Samco securities limited

Bikaji Foods International Limited IPO

Add to Calendar 2022-11-03 12:00 AM 2022-11-07 12:00 AM Asia/Kolkata Bikaji Foods International Limited IPO Bikaji Foods International Limited IPO India

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. 

Issue Detail

  • Issue Open: Nov 03, 2022
  • Issue Close: Nov 07, 2022
  • Issue Type: Book Built Issue IPO
  • Face Value: Rs.1 per equity share
  • Price Band: Rs. 285 to Rs. 300 per share
  • Bid Lot:50 Shares
  • Minimum Order Quantity:50 Shares
  • Listing At: BSE, NSE
  • Issue Size: ~Rs. 881 crores

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