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BUY Bikaji Foods International

Palatable offering; initiate with BUY
Consumer Goods  Initiating Coverage  May 9, 2024 TARGET PRICE (Rs): 650

We initiate coverage on Bikaji Foods International (Bikaji) with a BUY and Mar- Target Price – 12M Mar-25

25E TP of Rs650/sh (25% upside), on 48x P/E. An enhanced brand image and Change in TP (%) NA
Current Reco. BUY
better pack-mix place Bikaji at an advantage to leverage the swiftly evolving
Previous Reco. NR
Indian savory snacks story (mkt size: Rs1.4trn as of FY22) set for double-digit
Upside/(Downside) (%) 25.0
growth. We build-in mid-teens sales growth, likely to elevate further, backed
CMP (07-May-24) (Rs) 520.0
by Company’s distribution drive across core & focus markets. Bikaji has built
capacity in the Frozen Foods space, which is not only fast gaining acceptance in
Stock Data BIKAJI
India but holds opportunities to enhance exports too. With scale, Bikaji is likely
52-week High (Rs) 606
to meet its aspirations, gaining access to India’s QSR segment. Given Bikaji’s
52-week Low (Rs) 363
better sales mix, operating leverage, and cost efficiency, we see its margin (ex
Shares outstanding (mn) 250.4
PLI) rising by 220bps, thus aiding ~32% earnings CAGR over FY24-26E.
Market-cap (Rs bn) 130
Bikaji Foods International: Financial Snapshot (Consolidated) Market-cap (USD mn) 1,559
Y/E March (Rs mn) FY22 FY23 FY24E FY25E FY26E Net-debt, FY24E (Rs mn) -1,972

Revenue 16,110 19,661 23,339 26,765 31,296 ADTV-3M (mn shares) -

EBITDA 1,395 2,136 3,967 4,525 5,345 ADTV-3M (Rs mn) 189.0

Adj. PAT 760 1,266 2,667 3,084 3,748 ADTV-3M (USD mn) 2.3
Adj. EPS (Rs) 3.0 5.1 10.7 12.4 15.0 Free float (%) 49.5

EBITDA margin (%) 8.7 10.9 17.0 16.9 17.1 Nifty-50 22,303

EBITDA growth (%) (3.6) 53.1 85.7 14.1 18.1 INR/USD 83.5

Adj. EPS growth (%) (18.0) 66.5 110.7 15.6 21.5 Shareholding, Mar-24
RoE (%) 10.7 14.3 25.3 24.6 25.7 Promoters (%) 75.1
RoIC (%) 12.0 15.1 27.7 31.5 36.8 FPIs/MFs (%) 7.7/13.5
P/E (x) 170.7 102.5 48.6 42.1 34.6
EV/EBITDA (x) 93.2 60.8 32.2 27.8 23.3
P/B (x) 15.8 13.6 11.2 9.6 8.3 Price Performance
FCFF yield (%) (0.1) 1.1 2.7 2.9 3.4 (%) 1M 3M 12M
Source: Company, Emkay Research; Note: Bikaji to have PLI benefits accruing in P&L from FY24 Absolute (3.6) (7.8) 39.7
Rel. to Nifty (2.7) (9.3) 13.2
‘Bhujia king’ aspires to become a pan-India food play
Bikaji has emerged as a strong savory snacks & sweets brand. The company is well-
1-Year share price trend (Rs)
placed to address demand on the back of quality products and its brand popularity. Based
600 Rs % 40
on its current portfolio, Bikaji’s TAM stands at Rs1.4trn, which is set to grow in low double
digits. Bikaji, with its distribution prowess, is likely to drive a faster mid-teens net sales 550 30

growth. It targets gaining scale across half of India (in identified core & focus markets), 500 20
primarily in the North (57% of sales), East (34% of sales), and South (~2% of sales), 450 10
where it is looking to develop categories amid fast formalization. Ahead-of-time capacity
400 0
(utilization at 46–48%) is likely to help it address demand more efficiently. Given that
85% of sales are concentrated in general trade (GT), we see throughput at a healthy 350 -10
May-23 Jul-23 Sep-23Nov-23 Jan-24 Mar-24May-24
>Rs2,000/month/outlet. With capacity ramping up for Frozen snacks (now largely BIKAJI IN EQUITY (LHS) Rel to Nifty (RHS)
focused on exports), the company aspires to venture into the Indian QSR space.

Healthy growth with a better mix aids margins, strengthens balance sheet
Unlike most traditional players, Bikaji's share of the bulk pack is ~60%, which shields
the company from any major raw-material volatility risks. We expect gross margin (GM;
ex-PLI) to remain steady at ~33% in the near term, and see 35% GM potential over the
medium term. EBITDA margin is expected to expand to 15.6% by FY26E, from 13.5% in Nitin Gupta
[email protected]
FY24, benefiting from leverage and cost efficiency. On the balance sheet front, we expect
+91 22 6612 1257
asset turns to see steady expansion (with better utilization) and the return profile getting
a lift, bolstered by improving margins. Soham Samanta
[email protected]
Healthy earnings visibility; initiate with BUY; 25% upside +91 22 6612 1262
We initiate coverage on Bikaji with a BUY recommendation and Mar-25E TP of Rs650/sh,
based on 48x P/E (3-stage DCF also offers a similar target price). Our target price factors
in earnings adjusted for the PLI benefit, which will expire in FY27. With Bikaji aiming to
become a total foods company, we see optionality in its QSR and export opportunities,
which are largely built into the valuation premium. Key downside risks: RM volatility;
regulatory noise around health.

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>Please refer to the last page of the report on Restrictions Refer to Important Disclosures at the end of this report
on Distribution. In Singapore, this research report or research analyses may only be distributed to Institutional Investors, Expert Investors or
Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Table of Contents

Focus charts.......................................................................................................... 3

Aspiring for wider food play, initiate with BUY ..................................................... 8

Initiating coverage with BUY and Mar’25 TP of Rs650 ............................................... 8

Key risks in the business ...................................................................................... 10

Geared for pan-India play .................................................................................... 13

Strategic capacities to help address demand better ................................................ 13

Meeting with Deepak Agarwal, Managing director .................................................... 15

PLI an enabler for Bikaji ....................................................................................... 16

Strategy in place for the core and focus markets ..................................................... 17

High salience of family pack helps protect margins .................................................. 21

Bhujialalji aimed to counter regional competition..................................................... 22

Leveraging brand power to the fullest .................................................................... 23

Business is posed for healthy growth.................................................................... 24

Bhujia continues to leverage Bikaneri edge ............................................................. 26

Namkeen, a pan India play with regional capacities ................................................. 27

Western snacks: Fastest growing savory snack segment .......................................... 28

Packaged sweets to gain traction with migrants ...................................................... 29

Papad segment thrust with strong Bikaji brand ....................................................... 30

Frozen foods to drive export revenue and QSR aspiration ......................................... 31

Healthy earnings to aid return profile ................................................................... 33

Expanded margins looks sustainable ..................................................................... 33

Balance Sheet continue to strengthen .................................................................... 38

Limited capital needs helps healthy cash generation ................................................ 41

Appendix1: Impulse food options gaining scale .................................................... 42

Savory snacks seeing faster formalization .............................................................. 43

Packaged sweets adoption to heighten on hygiene .................................................. 46

Papad category seeing penetration ........................................................................ 48

Appendix 2: Company Financials ........................................................................... 49

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |2
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Focus charts
Exhibit 1: Bikaji – Key revenue streams

100% 3% 4% 4% 4% 4% 4%
5% 5%
8% 8% 7% 7% 6% 6% 6% 6%
90%
4% 5% 5% 6% 8% 8% 10% 11%
80% 12%
13% 12% 13% 12% 13% Others
13% 13%
70%
Papad
60%
37% 37% 36% 36% Western snacks
50% 37% 37% 36% 35%
40% Sweets

30% Namkeen
20% 36% Bhujia
33% 32% 35% 33% 33% 32% 31%
10%
0%
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Source: Company, Emkay Research

Exhibit 2: Assessing Bikaji’s total addressable market and growth expectations

Overall category size and growth Organized category size Bikaji - Sales
Organized Organized
(Rs mn) FY22 FY26E CAGR FY22 FY26E CAGR FY23 FY26E CAGR
share share
Savory snacks 751 56% 1,227 60% 13% 423 739 15% 78% 77% 13%
Bhujia 67 119 15% 33% 31% 13%
Namkeen 114 204 16% 36% 35% 15%
Western snacks 242 416 15% 8% 11% 27%
Papad 78 33% 103 36% 7% 26 37 9% 6% 6% 12%
Sweets 593 10% 846 12% 9% 59 101 15% 12% 13% 20%
Frozen foods 1% 2% 29%
Others (Cookies, restaurant sales) 3% 2%
Total addressable market 1,422 36% 2,176 40% 11% 508 877 15% 100% 100% 16%

Source: Company, Emkay Research

Exhibit 3: Bikaji’s capacities across business streams

Western Frozen
Core product Bhujia Namkeen Papad Sweets
Snacks Foods
supplies from
FY23 sales mix 33.4% 36.2% 6.2% 8.2% 12.1%
main facilities
Owned Capacities

- Karni, Bikaner, Rajasthan 57,600mt 50,520mt 2,400mt 4,800mt 24,000mt 9,600mt

- Bichhwal I, Bikaner, Rajasthan 10,200mt 36,480mt
Addresses
- Bichhwal II, Bikaner, Rajasthan demand in North- 24,000mt 6,000mt
east states and
- Kamrup, Assam (Commenced production FY22) the eastern part 12,000mt 6,000mt
- Muzaffarpur, Bihar (Commenced production of West Bengal
3,000mt 1,800mt
FY22)^ Bengal
- Bikaner, Rajasthan# 3,600mt 4,500mt

Subsidiary capacities

- Tumakuru (Tumkur), Karnataka @ 6,000mt 6,000mt

3P facilities

- Kolkata, West Bengal Dedicated to *

Uttar Pradesh
- Kanpur, Uttar Pradesh (Exclusive 3P) 6,000mt 4,800mt

- Patna, Bihar 6,000mt 3,000mt

- Durg, Chhattisgarh (WIP) 6,000mt 4,800mt

Total 57,600mt 117,120mt 12,600mt 41,700mt 60,480mt 9,600mt

In-house (%) 100% 85% 100% 70% 100% 100%

Source: Company, Emkay Research

^ Vindhyawasini Sales Private became Bikaji’s wholly-owned subsidiary with effect from 1-Apr-22
# Hanuman Agrofood Private became Bikaji’s subsidiary with effect from 1-Jan-23 and a wholly-owned subsidiary from 25-Jan-23
@ Petunt Food Processors Private, in which Bikaji has 51.22% stake; also undertakes manufacturing for 3Ps
*Kolkata third-party unit is not exclusive to the company, as such capacity has not been highlighted
This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |3
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 4: Recent capacity build-up to address the wider market demand

Location Commissioning date Comments

Tumkur, Karnataka Feb-21 Petunt Food Processing Private (Subsidiary)
Guwahati, Assam 14-Jan-22 Own facility
Vindhyawasini Sales Private (became subsidiary from
Muzaffarpur, Bihar 31-Mar-22
With built-up capacity, 1-Apr-22)
Bikaji’s capacity utilization Kolkata, West Bengal In operations Contract manufacturing arrangement, non-exclusive
stands at 46-48% Kanpur, Uttar Pradesh 13-Sep-22
Contract manufacturing arrangement with Hanuman
Agrofood
Bikaner, Rajasthan 16-Aug-22 Contract manufacturing arrangement
Contract manufacturing arrangement with Dadiji
Patna, Bihar Aug-23
Snacks Private, on exclusive basis
Durg, Chhattisgarh WIP To be commissioned

Source: Company, Emkay Research

Exhibit 5: Bikaji’s geographical focus

The company has an overall

outlet reach of 1mn outlets,
amid a universe of 8.6mn,
wherein 23% of this is
being addressed directly by
the company

Source: Company

Exhibit 6: Bikaji’s category market focus – Category size as of FY22

Ethnic Western
(Rs bn) Sweets Papad Total
Savories Snacks
Rajasthan 34 42 23 9 108
Bihar 16 42 13 3 74
Assam 8 22 9 2 41
Core market 58 106 45 14 223
Given the competitive
As a % of India 16% 18% 12% 19% 16%
intensity (strong regional
Delhi NCR 26 58 30 5 119
players) in the western
Uttar Pradesh 51 46 33 4 134
region, the company is not
Punjab 16 31 17 4 68
aggressive in this market
Haryana 18 21 18 4 61
Karnataka 8 16 20 2 46
Telangana 10 19 12 3 44
Focus market 129 191 130 22 472
As a % of India 35% 32% 34% 29% 33%
Indian market coverage 51% 50% 46% 48% 49%

