IPO Note : Bikaji Foods International Ltd By Geojit Financial Services

Incorporated on 1995 at Bikaner in Rajasthan, BFIL has market leadership in the ethnic snacks market in Rajasthan, Assam and Bihar. The company has operations across 23 states and four union territories and is also exporting products to other countries. In the six months ended June 30, 2022, the company sold more than 300 products under the Bikaji brand.

• India’s packaged food business is currently valued at ?4,240 billion and is estimated to grow at a CAGR of 8% in the next five years to reach ?5,798 billion. Indian savoury snacks market is valued at ?751 billion in 2022 and is expected to reach ?1,227 billion by 2026 at a CAGR 13%.

• BFIL has a track record of three decades in the Indian snacks industry, and the company has grown its sales at a CAGR of 22% and its EBITDA and PAT increased at a CAGR of 21% and 16%, respectively, between FY20 and FY22, while maintaining healthy profitability.

• Bikaji has developed a large pan-India distribution network with 6 depots, 38 super-stockists, 416 direct and 1,956 indirect distributors that work with their super-stockists as of June 30, 2022.

• BFIL intends to operationalise two manufacturing facilities in the next two years; one in Rajasthan to manufacture frozen snacks and sweets, and a facility in Bihar to manufacture namkeen and western snacks.

• BFIL’s revenue grew 23% YoY in FY22, while its net profit fell 13% YoY due to higher raw material costs in FY22. Revenue for Q1FY23 increased by 26% YoY to 419.2cr, while net profit was 15.7cr. H2FY23 is anticipated to be better due to moderation in cost.

• At the upper price band of ?300, BFIL is available at a P/E of 98.5x (FY22), which appears expensive compared to its peers. Considering its consistent top-line growth, industry leading position, future expansion plans, new product launches, investments in strengthening the brand recall and good future prospects for the packaged food business, we assign a ‘Subscribe’ rating on a short -term basis for high-risk investors.

Purpose of IPO

The IPO consists of only an offer for sale. The objects of the offer are to (i) achieve the benefits of listing the equity shares on the stock exchanges and (ii) carry out the offer for sale of up to 29,373,984 equity shares by the selling shareholders.

Key Risks

• Significant dependence on the sale of Bhujia and Namkeen products(~70% of sales) and on the sale of family pack stock keeping units(60% of sales).

• The sale of food products from three core markets of Rajasthan, Assam and Bihar amounted for ~70% of total sales.