider their investment decisions once the company's
financials improve and valuations become reasonable.
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