Source: Company, Emkay Research

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |4
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 7: Assessing throughput per outlet for our coverage universe (on MRP)

General Overall Direct Throughput

Domestic Trade GMV Throughput per Direct
FY23 sales trade outlet retail per store –
sales margin + sales store – Overall reach (mn
(Rs bn) share reach sales Direct
(Rs bn) Tax (Rs mn) (Rs/month/outlet) outlets)
(%) (mn) (%) (Rs/outlet)
HUL 582 570 30% 814 75% 9.0 5,654 45% 3.00 7,633
ITC 191 191 30% 273 74% 7.0 2,401 41% 2.50 2,757
Nestlé India 168 161 30% 230 82% 5.2 3,022 55% 1.60 5,402
Britannia 160 151 30% 216 85% 6.3 2,424 52% 2.60 3,055
GCPL 132 75 30% 108 82% 6.0 1,225 50% 1.00 3,676
Dabur 114 82 30% 116 74% 7.9 909 45% 1.40 2,308
Marico 97 74 30% 105 85% 6.5 1,144 50% 1.70 2,188
Colgate 52 49 30% 70 63% 5.6 661 36% 1.00 1,332
Emami 34 28 30% 40 74% 4.9 502 43% 0.90 1,176
Honasa (GT sales) 14 14 50% 29 21% 0.2 3,263 41% 0.04 5,000
Bikaji 20 20 35% 30 85% 1.0 2,138 30% 0.23 2,789

Source: Emkay Research

Exhibit 8: Assessing throughput per outlet across core and focus markets (on net sales)

FY24 Core Focus Other states

General trade revenue (Rs mn) 18,992 13,484 3,039 2,469
% of Bikaji 100% 71% 16% 13%
Universe – Outlet (mn) 8.61 1.37 2.96 4.28
Overall reach - Outlet (mn) 1.05 0.76 0.18 0.12
% of universe 12% 55% 6% 3%
% of Bikaji 100% 72% 17% 11%
Throughput per outlet per month (Rs) 1,507 1,488 1,407 1,789

Direct - Outlet (mn) 0.23 0.09 0.12 0.02

Of Bikaji's direct outlet % of Bikaji 100% 39% 52% 9%

reach of 231K, 93K is in % of overall reach 22% 12% 66% 17%

core markets and 119K in Revenue from direct outlets (Rs mn) 4,748 3,371 2,279 617
focus markets, with 20K As a % of revenue 25% 25% 75% 25%
forming the balance market Throughput per outlet per month (Rs) 1,707 3,019 1,595 2,612
Multiple of overall throughput (x) 1.1 2.0 1.1 1.5
Indirect – Outlets (mn) 0.82 0.66 0.06 0.10
% of Bikaji 100% 80% 7% 12%
% of overall reach 78% 87% 33% 83%
Indirect/Direct (x) 3.5 7.1 0.5 4.8
Revenue from indirect outlets (Rs mn) 14,244 10,113 760 1,852
Throughput per outlet per month (Rs) 1,451 1,273 1,039 1,619

Source: Emkay Research

Exhibit 9: Direct outlet reach thrust to continue aiding growth

450
400
400

350
('000 of outlets)

300
250
232
250 209
The company aims for an
200 162
outlet reach of 1.2-1.25mn 149
150
within the next couple of
100 72
years
50

0
Mar'22 Mar'23 Jun'23 Sep'23 Dec'23 Mar'24 Mar'26

Source: Company, Emkay Research

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |5
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 10: Pack salience for FY23 Exhibit 11: Bikaji has a relatively low salience of impulse packs
(priced at Rs5 and Rs10)

Impulse packs Family packs Impulse pack

100% 90%
90% 84%
80%
70%

39% 60%
50% 39%
40%
61%
30%
20%
10%
0%
Bikaji Gopal Snacks Prataap Snacks

Source: Company, Emkay Research Source: Company, Emkay Research

Note: Bikaji and Gopal Snacks: based on FY23 data; Prataap Snacks:
based on FY22 data

Exhibit 12: Summary of cash flow

(Rs mn) FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E
EBITDA 933 946 1,448 1,395 2,136 3,967 4,525 5,345
PBT 759 636 1,201 1,050 1,706 3,486 4,112 4,997
Tax (214) (117) (173) (411) (466) (819) (1,028) (1,249)
PAT 545 520 1,029 639 1,240 2,667 3,084 3,748
Non-cash and non-operating items 213 348 282 434 554 481 413 348
Changes in working capital (70) (321) (90) (498) (33) 56 (304) (372)
Operating cash flow 687 547 1,220 575 1,762 3,204 3,193 3,724
As a % of PAT 126% 105% 119% 90% 142% 120% 104% 99%
As a % of EBITDA 74% 58% 84% 41% 82% 81% 71% 70%
Capex (733) (405) (737) (1,078) (806) (467) (535) (626)
Free cash flow (46) 141 482 (504) 955 2,737 2,658 3,098
As a % of PAT -8% 27% 47% -79% 77% 103% 86% 83%
As a % of EBITDA -5% 15% 33% -36% 45% 69% 59% 58%

Source: Company, Emkay Research

Exhibit 13: Peer analysis – Revenue and growth trends

(Rs mn) FY18 FY19 FY20 FY21 FY22 FY23

Revenue
Haldiram North 26,219 30,730 37,086 41,004 50,354 63,746
Balaji 18,400 19,723 23,360 29,386 40,029 49,249
Haldiram Nagpur 20,476 24,803 26,892 29,185 35,492 41,052
Bikaji 7,813 9,014 10,746 13,107 16,110 19,661
Prataap Snacks 10,174 11,706 13,938 11,711 13,966 16,529
Gopal Snacks 6,891 8,160 8,862 11,289 13,522 13,947
Bikanervala Foods 7,755 9,350 10,919 9,814 10,073 12,093
DFM Foods 4,253 4,836 5,079 5,241 5,545 5,861
Haldiram Prabhuji 3,305 3,943 3,699 3,023 3,778 4,709
Revenue growth
Haldiram North NA 17.2% 20.7% 10.6% 22.8% 26.6%
Balaji 30.1% 7.2% 18.4% 25.8% 36.2% 23.0%
Haldiram Nagpur 28.7% 21.1% 8.4% 8.5% 21.6% 15.7%
Bikaji 28.5% 15.4% 19.2% 22.0% 22.9% 22.0%
Prataap Snacks 13.8% 15.1% 19.1% -16.0% 19.3% 18.4%
Gopal Snacks 10.1% 18.4% 8.6% 27.4% 19.8% 3.1%
Bikanervala Foods 20.6% 16.8% -10.1% 2.6% 20.1%
NADFM Foods 24.4% 13.7% 5.0% 3.2% 5.8% 5.7%
Haldiram Prabhuji 2.6% 19.3% -6.2% -18.3% 25.0% 24.7%

Source: Gopal Snacks IPO Document, Capitaline

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Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
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May 9, 2024 |6
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 14: Peer Analysis – Gross margin

FY18 FY19 FY20 FY21 FY22 FY23

Haldiram North 39.8% 37.6% 36.0% 34.0% 29.6% 34.1%
Balaji 26.7% 22.2% 21.0% 14.8% 12.7% 20.2%
Haldiram Nagpur 36.1% 35.5% 34.7% 33.4% 28.5% 29.0%
Bikaji 28.5% 28.5% 30.7% 28.5% 27.4% 29.0%
Prataap Snacks 32.4% 29.9% 28.9% 27.7% 25.1% 27.4%
Gopal Snacks 15.6% 17.5% 21.9% 18.1% 20.6% 28.4%
Bikanervala Foods NA 40.2% 35.0% 37.6% 31.4% 30.4%
DFM Foods 39.8% 41.3% 39.3% 40.3% 36.1% 39.2%
Haldiram Prabhuji 27.7% 32.0% 44.3% 32.4% 32.7% 33.0%

Source: Gopal Snacks IPO Document, Capitaline

Exhibit 15: Peer Analysis – EBITDA margin

FY18 FY19 FY20 FY21 FY22 FY23

Haldiram North 18.8% 16.2% 15.5% 15.1% 10.7% 15.1%
Balaji 17.6% 12.7% 10.1% 4.6% 3.7% 13.1%
Haldiram Nagpur 18.3% 19.2% 15.0% 17.2% 12.7% 14.6%
Bikaji 12.8% 10.3% 8.8% 11.0% 8.7% 10.9%
Prataap Snacks 8.3% 7.1% 7.0% 5.1% 2.6% 3.3%
Gopal Snacks 2.1% 1.8% 4.7% 5.3% 7.0% 14.1%
Bikanervala Foods NA 9.9% 7.0% 9.3% 4.2% 7.1%
DFM Foods 11.9% 13.1% 7.6% 10.4% -4.0% -7.1%
Haldiram Prabhuji 4.8% 5.7% 17.7% 12.4% 12.2% 6.6%

Source: Company, Capitaline

Exhibit 16: Return profile of savory snack peers

Return on equity Return on capital employed

FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23
Bikaji Foods International 10.9% 10.7% 14.9% 9.3% 13.3% 16.4% 12.7% 18.4% 11.6% 16.7%
Haldiram (Nagpur + Delhi) 21.8% 17.8% 16.3% 12.4% - 27.8% 19.8% 18.8% 14.6% -
Bikanervala Foods 18.3% 11.1% 11.2% 8.3% - 21.1% 9.9% 12.4% 9.9% -
Prataap Snacks 8.0% 7.7% 2.3% 0.5% 3.0% 9.4% 5.6% 1.4% 0.7% 0.0%
Balaji Wafers 10.2% 9.5% 1.8% 0.4% 22.5% 13.3% 9.8% 1.0% -0.1% 25.5%
PepsiCo India Holdings 0.4% 12.2% 5.6% 1.3% 7.7% 0.4% 9.4% 4.5% 1.0% 13.8%
DFM Foods 25.3% 16.8% 16.1% 16.2% - 30.3% 15.6% 25.1% -17.8% -
Gopal Snacks 29.7% 30.8% 15.6% 23.4% 38.6% 25.6% 32.1% 13.5% 18.7% 43.1%

Source: IPO Document

Note: ROE (%) = Profit after Tax/Total Equity; ROCE (%) = (EBITDA – Depreciation and amortization expense) / (Total Equity + Short-term borrowings +
Long-term borrowings – Cash and cash equivalents)

Exhibit 17: Emkay’s FMCG Coverage – Valuation Snapshot

Average historical
Rating TP Upside Mcap P/E (x) FY26E PER vs. Emkay valuation
forward PER (x)
(USD 5Y 10Y vs. 5Y
(Rs/sh) FY24E FY25E FY26E 3Y 5Y 10Y P/E (x)
bn) avg P/E avg P/E avg P/E
ITC BUY 520 18% 65.9 27.6 24.4 22.1 20.9 19.8 22.8 12% -3%

Hindustan Unilever ADD 2,500 5% 67.0 56.0 51.6 46.7 55.5 53.6 44.7 -13% 4% 49 -10%

Nestlé India REDUCE 2,600 4% 29.0 76.4 69.7 62.6 66.3 65.0 56.1 -4% 12% 65 0%

Britannia Industries ADD 5,550 7% 14.9 58.2 51.3 44.7 47.7 47.2 44.1 -5% 1% 48 0%
Godrej Consumer
ADD 1,350 2% 16.2 97.6 56.6 48.9 44.9 42.3 39.6 15% 23% 50 20%
Products
Dabur India BUY 660 18% 11.9 52.5 45.7 39.1 41.3 38.2 33.5 2% 17% 46 20%

Colgate-Palmolive SELL 2350 -18% 9.3 58.2 53.0 48.8 44.4 42.3 40.0 16% 22% 42 0%

Marico ADD 600 3% 9.0 50.8 46.2 41.0 39.9 40.5 39.4 1% 4% 40 0%

Emami BUY 600 14% 2.8 31.5 29.5 26.7 26.8 26.3 31.5 2% -15% 31 20%

Honasa Consumer BUY 500 17% 1.7 135.8 85.5 60.1 NA NA NA NA NA NA NA

Bikaji^ BUY 650 25% 1.6 66.9 49.3 38.6

Source: Company, Bloomberg, Emkay Research; Note: Prices based on close of business as on 7-May-2024; ^ P/E based on PLI adjusted EPS

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |7
 Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Aspiring for a wider food play; initiate with BUY

Bikaji emerged stronger in the Indian savory snacks space with a dominant share in Bhujia.
With its core and focused market strategy, the company has charted out its pan-India
We see 16% sales/32% expansion journey. Aided by differentiated marketing initiatives and better brand perception,
earnings CAGR over FY24- the company has improved family pack salience, which not only drives revenue growth and
26E market share but also helps profitability. The company, with ~1mn outlet coverages, has
decent throughput per outlet, which is much better compared with some of the traditional
FMCG players.

