Bikaji Foods International is back in focus after JM Financial reiterated ‘Buy’ rating on the stock, with a 12-month target price of Rs 785, implying an upside of about 27% from current levels of Rs 617. The brokerage said the recent correction in the stock presents an ‘opportunity to dig in’.
Let us find out why:
Mid-teen growth outlook remains intact
According to JM Financial, Bikaji is expected to sustain mid-teen revenue growth over the next few years, continuing its track record of outpacing the broader snacking industry. The company has already delivered a 19% sales CAGR between FY19 and FY25, well ahead of industry growth, and is expected to maintain that momentum through FY28, the report said.
According to the report, the company plans to add 50,000 direct outlets every year, targeting a network of 500,000 outlets over the next three to four years, up from around 350,000 currently. The brokerage firm believes that this will drive the company higher.
Margins to improve as utilisation rises
On the profitability front, the brokerage expects margins to improve gradually, with management targeting an EBITDA margin of around 15% over the next three to four years. The report noted that this will be supported by premiumisation, better capacity utilisation and scale-led cost efficiencies.
According to the brokerage firm, capacity utilisation currently stands at around 48–50%. Bikaji has already expanded margins by about 300 basis points over the past few years, and plans to continue this trajectory with an annual expansion of around 50 basis points, the report detailed.
Furthermore, the brokerage firm also noted that the company is expected to take price hikes to offset inflation in packaging materials, which have seen sharp increases of 35–40%.
New categories to drive next leg of growth
Beyond its core ethnic snacks business, Bikaji is expanding into new categories as part of its strategy to evolve into a broader foods company. The acquisition of The Hazelnut Factory (THF) in the premium sweets segment is showing strong traction, with sales doubling to about Rs 100 crore in a year and healthy store-level profitability, the report said.
The company has also entered the bakery segment through a joint venture, Bikaji Bakes, and is scaling up its presence in frozen foods and exclusive brand outlets.
Operational risks seen as manageable
JM Financial noted that near-term risks from geopolitical disruptions remain limited. Around 90% of Bikaji’s energy requirements are met through coal and briquettes, meaning the company does not have a direct risk from the gas shortage. According to the report, the company also maintains a 1.5 to 2-month inventory of packaging materials as a buffer.
Conclusion
As per JM Financial’s estimates, Bikaji’s net sales are expected to grow from Rs 2,548.3 crore in FY25 to Rs 3,902.4 crore by FY28. The return on equity is expected to remain healthy at around 17–18%, the report noted.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.