Bikaji Foods International Limited - IPO Note 104P India Bikaji
Bikaji Foods International Limited - IPO Note 104P India Bikaji
Bikaji Foods International Limited - IPO Note 104P India Bikaji
IPO Note
Recommendation: Avoid
About the Company:
⚫ Incorporated in 1995, Bikaji Foods International is the 3rd largest ethnic snacks company in India with an
international footprint, selling Indian snacks and sweets, and is the second fastest growing company in the
Indian organized snacks market.
⚫ The company has owned 7 operational manufacturing facilities – 4 in Bikaner, one in Assam, Karnataka and
Bihar each. The primary raw materials required for production of snack foods are pulses, flour, oil, spices
and seasoning, sugar, milk and other dairy products.
⚫ The company has divided its products in 2 segments – family packs products (i.e., packs priced at more than
₹10) and impulsive purchase packs (i.e., packs priced at ₹5 and ₹ 10). Family pack products contributed
60.57% to the sales of food products in FY22. The company’s products include Bhujia, Namkeen, Packaged
sweets, Papad, Western snacks and other snacks.
Issue Highlights:
Issue Objective:
⚫ The Selling Shareholders will be entitled to the entire proceeds of the Offer after deducting the Offer
expenses and relevant taxes thereon. The Company will not receive any proceeds from the Offer.
Promotor Holding:
⚫ Deepak Agarwal, the Managing Director and Promoter, has been instrumental in managing their rapidly
expanding operations, implementing strategic marketing and business initiatives, and focusing on financial
performance.
⚫ Apart from the MD, the promoters of the company are Shiv Ratan Agarwal, (35.4%), Deepak Agarwal
(16.6%), Shiv Ratan Agarwal (HUF)(24.5%)
Financial Highlights:
⚫ Bhujia: In FY22, 584.4 million packets of bhujia were sold amounting to ~₹560 crore accounting for ~35% of
the sale of food products. Key export regions for Bhujia outside India include Asia Pacific, North America and
Middle East.
⚫ Namkeen: There are 66 snacks classified under the namkeen category. In FY22, 696.3 million packets of
namkeen were sold amounting to ~₹570 crore accounting for ~35.6% of the sale of food products.
⚫ Packaged sweets: There are 43 products classified under packaged sweets. In FY22, 22.7 million packets of
packaged sweets were sold amounting to ~₹203.5 crore accounting for ~12.7% of the sale of food products.
⚫ Most of the company’s revenue came from two segments, bhujia and namkeen. Bhujia and Namkeen
accounted for 70% of revenue, followed by packaged sweets with nearly 13% of total sales.
Competitive Landscape:
⚫ In terms of revenue, Bikaji foods is below Britannia and Nestle but above smaller companies (Pratap and
DFM).
⚫ All companies in the segment are trading at higher PE (Except DFM). PE of Bikaji is on the higher side
compared to its peers.
⚫ The revenue has grown at a CAGR of 22.45% over the last 3 years.
Well-established Bikaji brand with a diversified range of products has helped the company in achieving a
strong growth rate.
Industry outlook:
⚫ Packaged food industry has been a fast growing one in India in the recent years. The packaged food industry
is currently valued at ₹424000 crores. The Indian savory snacks market is expected to grow to ₹122700
crores by FY26 from its current value of ₹75,100 crores in FY22.
⚫ The growth in the industry has been due to rising incomes, urbanization and changing lifestyles. The
estimated growth of CAGR has been approximately at around 8% in the next 5 years.
⚫ The strong growth of the online grocery segment is expected to continue which will eventually drive the
demand for ready-to-eat, packaged foods.
Rating:
At the upper price band the company demands a trailing PE of 98 times and price to sales of 4.4 times. In terms
of revenue, Bikaji foods is below Britannia and Nestle but above companies like Pratap. Pratap which reported
similar revenue but reported a loss due to cost pressures in the past 12 months trades 1.5 times sales. Given the
high valuation, stiff competition and low margin business we recommend not to subscribe it.
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RESEARCH
Huseain Kaizer Bharuchwala DGM and Head of Equity Research +91-44 - 4004 7360 huseainkb@chola.murugappa.com
Mugilan K Technical Analyst +91-44 - 4004 7353 mugilank@chola.murugappa.com
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