As the company leverages the pan-India opportunity with steady expansion in distribution, we
see a net sales CAGR of 16% over FY24-26E. Aided by steady margin improvement from a)
improving sales mix, b) operating leverage, and c) cost-optimization initiatives, we see
In the long run, Bikaji
adjusted earnings (ex-PLI) growth to be ~32% over FY24-26E. In the long run, as the company
aspires to be a total foods
aspires to transform into a total food company, we see added optionality emerging in the
company
business. From a near to medium-term perspective, we see a case for frozen foods and QSR
expansion.

We initiate coverage on Bikaji with a BUY and Mar-25E

TP of Rs650/share
With improving sales mix, business scale-up, and cost-optimization initiatives in place, we see
profitability improving, with EBITDA margin expansion of ~220bps over FY24-26E to 15.7%.
We initiate coverage on Bikaji with a BUY recommendation and Mar-25 TP of Rs650/share,
We initiate coverage with based on 48x P/E. We have used earnings adjusted for PLI benefit, as the benefit will expire in
BUY and Mar-25E TP of FY27. Scale up of frozen food products is an optionality from the QSR aspiration perspective;
Rs650/share, which offers we have not factored in any positives from the initiative as of now.
25% upside
Bikaji to see valuation re-rating on strong earnings growth visibility

Amid our traditional foods companies’ coverage, we ascribe 65x valuation multiple to Nestlé
India (relative premium justified, on strong parent portfolio, resilient management execution
prowess, and category opportunity) and 48x to Britannia (leadership in biscuits and aspiring to
become a ‘total foods company’ with multiple category endeavors), both in line with their
respective last five-year average forward P/E. Our discretionary team (led by Devanshu Bansal)
covers Varun Beverages and has assigned 50x P/E to the TP.

We expand our foods companies coverage with our initiation on Bikaji. We see Bikaji well placed
to drive a mid-teens top-line and 32% earnings growth. With scale, Company’s asset-turn is
likely to see steady expansion (current utilization at 46-48%) which, along with improving
margin, would lead to healthy improvement in the company’s ROIC profile. We value Bikaji at
48x P/E, which is in line with our valuation multiple for Britannia. We see the journey of savory
snacks to be akin to that of Biscuits, a vertical that has seen steady formalization. Focusing on
divergent segments, both entities (Bikaji and Britannia) aspire to become a ‘Total Food
Company’ and address a near-similar TAM opportunity.

Exhibit 18: Emkay’s Foods and Beverages coverage – Valuations

Price Mcap TP Upside P/E (x) EV/sales (x) RoE (%) CAGR (FY24-26E)

(Rs/sh) (Rs bn) Reco (Rs/sh) (%) FY25E FY26E FY25E FY26E FY25E FY26E Sales Earnings

Nestlé India 2,509 2,419 Reduce 2,600 4 69.7 62.6 11.3 10.1 100.1 106.5 11% 10%

Britannia Industries 5,174 1,246 Add 5,550 7 51.3 44.7 6.8 6.2 60.3 65.6 10% 14%

Varun Beverages 1,443 1,875 Add 1,500 4 70.7 53.8 9.6 7.8 32.9 32.7 23% 30%

Bikaji 520 130 BUY 650 25 49.3 38.6 4.7 4.0 24.6 25.7 16% 32%

Source: Bloomberg, Emkay Research; Note: Prices based on close of business on 7-May-2024

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |8
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Discounted cash flow also suggests significant upside

We have also used a discounted cash flow approach to evaluate the fair value of Bikaji Foods.
We have estimated detailed financials for the next 10 years, followed by the next 10-year
period of growth convergence to a terminal growth of 5%. Overall, we arrive at a similar target
price as that using the PER-based approach.

Details of our three-stage valuation:

 Stage 1 (FY25E-34E, explicit period): During this period, we estimate revenue CAGR of
about 12%. We expect EBITDA margin to see a 300bps expansion in 10 years to 20%.
EBITDA CAGR is likely to be 14%, while earnings CAGR ~15%.

 Stage 2 (FY34E-44E, implicit period): During this period, we estimate revenue/earnings

CAGR of ~6%/7%, resp. Earnings-to-FCF conversion is likely to remain steady at ~95%.

 Stage 3 (FY43E & beyond, terminal period): We assume terminal growth of 5%.

Exhibit 19: Fair value using the discounted cash-flow approach

Key assumptions
Risk free rate 7.3%
Observed Beta (x) 0.8
Market return 10.0%
Cost of Equity 9.5%
Terminal growth 5.0%
Fair value analysis (Rs mn)
NPV (explicit FY25E-34E FCF) 32,336
NPV (explicit FY35E-FY44W FCF) 39,158
NPV (terminal value) 88,382
Enterprise value (Rs mn) 159,876
Less: Net Borrowing (FY23) -2,300
Less: Minorities (FY23) 0
Equity value (Rs mn) 162,176
Shares outstanding (mn) 250
Fair value / Target price (Rs/sh) 650
Current share price 520
Upside 25%

Source: Emkay Research

Exhibit 20: DCF-based Sensitivity analysis

WACC
8.5% 9.0% 9.5% 10.0% 10.5%
3.0% 657 588 535 530 481
Terminal

4.0% 735 647 582 576 517

growth

5.0% 857 736 650 642 567

6.0% 1077 883 757 745 642
7.0% 1590 1178 951 931 767

Source: Emkay Research

Key assumptions

 We ascribe 5% terminal growth rate, given Company thrust on the foods & beverages
segment.

 We have used a weighted average cost of capital/cost of equity of 9.5%, which takes into
consideration a risk free rate of 7.25%, market return of 10%, and observed beta of 0.8x.

 Our double-digit growth assumption for the implicit and explicit periods is largely a factor
of increased formalization of food categories. We see premiumization opportunities in the
segment, wherein offerings are largely positioned at the value end.

 Premiumization opportunities in the core portfolio are likely to help Bikaji expand margin
on a sustainable basis which will support double-digit earnings.

 Better growth and margin potential will drive a valuation premium.

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |9
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 21: Explicit period – Cash-flow forecasts

(Rs mn) Mar-25E Mar-26E Mar-27E Mar-28E Mar-29E Mar-30E Mar-31E Mar-32E Mar-33E Mar-34E
Net Sales 26,765 31,296 35,284 40,211 44,989 49,982 55,480 61,028 66,520 72,507
- growth 14.7% 16.9% 12.7% 14.0% 11.9% 11.1% 11.0% 10.0% 9.0% 9.0%
Total Cost 22,240 25,951 29,050 33,435 37,197 41,005 44,939 49,127 53,216 58,006
EBITDA 4,525 5,345 6,234 6,776 7,792 8,977 10,541 11,900 13,304 14,501
- margin 16.9% 17.1% 17.7% 16.9% 17.3% 18.0% 19.0% 19.5% 20.0% 20.0%
Depreciation 598 609 651 691 734 782 813 833 842 845
as a % of sales 2.2% 1.9% 1.8% 1.7% 1.6% 1.6% 1.5% 1.4% 1.3% 1.2%
Other income 276 345 414 496 571 657 755 831 914 1,005
- growth 25.0% 25.0% 20.0% 20.0% 15.0% 15.0% 15.0% 10.0% 10.0% 10.0%
Oper. EBIT 4,203 5,081 5,996 6,582 7,629 8,852 10,483 11,898 13,376 14,662
Interest 91 84 70 56 42 28 29 30 32 34
PBT 4,112 4,997 5,926 6,526 7,587 8,824 10,454 11,867 13,344 14,628
Tax 1,028 1,249 1,511 1,664 1,935 2,250 2,666 3,026 3,403 3,730
Tax rate 25.0% 25.0% 25.5% 25.5% 25.5% 25.5% 25.5% 25.5% 25.5% 25.5%
Reported PAT 3,084 3,748 4,415 4,862 5,652 6,574 7,789 8,841 9,941 10,898
Adjusted PAT 2,631 3,358 4,028 4,862 5,652 6,574 7,789 8,841 9,941 10,898
- growth 35.6% 27.6% 20.0% 20.7% 16.3% 16.3% 18.5% 13.5% 12.4% 9.6%
Depreciation 598 609 651 691 734 782 813 833 842 845
Capex -535 -626 -895 -1,005 -1,125 -1,250 -1,138 -1,083 -1,094 -1,069
Capex/Dep 0.9x 1.0x 1.4x 1.5x 1.5x 1.6x 1.4x 1.3x 1.3x 1.3x
Decreased in Working Capital -304 -372 -459 -521 -534 -443 -555 -305 -333 -363
as a % of net sales -1.1% -1.2% -1.3% -1.3% -1.2% -0.9% -1.0% -0.5% -0.5% -0.5%
Free Cash Flow 2,390 2,970 3,325 4,027 4,728 5,664 6,909 8,286 9,356 10,311
Growth 12.8% 24.2% 12.0% 21.1% 17.4% 19.8% 22.0% 19.9% 12.9% 10.2%
FCF-to-PAT 90.8% 88.4% 82.5% 82.8% 83.7% 86.2% 88.7% 93.7% 94.1% 94.6%
FCF-to-sales 8.9% 9.5% 9.4% 10.0% 10.5% 11.3% 12.5% 13.6% 14.1% 14.2%

Source: Emkay Research

Exhibit 22: Implicit period forecast

(Rs mn) Mar-35 Mar-36 Mar-37 Mar-38 Mar-39 Mar-40 Mar-41 Mar-42 Mar-43 Mar-44
Free Cash Flow 11,310 12,347 13,415 14,505 15,608 16,713 17,810 18,886 19,929 20,925
growth 9.7% 9.2% 8.6% 8.1% 7.6% 7.1% 6.6% 6.0% 5.5% 5.0%

Source: Emkay Research

Key risks in the business

Sustained raw-material volatility to have a bearing on performance
Any volatility in raw-material prices has a bearing on the financial health of the company.
Inflationary pressures are being managed with effective price hikes, which at times invite
competition. Effecting price hikes also involves decent time. In case raw-material volatility is
sustained, the company would be under pressure to maintain its margin.

Bikaji brand concentration

The company’s sales are
largely under the Bikaji With a single-brand focus, the company optimizes A&P spending and leverages a wider product
brand; in the past, it had base. In case the Bikaji brand gets into any legal tussle, the company will see performance
different branding for its impact across the portfolio. The recent acquisition of Bhujialal is focused on countering mass-
western snack offerings priced competition. Given high in-home production reliance, we do not see any major risk of
brand concentration.

Higher revenue concentration in the core market

The company generates ~70% revenue from core markets like Rajasthan, Assam, and Bihar.
The company aspires to grow faster in the focused market, where it generates ~15% revenue.
The company’s inability to drive growth in focused markets would be a key risk ahead.

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |10
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

High regulatory setting

Given the company’s focus on the foods category, the company needs to comply with multiple
regulations related to production, distribution, and consumption. Any non-compliance of
regulation would lead to disruption in business operations.

Supply-chain disruption to hurt its focus on market aspirations

The company is aiming to chart healthy double-digit, ahead-of-sector growth by 1.3x. In the
core market, the company’s focus would be to gain share and expand throughput per outlet.
While in the focus market, the company’s emphasis would be on expanding its distribution
reach. The company’s distributors reduced in FY23, where it had realigned distribution in Uttar
Pradesh, shifting from super stockists to direct distributors. Going ahead, these kind of supply
chain-related fixes may delay the growth path.

Bhujia production concentrated in Bikaner

The company generates one-third of its revenue from Bhujia, which has a pan-India appeal,
given the Geographical Indication (GI) tag attached to it. We see two risks from production
concentration a) increased logistics costs, as the company gains scale pan-India and b) any
disruption in the base state to have a bearing on pan-India supplies. Given production is done
in a specific climatic setting, Bhujia made in Bikaner tastes better vs. that produced in any
other part of India.

Exhibit 23: Emkay’s FMCG Coverage – Valuation Snapshot

Average historical
Rating TP Upside Mcap P/E (x) FY26E PER vs. Emkay valuation
forward PER (x)
(USD 5Y 10Y vs. 5Y
(Rs/sh) FY24E FY25E FY26E 3Y 5Y 10Y P/E (x)
bn) avg P/E avg P/E avg P/E
ITC BUY 520 18% 65.9 27.6 24.4 22.1 20.9 19.8 22.8 12% -3%

Hindustan Unilever ADD 2,500 5% 67.0 56.0 51.6 46.7 55.5 53.6 44.7 -13% 4% 49 -9%

Nestlé India REDUCE 2,600 4% 29.0 76.4 69.7 62.6 66.3 65.0 56.1 -4% 12% 65 0%

Britannia Industries ADD 5,550 7% 14.9 58.2 51.3 44.7 47.7 47.2 44.1 -5% 1% 48 2%
Godrej Consumer
ADD 1,350 2% 16.2 97.6 56.6 48.9 44.9 42.3 39.6 15% 23% 50 18%
Products
Dabur India BUY 660 18% 11.9 52.5 45.7 39.1 41.3 38.2 33.5 2% 17% 46 20%

Colgate-Palmolive SELL 2350 -18% 9.3 58.2 53.0 48.8 44.4 42.3 40.0 16% 22% 42 -1%

Marico ADD 600 3% 9.0 50.8 46.2 41.0 39.9 40.5 39.4 1% 4% 40 -1%

Emami BUY 600 14% 2.8 31.5 29.5 26.7 26.8 26.3 31.5 2% -15% 31 18%

Honasa Consumer BUY 500 17% 1.7 135.8 85.5 60.1 NA NA NA NA NA NA NA

Bikaji ^ BUY 650 25% 1.6 66.9 49.3 38.6

Source: Company, Bloomberg, Emkay Research; Note: Prices based on close of business as on 7-May-2024 ^ P/E based on PLI adjusted EPS

Exhibit 24: Emkay FMCG Universe — Valuations

EV/Sales (x) EV/EBITDA (x) Dividend payout (%) Dividend yield (%)

FY24E FY25E FY26E FY24E FY25E FY26E FY24E FY25E FY26E FY24E FY25E FY26E

ITC 7.5 6.9 6.3 21.3 18.6 16.9 88 83 83 3.2 3.4 3.7

Hindustan Unilever 9.2 8.6 8.0 38.7 36.1 32.8 99 100 102 1.8 1.9 2.2

Nestlé India 9.9 11.3 10.1 41.2 46.5 42.1 49 60 78 0.6 0.9 1.2

Britannia Industries 7.5 6.8 6.2 39.0 35.1 31.3 83 99 99 1.4 1.9 2.2

Godrej Consumer Products 9.4 8.7 7.8 44.5 38.1 33.8 111 56 67 1.1 1.0 1.4

Dabur India 7.7 6.9 6.2 39.3 34.2 29.0 52 53 54 1.0 1.2 1.4

Colgate-Palmolive 13.5 12.5 11.5 40.5 36.9 33.9 87 85 85 1.5 1.6 1.7

Marico 7.8 7.1 6.4 36.9 33.0 29.3 83 71 70 1.6 1.5 1.7

Emami 6.3 5.8 5.3 23.6 21.2 18.9 48 56 56 1.5 1.9 2.1

Honasa Consumer 6.8 5.5 4.6 99.3 57.6 40.0 0 0 0 0.0 0.0 0.0

Bikaji 5.7 4.8 4.0 32.2 27.8 23.3 25 35 45 0.5 0.8 1.3

Source: Company, Bloomberg, Emkay Research; Note: Prices based on close of business as on 7-May-2024

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |11
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 25: Emkay FMCG Universe — Return profile and free cash conversion

ROE (%) ROCE (%) FCF yield (%) FCF/PAT (%)

FY24E FY25E FY26E FY24E FY25E FY26E FY24E FY25E FY26E FY24E FY25E FY26E

ITC 29.4 32.0 32.8 33.0 36.2 38.3 3.0 3.0 3.4 83 78 79

Hindustan Unilever 19.7 21.2 23.5 25.5 27.7 30.7 1.7 1.9 2.0 98 97 96

Nestlé India 109.2 100.1 106.5 181.2 133.4 141.6 2.5 1.3 1.4 153 91 87

Britannia Industries 57.3 60.3 65.6 45.6 53.2 60.1 1.3 1.7 2.1 74 92 96

Godrej Consumer Products 15.3 18.0 19.3 16.3 18.2 20.2 -0.4 1.8 2.1 -25 101 102

Dabur India 20.0 20.9 22.2 18.9 21.3 22.7 1.4 1.8 2.1 76 77 82

Colgate-Palmolive 74.3 73.7 71.9 41.6 43.4 43.9 1.6 2.5 2.2 80 111 88

Marico 38.8 40.1 40.1 91.8 91.3 89.4 1.8 1.9 2.1 106 103 103

Emami 28.4 26.2 26.2 32.1 30.5 30.6 3.5 3.4 3.8 109 100 100

Honasa Consumer 12.1 14.0 17.0 15.3 17.7 21.4 1.0 1.4 1.8 131 119 107

Bikaji 25.3 24.6 25.7 28.7 32.7 38.1 2.7 2.4 2.9 133 118 114

Source: Company, Bloomberg, Emkay Research; Note: Prices based on close of business as on 7-May-2024

Exhibit 26: Valuation summary for Indian HPC and F&B players (on Consensus)

MCap P/E (x) EV/Sales (x) EV/EBITDA (x)

CMP
(USD bn) FY24 FY25 FY26 FY24 FY25 FY26 FY24 FY25 FY26
(Rs/share)
Hindustan Unilever 2,379 67.0 54.3 50.5 45.6 9.0 8.5 7.8 38.3 35.7 32.2
Godrej Consumer Products 1,322 16.2 67.7 55.6 47.3 9.6 8.8 7.9 45.7 39.3 34.5
Dabur India 558 11.9 52.0 46.7 41.0 7.9 7.2 6.6 40.3 36.1 31.9
Marico 584 9.0 50.7 45.9 40.8 7.7 7.0 6.3 36.8 33.3 29.8
Colgate-Palmolive 2,863 9.3 59.9 55.0 50.3 13.6 12.6 11.6 41.2 37.8 34.8
Emami 526 2.8 29.8 27.1 24.4 6.4 5.9 5.4 23.8 21.4 19.2
Jyothy Labs 457 2.0 44.3 38.7 33.9 5.9 5.3 4.7 33.6 30.0 26.7
Honasa Consumer 428 1.7 135.2 90.2 61.4 7.1 5.7 4.7 101.7 64.7 43.6
Bajaj Consumer Care 258 0.4 22.2 19.3 16.8 3.1 2.8 2.6 18.3 15.6 13.6
India HPC players 129.1 57.5 51.4 45.5 9.2 8.6 7.9 40.9 36.7 32.6

Britannia Industries 5,174 14.9 57.7 51.4 45.6 7.4 6.8 6.1 39.4 35.6 31.9
Nestlé India 2,509 29.0 80.7 67.1 65.7 12.5 10.5 10.9 53.4 44.0 44.7
Tata Consumer Products 1,099 12.5 73.2 63.7 53.0 7.0 6.0 5.4 48.5 38.2 33.4
Varun Beverages 1,443 22.5 73.5 58.1 45.8 9.5 8.0 7.0 42.8 35.4 30.0
Adani Wilmar 338 5.3 277.0 52.2 42.7 0.9 0.8 0.7 42.0 22.4 19.5
Zydus Wellness 1,665 1.3 37.6 26.9 25.3 4.6 4.1 3.7 34.4 25.2 21.6
Bikaji Foods International 520 1.6 53.2 50.5 42.3 5.6 4.9 4.2 35.7 34.2 29.6
Mrs Bectors Food Specialties 1,249 0.9 52.9 44.4 35.4 4.5 3.9 3.3 30.2 25.4 20.9
Agro Tech Foods 730 0.2 137.0 79.6 58.6 2.3 2.2 1.9 47.0 35.2 24.4
Prataap Snacks 886 0.3 39.4 26.4 19.9 1.3 1.1 1.0 15.3 12.3 10.1
India F&B players 88.3 84.2 59.6 52.6 9.0 7.7 7.3 46.0 37.5 34.7

Source: Company, Bloomberg, Emkay Research; Note: Prices based on close of business as on 7-May-2024

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |12
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Geared to become pan-India play

Bikaji has emerged as a strong savory snacks and sweets brand, where the company is placed
well to address demand with quality and a well-accepted brand. The company is leveraging its
traditional Bikaner Bhujia heritage pan-India and, at the same time, is addressing demand in
other emerging segments like Namkeen and Western snacks. With expected double-digit
growth in the category, Bikaji is better placed to drive mid-teen topline growth, aided by steady
distribution expansion. The company is targeting to gain scale in half of India, primarily in
North, East, and South markets. The western region, which represents ~30% of the category,
is not a focus market for the company, given the high regional competition.

Company history: Bikaji’s promoter is part of the Haldiram family where, as a part of business
territory separation, the western region was allotted to Bikaji’s promoters. But with an
aspiration to address pan-India demand, Bikaji’s promoter created a new brand Bikaji (named
after Bikaner king – Rao Bika) in 1993. In 2016, the company set up its first mega factory in
Bikaner with a daily capacity of 500ton. In the last couple of years, it has expanded its
production base across India.

Exhibit 27: Haldiram family’s history and division of businesses

Ganga Bishan Agarwal

(Haldiram)

Moolchand Satyanarayan Rameshwarlal

Haldiram & Sons Haldiram Prabhuji

Son: Shiv Kishan
(1960; Closed down) (Kolkata; 1950)
Haldiram Nagpur
(1980) Son: Prabhu
Daughter:
Saraswati Devi Agarwal

Grand-son: Manish
Son: Manoharlal
Agarwal
Haldiram Delhi
(1984)
Son: Madhusudan

Bikaji (1993) Son: Shiv Ratan

Source: Company

Strategic capacities to help address demand better

Exhibit 28: Annual installed capacity by manufacturing facilities

(mt) FY19 FY20 FY21 FY22 FY23 Dec-23

Bhujia 45,600 45,600 52,373 57,600 57,600 57,600

Namkeen 64,825 67,938 71,134 77,446 105,120 111,120

Machine made papad 1,200 1,200 1,897 2,400 2,400 2,400

Western snacks 8,255 10,800 10,800 12,263 33,900 36,900

Packaged sweets 23,943 38,173 47,573 56,735 60,480 60,480

Handmade papad 10,200 10,200

Frozen Foods 9,600

Total 143,824 163,712 183,776 206,444 269,700 288,300

Change (YoY) 14% 12% 12% 31% 3%

Source: Company, Emkay Research

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |13
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

As can be seen in the capacity table below, the company has a healthy capacity in core markets
Bikaji’s plants have peak (73% of sales for FY23 and ~67% for 9MFY24). Additionally, it has been addressing capacity
revenue potential of needs in its focused markets (~15% of sales for FY23). The company’s overall capacity (at
~Rs45bn vs. revenue of 288,300mt) utilization is at 46-48%, which suggests capacity expansion needs to be limited
Rs20bn in FY23 over the medium term. With better distribution and strong brand recall, the company is poised
well to drive sales in focused markets.

Bikaji’s manufacturing capacities are strategically located near raw-material suppliers (efficient
procurement) as well as its core and focused markets. This aids in a) reducing lead time to its
service markets, b) optimization of freight costs, and c) delivery of fresh products (better taste
and quality). The company’s effort to add capacities through 3Ps will help it reach market in a
better way and drive asset-light operations.

Exhibit 29: Bikaji’s capacities across business streams

Western Frozen
Core product Bhujia Namkeen Papad Sweets
Snacks Foods
supplies from
FY23 sales mix 33.4% 36.2% 6.2% 8.2% 12.1%
main facilities
Owned Capacities

- Karni, Bikaner, Rajasthan 57,600mt 50,520mt 2,400mt 4,800mt 24,000mt 9,600mt

- Bichhwal I, Bikaner, Rajasthan 10,200mt 36,480mt
Addresses demand
- Bichhwal II, Bikaner, Rajasthan in Northeastern 24,000mt 6,000mt
states and the
- Kamrup, Assam (Commenced production FY22) eastern part of West 12,000mt 6,000mt
- Muzaffarpur, Bihar (Commenced production Bengal
3,000mt 1,800mt
FY22)^
- Bikaner, Rajasthan# 3,600mt 4,500mt

Subsidiary capacities

- Tumakuru (Tumkur), Karnataka @ 6,000mt 6,000mt

3P facilities

- Kolkata, West Bengal Dedicated to *

Uttar Pradesh
- Kanpur, Uttar Pradesh (Exclusive 3P) 6,000mt 4,800mt

- Patna, Bihar 6,000mt 3,000mt

- Durg, Chhattisgarh (WIP) 6,000mt 4,800mt

Total 57,600mt 117,120mt 12,600mt 41,700mt 60,480mt 9,600mt

In-house 100% 85% 100% 70% 100% 100%

Source: Company, Emkay Research

^ Vindhyawasini Sales Private became Bikaji’s wholly-owned subsidiary with effect from 1-Apr-22
# Hanuman Agrofood Private became Bikaji’s subsidiary with effect from 1-Jan-23 and a wholly-owned subsidiary from 25-Jan-23
@ Petunt Food Processors Private, in which Bikaji has 51.22% stake; also undertakes manufacturing for 3Ps
*Kolkata third-party unit is not exclusive to the company, as such capacity has not been highlighted

Exhibit 30: Bikaji’s manufacturing facility

The company operates with

four subsidiaries, of which
three entail production and
the fourth looks after the
US market

Source: Company

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Meeting with Deepak Agarwal, Managing Director

We met Deepak Agarwal, Managing Director at Bikaji Foods International, to gauge the
company’s aspirations as well as his vision of the savory snacks category. Deepak Agarwal is
looking to transform Bikaji into a total foods company in the long run.
Looking to meet its
aspiration of becoming a Aspiration to become a total foods company
total foods company by The company has a fair presence in savory snacks and packaged sweets. The next attempt for
expanding its portfolio from the company is to commission a frozen snacks facility, which will widen its product offerings.
savory snacks & sweets to As the company gets its frozen-snacks recipe right, it will explore opportunities in the Indian
frozen foods QSR segment, where traditional incumbents are seeing decent scale-up. Though the company
has no plans to explore the beverages space yet, we see it entering Indian beverages in the
long run (just as peer Haldiram is active in dairy-based and Indian beverages like aam panna).
We do not expect Bikaji to enter the large biscuits segment, given the stiff competitive intensity
there.

Indian consumption habits transforming; offer opportunity for savory snacks

Savory snacks have not replaced other food products, rather they are like incremental
Out-of-home consumption
for savories has seen consumption for a consumer. Savory snacks complement breakfast dishes better, e.g. French
acceleration, wherein fries go well with burgers and wafers complement sandwiches. Out-of-home consumption has
consumers look for accelerated, wherein consumers look for munching options and not for appetite appeasement.
munching options, not to Frozen snacks seeing greater consumer acceptance
appease their appetite Consumer convenience has become more of a trend, wherein frozen snack products have seen
greater acceptance than in the past. Large players like ITC and Nestlé India have also ventured
into the space. Bikaji is in the process of commissioning frozen capacity, which will address
demand in the domestic as well as export markets.

Savory snacks formalization

Savories are expected to Mr. Agarwal considers that like the transformation in the biscuits category in 2005 with
follow a similar path as increased formalization, it is now time for the savory snacks category to tread a similar path.
biscuits, which have seen Given GST implementation and the recent volatility in raw-material prices, the unorganized
steady formalization since sector has been under stress. Select regional players have enhanced presence pan-India, to
2005 further leverage the India opportunity, wherein consumer acceptance is heartening.

Innovation ahead would be crucial

Mr. Agarwal has been instrumental in Bikaji’s innovation, given his ancestral expertise in the
snacks category. He is exploring new-to-market innovative products, that give a boost to
snacking habits as the product format changes (like offering Bhujia in a snack-bar or wafer
format). The company has recently launched a Rs5 soan papdi pack called Patisa, which has
seen good acceptance by consumers. Going ahead, Company is looking to give competition to
the protein bar with its Indian sweet product, which will have peanut butter as one of its
ingredients. The company generates ~3% of revenue from new product launches.

Bikaji identifies its long-term strategy

Company thrust would be Unlike multiple product offerings emerging in the Indian snacking category, Bikaji is focusing
on innovation, aimed at on segments in which it has built capabilities. It is not looking to enter a segment just for
launching base products in growth. Case in point would be the popcorn segment, where procurement of corn is crucial.
different consumption Similarly, foxnut has healthy realizations, but sourcing is concentrated in Bihar; also A&P needs
formats as well as are high to gain scale.
leveraging new
opportunities M&A is part of its strategy, where it sees no organic fit
The company may look to track the inorganic route, where it does not see capability and is
crucial for its total foods company aspiration. Most of its product offerings are positioned for
the masses, where we see some M&A possibility in the super premium-end (roasted or baked
offerings) vertical.

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 Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 31: Recent capacity build-up to address a wider market demand

Location Commissioning date Comments

In the last couple of years,
the company has built Tumkur, Karnataka Feb-21 Petunt Food Processing Private (Subsidiary)

capacity with own and Guwahati, Assam 14-Jan-22 Own facility

contract manufacturers, to Vindhyawasini Sales Private (became a subsidiary

Muzaffarpur, Bihar 31-Mar-22
from 1-Apr-22)
address demand better and
Kolkata, West Bengal In operations Contract manufacturing arrangement, non-exclusive
aid logistics cost efficiency
Contract manufacturing arrangement with Hanuman
Kanpur, Uttar Pradesh 13-Sep-22
Agrofood
Bikaner, Rajasthan 16-Aug-22 Contract manufacturing arrangement
Contract manufacturing arrangement with Dadiji
Patna, Bihar Aug-23
Snacks Private, on exclusive basis
Durg, Chhattisgarh WIP To be commissioned by FY24-end

Source: Company, Emkay Research

Exhibit 32: Bikaji’s revenue split

Ecommerce, 2% Others, 1% Export, 4%

Modern trade, 8%

General
trade, 85%

Source: Company, Emkay Research

PLI is an enabler for Bikaji

Bikaji’s manufacturing units have qualified under the ‘Production Linked Incentive (PLI) Scheme
– Category-I,’ Segment-Ready to Cook/Ready to Eat, where it has committed to spending a
total of Rs4.4bn over FY21-24 in eligible capital assets up to 31-Mar-24 directly and through
contract manufacturing units and subsidiaries (benefit will accrue to the company as capex is
dedicated towards brand Bikaji). This will include Rs2.9bn to be spent by Bikaji (Rs2.6bn) and
its subsidiaries (Rs339mn) over FY21-24 along with the contract manufacturer (spending of
Rs1.5bn). The company has been sanctioned an incentive of ~Rs2.6bn to be received over five
years (FY22-27).

Exhibit 33: PLI-related capex investments (Rs4.4bn)

PLI-related capex
commitment is Rs4.4bn, Company spending Contract Manufacturer Subsidiaries

which will enable an

8%
incentive of Rs2.6bn over
FY21-27

34%

58%

Source: Company, Emkay Research

With the international
Bikaji has also received approval for PLI from the government pertaining to branding and
business, the company also
marketing abroad from FY22 through FY26. Under this, it would commit to spending Rs465mn
benefits from
reimbursement of branding towards promoting the brand abroad until FY26 – with a maximum incentive of ~Rs230mn
and marketing spends, under this incentive head. For the last three years, the company is likely to have logged
under the PLI cumulative income of Rs950mn (in Q4FY24).

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Strategy in place for its core and focus markets

Bikaji has a pan-India distribution network across 25 states and four union territories, but its
products are available only in 1mn outlets, amid pan-India universe of 8.6mn outlets (outlets
who address demand for savory snacks). The company is aiming for an overall outlet reach of
1.2-1.25mn outlets (from 1mn outlet reach now) in the next couple of years with direct outlet
coverage at 0.35-0.40mn outlets (from 0.23mn outlets now).

The company has been expanding its depots to better service its distributors and drive
throughput per outlet. In Uttar Pradesh, post distributor realignment, the company has two
depots in Ghaziabad (12.5K sq. ft.) and Varanasi. It is in the process of adding new depots in
Raipur, Chhattisgarh, and Delhi. These depots are aiding product freshness. In the non-focused
market, the company has added a depot in Ahmedabad (Gujarat) and Pune (Maharashtra).

Exhibit 34: Bikaji’s presence

(no. of) FY21 FY22 FY23

In States 22 23 25
In Union Territories 3 4 4
In Depots 5 6 3
With Super Stockists 43 38 37
With Distributors 2,082 2,372 1,917

Source: Company, Emkay Research

Exhibit 35: Bikaji's geographical focus

In the overall outlet

universe of 8.6mn, the
company has a reach of
1mn outlets, 23% of which
are being addressed
directly by the company

Of its 231K outlet reach, the

company has a direct outlet
reach to 93K outlets in core
markets and 119K in focus
markets, while the balance
market has a direct outlet
reach to 20K outlets

Source: Company

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 36: Bikaji’s outlet coverage across markets and key states

Indirect - Outlets (mn) Direct - Outlet (mn)

1,300
1,050
1,100

900 755

('000 outlets)
700 818
662
500

300 180
115
232 61
100
93 119 95
-100 20
FY24 Core Focus Other states

Source: Emkay Research

Core markets’ thrust on expanding throughput and direct reach

Classification of the core
market is based on The company's core markets are Rajasthan, Assam, and Bihar, where it enjoys a strong market
consumer base, market share in the organized Indian ethnic snack category with 47–48% in Rajasthan, 57% in Assam,
share, and brand pull. Here, and 26% in Bihar. Of the overall ~1.05mn outlet reach, the company has an outlet reach to
the focus is on the ~755K outlets in core markets. From the direct outlet reach perspective, of the ~232K outlets,
offering/selling range in it has a reach to ~93K outlets in core markets.
outlets which aids better
throughput  Rajasthan, base market, continues to grow: Of the core market sales, we estimate
70% of the revenue would be from Rajasthan. As the other core markets have seen faster
growth, the salience of Rajasthan has seen moderation. In Rajasthan, the outlet universe
stands at ~457K, of which ~306K is being reached by Bikaji. Its direct reach is up to 90K
outlets. The company addresses 90% of the orders in Rajasthan within 24 hours.
In its core markets of
Rajasthan, Assam, and  Bihar’s growth journey to accelerate with direct distribution thrust: In 1990s,
Bihar, the company now some of Bikaji’s distributors moved to the eastern part of India in the quest for a larger
has deep penetration, with business. They have helped Bikaji build a strong market, with 26% share. We estimate
market share of 47-48%, ~75K outlet reach for the company, where only ~2K outlets are being covered directly.
57%, and 26%,
 Assam has seen faster growth, capacity addition to boost growth: The company
respectively
added capacity in Guwahati in FY22. We estimate an outlet coverage of 265K, of the total
universe of 350K outlets. Given the terrain, establishing direct distribution is expensive,
as such its direct outlet reach is limited to 2K outlets. We see healthy growth to sustain
with expansion in direct reach and fresh product access from indigenous plants.

Focus market to see distribution-led growth

The company has identified its focus markets (addressable market 2x of the core market),
where it has identified four states – Haryana, Delhi, Punjab, and Uttar Pradesh, in north India
and Karnataka and Telangana, in South India. The focus states now have ~15% sales
contribution. In the focus market, the company is aiming for 1.5x growth over the core
markets. The focus market is likely to see healthy distribution expansion (direct reach at
~119K), which along with capacities near the market will enable Bikaji to rapidly drive revenue
from the focus market going ahead.

 Uttar Pradesh soon to be the core market: Amid focused markets, we see Uttar
Pradesh holds the potential to become the company’s core market. The company has less
than 1.5% share in the market, where trade sees the potential to double its share in the
next three years (turnover to double in the next three years). In the market, the relevant
outlet universe stands at 1.83mn, of which only 90K outlets are being covered by Bikaji.
The company is looking to expand its outlet coverage to 200K outlets. Bikaji now has direct
distribution in the market vs. operations through wholesale (still 50% of sales) and super
stockists in the past. Now it has two C&Fs (carry and forward agents) for the market based
in Varanasi and Ghaziabad. The company has indirect trade mapping (ITM), where it now
tracks product availability in retail outlets.

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 37: Assessing throughput per outlet across core and focus markets (on net sales)

FY24 Core Focus Other states

General trade revenue (Rs mn) 18,992 13,484 3,039 2,469
% of Bikaji 100% 71% 16% 13%
Universe – Outlets (mn) 8.61 1.37 2.96 4.28
Overall reach - Outlets (mn) 1.05 0.76 0.18 0.12
% of universe 12% 55% 6% 3%
% of Bikaji 100% 72% 17% 11%
Throughput per outlet per month (Rs) 1,507 1,488 1,407 1,789

Direct - Outlets (mn) 0.23 0.09 0.12 0.02

% of Bikaji 100% 39% 52% 9%
% of overall reach 22% 12% 66% 17%
Revenue from direct outlets (Rs mn) 4,748 3,371 2,279 617
As a % of revenue 25% 25% 75% 25%
Throughput per outlet per month (Rs) 1,707 3,019 1,595 2,612
Multiple of overall throughput (x) 1.1 2.0 1.1 1.5
Indirect – Outlets (mn) 0.82 0.66 0.06 0.10
% of Bikaji 100% 80% 7% 12%
% of overall reach 78% 87% 33% 83%
Indirect/Direct (x) 3.5 7.1 0.5 4.8
Revenue from indirect outlets (Rs mn) 14,244 10,113 760 1,852
Throughput per outlet per month (Rs) 1,451 1,273 1,039 1,619

Source: Emkay Research

Strategic thrust on gaining share in half of India

A detailed analysis of the state-wise TAM segmentation suggests that Bikaji is still focusing on
half of the Indian market. While the company is present across 25 states and 4 union territories,
its presence in the high penetrated western region (~30% of the industry) is limited to ~6%
of sales. The company has a high revenue concentration in North India (at ~57% of sales),
which represents ~37% of the industry, where Bikaji has a high thrust in 75% of the market.

Exhibit 38: Bikaji’s category market focus – Category size for FY22

Ethnic Western
(Rs bn) Sweets Papad Total
Savories Snacks
Rajasthan 34 42 23 9 108
Bihar 16 42 13 3 74
Assam 8 22 9 2 41
Core market 58 106 45 14 223
Given the competitive
As a % of India 16% 18% 12% 19% 16%
intensity (due to strong
Delhi NCR 26 58 30 5 119
regional players) in the
Uttar Pradesh 51 46 33 4 134
western region, the
Punjab 16 31 17 4 68
company is not aggressive
in this market Haryana 18 21 18 4 61
Karnataka 8 16 20 2 46
Telangana 10 19 12 3 44
Focus market 129 191 130 22 472
As a % of India 35% 32% 34% 29% 33%
Indian market coverage 51% 50% 46% 48% 49%

Source: Company, Emkay Research

Key insights – West India: The company has stayed away from the western part of India,
despite high 30% contribution to demand with increased per capita consumption in Gujarat
and Maharashtra. The company had focused evaluation of states, where two key metrics – a)
its ability and b) right to win – are helping it decide on its focus and other markets. The western
region is highly competitive with strong regional brands. Additionally, realization has been low
in the market, given the stiff competition. For Bikaji, the immediate focus is to move promising
markets. The company is present in the west but is not part of the focused market.

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

From a category perspective, in India, there is an outlet universe of 8.6mn outlets, of which
the company has access to 1mn outlets. Its direct outlet reach stands at 231K outlets. In the
core state, the company generates Rs10bn in revenue from Rajasthan, where it distributes
products to 306K outlets (75% reach); its direct reach stands at 90K outlets. In the focus
market, Uttar Pradesh, the company reaches 90K outlets, which helps generate ~Rs1bn in
revenue.

Exhibit 39: Assessing throughput per outlet for companies under our coverage for FY23

GMV General Overall Throughput per Direct Throughput

FY23 Domestic Trade Direct
sales trade outlet store – Overall retail per store –
sales (Rs sales margin + reach (mn
(Rs share reach (Rs/ month/ sales Direct (Rs/
bn) (Rs bn) Tax outlets)
mn) (%) (mn) outlet) (%) outlet)
HUL 582 570 30% 814 75% 9.0 5,654 45% 3.00 7,633
ITC 191 191 30% 273 74% 7.0 2,401 41% 2.50 2,757
Nestlé India 168 161 30% 230 82% 5.2 3,022 55% 1.60 5,402
Britannia 160 151 30% 216 85% 6.3 2,424 52% 2.60 3,055
GCPL 132 75 30% 108 82% 6.0 1,225 50% 1.00 3,676
Dabur 114 82 30% 116 74% 7.9 909 45% 1.40 2,308
Marico 97 74 30% 105 85% 6.5 1,144 50% 1.70 2,188
Colgate 52 49 30% 70 63% 5.6 661 36% 1.00 1,332
Emami 34 28 30% 40 74% 4.9 502 43% 0.90 1,176
Honasa (GT sales) 14 14 50% 29 21% 0.2 3,240 41% 0.04 5,000
Bikaji 20 20 35% 30 85% 1.0 2,138 30% 0.23 2,789

Source: Emkay Research

Exhibit 40: Bikaji – Regional revenue concentration

North East West South

1% 2% 2% 2%
100%
9% 8% 7% 6%
The southern market, 90%
80%
largely driven by sweets 70%
32% 33% 32% 34%
offerings, contributes the 60%
least to Bikaji’s revenue 50%
40%
30% 58% 58% 59% 57%
20%
10%
0%
FY20 FY21 FY22 FY23

Source: Company, Emkay Research

The company has been strengthening its direct outlet reach to have better control of its revenue
base. The company’s reach as of Dec-23 stands at 231K outlets, which is on course to expand
to a target of 250K outlets by Mar-24. Over the next couple of years, management is looking
to further add 100K direct reach outlets. By FY26E, the company aims to reach 400K direct
outlets, of which ~150K outlets are likely to be in focus markets. To address fulfilment, the
company has added C&F agents in Ghaziabad and Varanasi and is looking to add two new C&Fs
in Delhi and Raipur.

Exhibit 41: Direct outlet reach thrust to continue aiding growth

450
400
400

350
('000 of outlets)

300
250
232
250 209
The company aims for an
200 162
overall outlet reach of 1.2- 149
150
1.25mn outlets in the next
100 72
couple of years
50

0
Mar'22 Mar'23 Jun'23 Sep'23 Dec'23 Mar'24 Mar'26

Source: Company, Emkay Research

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 42: Bikaji has limited market share in focus categories

Market share

10% 9.0%

8%
Bikaji is the largest Bhujia 6.0% 6.0%
player in the organized 6%

market
4%

2%
0.8%

0%
Ethnic snacks Sweets Papad Western snacks

Source: Company, Emkay Research

Exhibit 43: D2C initiative in place

Source: Company

High salience of family pack helps protect margins

A relatively high share of For Bikaji, family pack salience is at ~61%, which is a factor of family pack SKUs in sweets
family packs shields from (100%) and papad and gift packs (together ~20% of revenue). Bhujia and Namkeen have an
business volatility in the equal share of family packs and impulse packs. Moreover, from a trade perspective, the
volatile raw-material company generates 8% of sales from modern trade and 2% from ecommerce, where salience
setting of family pack is high. Incremental focus is to drive distribution, which is likely to expand the
salience of impulse packs priced at Rs5-10.

Exhibit 44: Pack salience for FY23 Exhibit 45: Bikaji has a relatively low salience of impulse packs
(priced at Rs5 and Rs10)

Impulse packs Family packs Impulse pack

100% 90%
90% 84%
80%
70%
39% 60%
50% 39%
40%
61% 30%
20%
10%
0%
Bikaji Gopal Snacks Prataap Snacks

Source: Company, Emkay Research Source: Company, Emkay Research; Note: Bikaji and Gopal Snacks:
based on FY23 data; Prataap Snacks: based on FY22

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 46: Packaging costs as a % of COGS are the lowest for Bikaji, among peers

% of COGS

35%
30%
30%
25%
25%

20%

15% 11%
10%

5%

0%
Bikaji Gopal Snacks Prataap Snacks
The Rs5 SKU represents
~50% of the organized Source: Company, Emkay Research
snacks industry

While the company has Bhujialalji aimed to counter regional competition

pan-India distribution, its Bikaji Foods International has acquired a 49% stake (acquiring 9,608 equity shares) and 396
core markets are Rajasthan,
Compulsorily Convertible Debentures (CCDs) in Bhujialalji Pvt (not related party) for Rs51mn
Assam, and Bihar. The
in Jul-23. CCD conversion will give a majority stake in the next five years, but it will be
company has also identified
contingent on the company’s performance. Bhujialalji was incorporated in May-21 with an
its focus markets in North
annual turnover of Rs180.8mn for FY23 (deal valued at EV/Sales of 0.58x), with a high share
and South India
of modern trade and e-commerce. The business operates with a mix of own and 3P capacities.
Bikaji aims to expand its business to ~Rs1bn in the next four years (~53% CAGR).

The brand currently has an ARR of Rs250mn, where it is reporting a low single-digit margin.
At this scale, most brands incur double-digit negative margins. Bhujialalji also has a factory in
Bikaner.

Exhibit 47: Bhujialalji’s product offerings

Bhujialalji’s acquisition in
Jul-23 is aimed at
addressing local
competition in North India
and is placed as a flanker
brand of Bikaji’s

Source: Company

The company considers this as a strategic acquisition, where the new brand is being targeted
from the very start. This is going to be a flanker brand that will be used to counter competition.
The brand is present largely in North India in markets like Punjab, Haryana, Delhi, and Uttar
Pradesh. Moreover, the company is looking to target ecommerce and regional presence
expansion. The company is unlikely to push the brand in its core markets, as it may lead to
cannibalization.

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Insights on the three key subsidiaries supporting production:

 In the quest to address demand in Karnataka and Telangana (focus markets), the company
acquired a 51.2% stake in Petunt Food Processors Private in 2020. The western snacks
market is fairly large in South India, where ITC is the no. 1 player. Given the high logistics
costs for Western snacks, the company has acquired a controlling stake in the entity. This
facility is highly automated, where the need for any specialization is limited. At the current
scale of Bikaji, this plant is also addressing other category incumbents, where in turn
subsidiaries recognize job work fees as revenue. As the company gains scale, this
subsidiary will use capacity for Bikaji’s needs.

 The company has operations in Bihar under its subsidiary, Vindhyawasini Sales Private,
which helped the company establish business in the state.

 Hanuman Agrofood Private, which became its subsidiary with effect from 1-Jan-23, and
wholly owned subsidiary from 25-Jan-23, had a plant adjacent to Bikaji’s plant in Bikaner.
The company acquired the plant, but as per local rules (Rajasthan Industrial Corridor), the
business merger was not allowed till the commencement of operations.

Leveraging brand power to the fullest

Following its association
Bikaji caught the right attention, roping Bollywood celebrity, Amitabh Bachchan, in 2019, with
with Bollywood celebrity
the rhyming jingle – Amit ji loves Bikaji. With multiple large players active and a host of regional
Amitabh Bachchan in 2019,
players aggressive in the category, Bikaji’s ahead-of-time brand build-up is reaping strong
the company has seen
benefits. The benefit is visible in its high salience of family packs, where consumers look to
improved visibility and
stock up on branded products. The company has recently extended its relationship with the
recall, which has aided
growth and its focus market renewal of terms for the next couple of years. The company has shot 12 TVCs and is looking
strategy to enhance brand communication.

Exhibit 48: Bikaji’s brand ambassador Exhibit 49: Strong brand positioning

Source: Company Source: Company

The company is geared well to leverage the jingle further

The company is looking to leverage the famous jingle – Amit ji loves Bikaji – to family members.
With the association of jingles with family members, the company can further drive
consumption across family members. Some of the jingles would be read as Babuji (father)
loves Bikaji, Dadaji (grandfather) loves Bikaji, and Bhaiya (Elder brother) loves Bikaji etc.

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Bikaji’s TAM size is Business is poised for healthy growth

Rs1.4trn, which is expected
to see 11% CAGR over With healthy capacities in place across markets, management’s thrust on expanding
FY22-26E, while the distribution is likely to help Bikaji with healthy mid-teen topline growth over the medium term
organized market is likely (vs. ~20% CAGR in the last five years). The company’s TAM was sized at Rs1.4trn in FY22,
to see a faster CAGR at which is expected to report FY22-26E CAGR of 11%, where the organized market (sized at
~15% Rs508bn for FY22) is likely to expand at FY22-26E CAGR of 15%, as per Frost and Sullivan.

Exhibit 50: Bikaji – Key revenue streams

Bhujia Namkeen Sweets Western snacks Papad Others

100% 3% 4% 4% 4% 4% 4%
5% 5%
8% 8% 7% 7% 6% 6% 6% 6%
90%
4% 5% 5% 6% 8% 8% 10% 11%
80% 12%
13% 12% 13% 12% 13% 13% 13%
70%

60%
37% 37% 36%
50% 37% 36% 37% 36% 35%
40%

30%

20%
33% 32% 36% 35% 33% 33% 32% 31%
10%

0%
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Source: Company, Emkay Research

Key insights – Sales mix: The company generates 70% of its revenue in the core Rajasthan
market from traditional snacks, which are Bhujia and Namkeen. The same for other core
markets like Bihar and Guwahati is at 60-65%.

Exhibit 51: Assessing Bikaji’s total addressable market and growth expectations

Overall category size and growth Organized category size Bikaji's sales
Organized Organized
(Rs mn) FY22 FY26E CAGR FY22 FY26E CAGR FY23 FY26E CAGR
share share
Savory snacks 751 56% 1,227 60% 13% 423 739 15% 78% 77% 13%

Bhujia 67 119 15% 33% 31% 13%

Namkeen 114 204 16% 36% 35% 15%

Western snacks 242 416 15% 8% 11% 27%

Papad 78 33% 103 36% 7% 26 37 9% 6% 6% 12%

Sweets 593 10% 846 12% 9% 59 101 15% 12% 13% 20%

Frozen foods 1% 2% 29%

Others (Cookies, restaurant sales) 3% 2%

Total addressable market 1,422 36% 2,176 40% 11% 508 877 15% 100% 100% 16%

Source: Company, Emkay Research

With distribution thrust, we see Bikaji to register a faster 16% CAGR over FY23-26E. Of the
segments, we expect faster growth for Western snacks. Additionally, scale-up of frozen snacks
will enable Bikaji with higher growth.

We see three key enablers of growth:

 Gradual formalization of categories

 Expanding geographic coverage with distribution expansion

 Expanding product portfolio with entry into new food categories

Enhanced thrust on national brand marketing has enabled distributors’ reach to a wider
population base

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 52: Bikaji’s revenue from operations Exhibit 53: Bikaji’s revenue from growth in operations (ex. PLI
benefits)
35
31 25% 22.9%
22.0% 22.0%
30
26
19.2%
20% 17.7%
25 22 16.9%
20 15.4%
20 13.9%
(Rs bn)

15%
16
15 13
11 10%
9
10
5%
5

0 0%
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Source: Company, Emkay Research Source: Company, Emkay Research

Exhibit 54: Bikaji’s volume growth trend

20%
18%
18%
16% 15%
16%
14% 13%
12%
12%
10%
10%
Bikaji has seen a volume 8%
CAGR of 20% in the last 6%
decade 4%
2%
0%
FY19 FY20 FY21 FY22 FY23 FY24E

Source: Company, Emkay Research

Exhibit 55: Bikaji’s journey

Source: Company
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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Bhujia continues to leverage the Bikaneri edge

We expect growth to remain healthy, as the company is leveraging the Bikaneri heritage. The
company manufactures 70-80% of its bhujia in Bikaner and distributes pan-India. For non-core
bhujia products like Aloo Bhujia, Paneer Bhujia, and Tana Tan, it has production across plants.
Given the higher weight, logistics costs are not high, like in case of Western snacks.
Additionally, the company looks to cover costs with higher distributor landing pricing for distant
locations. Recently, the company has launched the innovative Paneer Bhujia, which has seen
strong traction. With its strong product basket and better mix, the company does not see any
major rise in costs with concentrated production and pan-India supplies. There is a loyal set of
consumers who look for Bikaneri bhujia, where Bikaji has an edge.

Business insights
Bikaji manufactures Bikaneri bhujia, a traditional crispy snack made using dew bean (moth
dal), gram flour (besan), edible oil, salt, and various spices, and is light yellow in color. It is
famously known to have been first prepared in Bikaner and enjoys geographical indication
tagging (since 2010) and has grown over the years from being a cottage industry product to
being manufactured in a large scale in state-of-the-art manufacturing units. The company has
14 different kinds of Bhujia products to cater to various regional and international tastes.

Exhibit 56: Bhujia – Revenue trend Exhibit 57: Bhujia – Revenue growth to remain healthy

10 9.5 40%
9 8.3 33.4%
35%
8 7.3
6.5 30%
7
24.0%
5.6 25%
6 20.7%
(Rs bn)

4.6
5 20% 17.5% 16.8%
3.5 15.0%
4 13.0%
3.0 15% 12.0%
3
10%
2
1 5%

0 0%
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Source: Company, Emkay Research Source: Company, Emkay Research

Exhibit 58: Bhujia – Product offerings

Source: Company

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 Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Namkeen, a pan-India play with regional capacities

Along with category growth, the company is likely to benefit from steady distribution
National capacities to help expansion. We see mid-teen growth ahead. As the company shifts its market supplies from
control logistics costs regional plants vs. Bikaner plant concentration in the past, margin profile of the segment is
likely to improve from reduced logistics costs. We see mid-teen growth in the business.

Business insights
The company has diversified its namkeen portfolio, with products like kuch kuch, moong dal,
soya stick, nut cracker, sab kuch, and panchratna – these are the best-selling products across
India. As of Dec-23, the company had 66 snacks classified under the namkeen category. Its
SKU range varies from weighing 14 gram to 1,000 kg.

Exhibit 59: Namkeen – Revenue trend Exhibit 60: Namkeen – Revenue growth

12 40% 36.9%
10.8

9.4 35%
10
8.2 30%
8 7.1 24.4%
25%
20.4%
(Rs bn)

5.7 19.6% 18.7%

6 20%
4.8 15.0% 15.0% 15.0%
4.0
3.3 15%
4
10%
2
5%

0 0%
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Source: Company, Emkay Research Source: Company, Emkay Research

Exhibit 61: Namkeen – Product offerings… Exhibit 62: …(contd.) Namkeen – Product offerings

Source: Company Source: Company

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Western snacks: Fastest-growing savory snack segment

The Western snack category primarily consists of chips (>50% share in the segment), extruded
products, and pellets, where the company has an equal contribution. The company has 32
product offerings in this category and is targeting 11% revenue contribution from this segment
over 4-5 years, from ~8% contribution in FY23. We believe that with decent distribution and
focused capacity endeavor, the company would achieve its aspiration of 11% revenue
contribution by FY25E.

Fast-growing Western snacks offer growth opportunity

Unlike other listed peers – Prataap Snacks and DFM, Bikaji has been less focused on Western
snacks, in the past. But with enhanced capacities in place, Bikaji is geared to leverage high-
growth opportunities in the sub-category. The company has recently rebranded to base Bikaji
In Assam, western snacks brands vs. its attempt in the category under Café and Fun Keen brands. We see healthy growth
account for 60-65% of the in the segment, where management is geared to support distribution with the required
market, while in manufacturing set-up.
Bihar/Rajasthan the share
of western snacks is 45- High competitive intensity, where Bikaji brand will help
50% The company is aiming to have a pan-India presence with capacities across regions. The
segment has lower margin, given high salience of Rs5-10 packs. Overall, the gross margin
range is 26-28%, while EBITDA margin is 200-300bps lower to the company’s average. Here
the company is likely to face competitive heat. The company will have to manage margin better
as growth is likely to be faster here, which will affect the product mix.

Faster growth to hurt sales mix, addressing demand from local production key
For FY24, amid the relaunch of offerings, the growth rate stood lower at ~16%, but on a small
base, business is likely to grow by>30% over FY25-26E. Given a lower margin profile, faster
growth may have a bearing on its mix, which will hurt the margin trajectory. To address this
issue, the company has arranged for local capacities across markets to keep logistics low. With
no specialization, its automated plants are capable of driving efficiency.

Exhibit 63: Western snacks – Revenue trend Exhibit 64: Western snacks – Revenue growth

3.5 3.3 90%

78.0%
80%
3.0
2.5 70%
2.5
60%
1.9 49.0%
(Rs bn)

2.0 1.6 50%

39.3%
1.5 40% 33.3% 32.4%
28.0%
0.9 30%
1.0 0.7 17.2%
0.6 15.7%
0.4 20%
0.5
10%
0.0 0%
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Source: Company, Emkay Research Source: Company, Emkay Research

Exhibit 65: Western snacks – Transport entails higher costs for the company

Western snacks Bhujia

No. of packs 3,500 600
SKU Rs5 Rs60 (200gm)
MRP value (Rs) 17,500 36,000
Freight costs (Rs/kg) 1,440 1,440
As a % of MRP value 8.2% 4.0%

Source: Emkay Research

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Packaged sweets to gain traction with migrants

We see mid-teen growth in the business, where sweets will continue to see benefit over
confectionaries as gifting options. Amid inflationary cocoa prices, FMCG companies have
reduced the pack sizes for high-selling gift packs, which made consumers shift to traditional
offerings like packaged sweets. With focus on quality and long shelf life, we see packaged
sweets to continue gaining traction ahead.
Packaged sweets represent
While the bulk of its revenue is concentrated in the core markets of Bihar and Guwahati, going
~12% of Company revenue,
ahead its other markets are likely to drive scale. Sweets packs have high concentration in
with the bulk of revenue
modern trade channels, which are part of other states. Sweets have better margins with family
from Guwahati and Bihar
pack concentration and lower logistics costs. We see a healthy 20% revenue CAGR over FY24-
26E.

Business insights
Bikaji is one of the largest manufacturers of packaged rasgullas with the annual capacity of
24,000 MT. Moreover, it is one of the largest manufacturers of soan papdi and gulab jamun
with annual capacity of 23,040 MT and 12,000 MT, respectively. The company has 43 different
products under this category. Bikaji manufactures more than 30 varieties of dry and wet
sweets.

Bikaji’s dry sweets include soan papdi, dry fruit barfi, and ladoo, while wet sweets include
rasgulla, rajbhog, and gulab jamun. Some of its popular sweet brands are Gol-Matol (rasgulla),
Manbhavan (soan papdi), Sadabahar (soan papdi), Gol-M-Gol (gulab jamun), and Rajbhog.

Exhibit 66: Packaged sweets offerings… Exhibit 67: …(contd.) Packaged sweets offerings

Source: Company Source: Company

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 68: Packaged sweets – Revenue trend Exhibit 69: Packaged sweets – Revenue growth

4.5 4.1 30%

26.7%
4.0
3.5 25% 23.7%
3.5 21.0%
20.0% 20.0%
2.9
3.0 20%
16.8% 17.0%
2.4 15.4%
(Rs bn)

2.5
2.0 15%
2.0 1.6
1.5 1.3 10%
1.1
1.0
5%
0.5

0.0 0%
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Source: Company, Emkay Research Source: Company, Emkay Research

Papad segment’s thrust, with the popular Bikaji brand

Given the family-size SKU concentration, Papad margin is relatively (150-200bps) high vs. the
Bikaji is the second-largest company’s margin. In FY24, the company is expected to see slow growth of 5%, in our view,
producer of handmade given extended rains affecting production and sales. However, with expectations of normal
papads in India season in FY25-26, we expect the Papad business to see mid-teen growth.

Business insights
The company is the second largest manufacturer of handmade papad with an annual production
capacity of 10,200 MT. It also has 2,400 MT automated capacity at its Karni facility. The
company produces a diverse range of papads ranging in size from small disco papads of 1.5
inch to big 9-inch papads and popular variants. Its popular variants include Dil Khush Papad,
Baat Cheet Papad, Premium Papad, Aas Paas Papad, Chana Papad, Super Papad, and Chote
Chote Mini Papad.

Exhibit 70: Papad product offerings

Source: Company

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 71: Papad – Revenue trend Exhibit 72: Papad – Revenue growth
Extended rains affected
1.9 production and sales in FY23
1.7 20%
1.7 17.7% 17.4%
18% 16.0%
1.5 15.0%
1.5 16% 14.1%
1.3 14%
1.3 1.2 11.2%
(Rs bn)

12%
1.1 10%
1.1
0.9 8% 6.8%
0.9 0.8 6% 5.0%
0.7 4%
0.7
2%
0.5 0%
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Source: Company, Emkay Research Source: Company, Emkay Research

Frozen foods to drive export revenue and QSR aspiration

The company has just commissioned its frozen foods capacity in Karni, Bikaner, which is likely
Captive frozen food to focus on export to address demand from the Indian diaspora. The company earlier used to
capacity commissioning to address demand from contract manufacturers, where it used to face capacity constraint in the
aid the company’s export season. Here, having own capacity will help Bikaji address seasonal demand.
demand (shift from 3P
sourcing) and help achieve Over the medium term, we project a 40% revenue CAGR; but in the long run, this revenue
its QSR ambitions growth is expected to see further expansion, as the company looks to fulfill its QSR aspirations.
Of its international sales, ~40% is driven by frozen foods.

Exports remains a large opportunity

Of the exported revenue, frozen products contribute ~40%. Here, the company targets 25
countries with the Indian diaspora, prominent one being the U.S., Canada, and U.K.. The
company has secured all the permissions and approvals for export. The company has two
models of operation a) trading (where one vendor procures and sells products) and b) semi-
C&F agent with its own distribution network). Bikaji is looking to gain share rather than develop
a market. From the portfolio’s perspective, it is pretty wide with no products having >10%
concentration.

Exhibit 73: Dedicated offerings for the export markets

Source: Company

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 74: Bikaji’s international thrust

Source: Company

Exhibit 75: Bikaji – Export revenue Exhibit 76: Bikaji – Revenue from the international market in FY22

Exports North America Asia Pacific ME Europe Agrica UK

665 4% 1%
700 637
1%
584
600

500 460
13%
369
(Rs mn)

400 41%

300

200
40%
100

0
FY19 FY20 FY21 FY22 FY23

Source: Company, Emkay Research Source: Company, Emkay Research

QSR aspiration hinges on frozen food facility

The company has a QSR pilot running in Malad, Mumbai, where it clocks Rs200mn in revenue.
We estimate ~50% of sales to be from fresh products – 35% constitutes consumer products
and 15% comprises gift packs. Here EBITDA margin, in our view, would be in line with the
company’s margin. In QSR, getting taste and quality right is the key to success. Frozen
products’ scale-up would provide an opportunity for Bikaji to meet its QSR aspirations. In the
sector, Haldiram and Bikanervala have seen decent scale-up with multiple outlets active across
markets.

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Healthy earnings to aid return profile

As noted in the section above, Bikaji is placed well to ride on the snacking consumption
opportunity, where it has a low single-digit market share. With capacity near the consumption
center and thrust on distribution, the company is placed well for mid-teen revenue growth over
FY23-26E. In the last five years, Bikaji has seen a faster 20% CAGR, next to Haldiram North
at 26% and Balaji at 22%, but better compared to most snacking players.

Exhibit 77: Peer analysis – Revenue and growth trends

Bikaji is one of the fastest-
(Rs mn) FY18 FY19 FY20 FY21 FY22 FY23
growing savory snacks
Revenue
companies
Haldiram North 26,219 30,730 37,086 41,004 50,354 63,746
Balaji 18,400 19,723 23,360 29,386 40,029 49,249
Haldiram Nagpur 20,476 24,803 26,892 29,185 35,492 41,052
Bikaji 7,813 9,014 10,746 13,107 16,110 19,661
Prataap Snacks 10,174 11,706 13,938 11,711 13,966 16,529
Gopal Snacks 6,891 8,160 8,862 11,289 13,522 13,947
Bikanervala Foods 7,755 9,350 10,919 9,814 10,073 12,093
DFM Foods 4,253 4,836 5,079 5,241 5,545 5,861
Haldiram Prabhuji 3,305 3,943 3,699 3,023 3,778 4,709

Revenue growth
Haldiram North NA 17.2% 20.7% 10.6% 22.8% 26.6%
Balaji 30.1% 7.2% 18.4% 25.8% 36.2% 23.0%
Haldiram Nagpur 28.7% 21.1% 8.4% 8.5% 21.6% 15.7%
Bikaji 28.5% 15.4% 19.2% 22.0% 22.9% 22.0%
Prataap Snacks 13.8% 15.1% 19.1% -16.0% 19.3% 18.4%
Gopal Snacks 10.1% 18.4% 8.6% 27.4% 19.8% 3.1%
Bikanervala Foods NA 20.6% 16.8% -10.1% 2.6% 20.1%
DFM Foods 24.4% 13.7% 5.0% 3.2% 5.8% 5.7%
Haldiram Prabhuji 2.6% 19.3% -6.2% -18.3% 25.0% 24.7%

Source: Gopal Snacks IPO Document

Expanded margins look sustainable

Gross margin stability with a better sales mix

Bikaji has a relatively stable margin profile in its peer set. Over FY21-23, its margin profile had
a bearing of inflationary pressures, but in FY24, with easing raw-material prices, the company
Based on its current mix, was able to enhance its margin profile. The company is looking to hedge its position with
the company can expand its seasonal procurement of its key raw materials. Daal, which recently saw price volatility, is
gross margin to ~35% in being booked with millers. For moth dal, whose price drops seasonally, the company engages
the next 3-4 years which with the miller for freezing its stock for six months. Going ahead, we project margins to remain
will help Bikaji expand its stable or see moderate improvement (expect gross margin to expand to 32.9% by FY26E from
adjusted EBITDA margin 32.3% in FY24).
(ex-PLI) to ~16% Volatility in raw material may have a bearing on its margin in the short term, where we see
the company is capable to effect price actions via price hikes in bulk packs and volume
reduction in low unit packs. On a long-term basis, we see margins to remain steady. Based on
its current mix, the company can expand its gross margin to ~35%, which will help Bikaji
expand its adjusted EBITDA margin (ex-PLI) to ~16%. In the long run, management aspires
to take margin to 18%.

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analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |33
 Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 78: Bikaji – Gross margin trends

Gross margin on revenue Gross margin on net sales

Bikaji has recouped its pre-

35%
37%
Covid margin; and with a

34%

34%
35%
better sales mix, it is likely

33%
33%
32%
to sustain its trajectory 33%

31%

31%
31%

29%

29%
29%
29%

28%
28%

27%

27%
29%

27%

25%
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Source: Company, Emkay Research

Exhibit 79: Peer Analysis – Gross margin

FY18 FY19 FY20 FY21 FY22 FY23

Haldiram North 39.8% 37.6% 36.0% 34.0% 29.6% 34.1%
Balaji 26.7% 22.2% 21.0% 14.8% 12.7% 20.2%
Haldiram Nagpur 36.1% 35.5% 34.7% 33.4% 28.5% 29.0%
Bikaji 28.5% 28.5% 30.7% 28.5% 27.4% 29.0%
Prataap Snacks 32.4% 29.9% 28.9% 27.7% 25.1% 27.4%
Gopal Snacks 15.6% 17.5% 21.9% 18.1% 20.6% 28.4%
DFM Foods 39.8% 41.3% 39.3% 40.3% 36.1% 39.2%
Haldiram Prabhuji 27.7% 32.0% 44.3% 32.4% 32.7% 33.0%

Source: Gopal Snacks IPO Document

Exhibit 80: Key ingredients across segments

Source: Company

Healthy advertisement spends offer a competitive edge

Bikaji sustained its A&P thrust even during Covid and an inflationary setting, which in our view
has helped the company generate brand recall with consumers. Going ahead, with the renewal
of the contract with Amitabh Bachchan for the next couple of years, we see continued
aggression from the company to support its distribution thrust. In the long run, we expect A&P
optimization, but in the near term, we see spending to see expansion.

Leveraging celebrity power to create a brand in the industry: In the snacks market,
Enhanced A&P spending large players like PepsiCo and ITC have been leveraging celebrities for product promotions.
aided Company’s national Prataap Snacks has also tried Salman Khan as its ambassador in the past, but the association
expansion plans discontinued a few years back. Similarly, Haldiram Prabhuji had roped in Shahrukh Khan. Balaji
Wafers have tied up with Ayushman Khurana. With an aspiration to go national, Bikaji has
roped in Amitabh Bachchan in 2019; this association has created a strong recall in the mind of
consumers with the jingle – Amit ji Loves Bikaji.

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 Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 81: Bikaji – Absolute A&P spends Exhibit 82: Bikaji – A&P spends as a % of sales
Signed Amitabh Bachchan
600 4% as the brand ambassador
Contract renewed for
3.4%
4% two years (till Oct-
500
25)
3%
400 2.3%
3% 2.2%
(Rs mn)

300 2% 1.8% 1.8% 1.8%

1.6% 1.7%

2%
200
1%
100
1%

0 0%
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Source: Company, Emkay Research Source: Company, Emkay Research

Exhibit 83: A&P spend as a % of revenue for listed savory-snack peers

FY21 FY22 FY23

3% 2.3%

2% 1.8%
1.7%

2%
A&P spends are relatively
0.8% 0.8%
low for Gopal Snacks, given 1%
0.6%
its regional concentration 1% 0.3%
0.1%
0.0%
0%
Bikaji Prataap Snacks Gopal Snacks

Source: Company, Emkay Research

Employee spends to have operating leverage

The company is likely to see healthy expansion in employee spends, where business expansion
will require support. But as a percentage of sales, spends are likely to witness a correction
Growth businesses require
ahead. The company has approved two ESOP schemes in 2021, where retaining talent has
healthy employee spends
been key, given its growth aspirations.

Exhibit 84: Bikaji – Employee costs and YoY change Exhibit 85: Bikaji – Employee spends as a % of sales

6.2% 6.1%
Employee spends % YoY (RHS)
6.0%
6.0%
1,800 50%
1,600 45%
5.8%
1,400 40% 5.6%
35% 5.6% 5.5%
1,200
30% 5.4%
(Rs mn)

1,000 5.3%
25% 5.4% 5.3%
800 5.2%
20%
600 5.2%
15%
400 10% 5.0%
200 5%
0 0% 4.8%
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Source: Company, Emkay Research Source: Company, Emkay Research

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analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 86: Employee spends as a % of revenue for listed savory-snack peers

FY21 FY22 FY23

7% 6.3%
5.6% 5.7%
6% 5.3% 5.2% 5.2%
5% 4.6% 4.6%
Bikaji’s employee spends 4.1%
4%
stable at 5-6% of revenue
3%

2%

1%

0%
Bikaji Prataap Snacks Gopal Snacks

Source: Company, Emkay Research

Transportation costs key for wider footprint

Bikaji’s quest to gain pan-India presence is well supported with its own and 3P capacity across
A higher share of family India. For Bikaji, we project transportation costs to settle at ~4%. Only in case of Bhujia,
packs is likely to help the whose production is focused in Rajasthan, will a quick growth in scale hurt margins (as
company drive efficiency in transport costs will increase, etc). Here, higher salience of family packs is a comfort.
its logistics costs
For a snacks company, a radius of 300km is optimum for transportation costs. As the radius
expands, transportation costs shoot up and start eroding EBITDA margin.

Exhibit 87: Bikaji – Freight and forwarding costs

5%

4.0% 3.9% 4.0%

4% 3.8% 3.7% 3.7%

2.9%
3%
2.4%

2%

1%

0%
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Source: Company, Emkay Research

Exhibit 88: Transportation cost as a % of revenue for listed savory-snack peers

FY21 FY22 FY23

8%
6.9% 6.7%
6.6%
7%
6%
As the company scales its
5%
operations with focus on 3.8% 3.9%
4%
3.0%
regional production, its 2.9% 2.7% 2.9%
3%
logistics costs expand
2%
1%
0%
Bikaji Prataap Snacks Gopal Snacks

Source: Company, Emkay Research

EBITDA margin to have operating leverage benefits

The company has enhanced its EBITDA margin from touching double digits in the past to
~13.5% in FY24, which we expect would see gradual expansion to ~15.6% by FY26E.
Operating leverage benefit is likely to help the company drive EBITDA margin improvement.
On a relative basis, the margin profile is relatively low vs. large national players, but it is better
compared to smaller players. As the company gains scale at a national level, Bikaji is likely to
see margin benefits.

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 89: Bikaji – EBITDA margin trend

We see EBITDA margin to
see steady expansion, from Ebitda margin Ebitda margin-ex PLI

10.9% in FY23 to 15.6% in 17.0% 16.9% 17.1%

18%
FY26E 16% 15.0%
15.7%
13.5%
14%
12% 11.0% 10.9%
10.3%
10% 8.8% 8.7%
8%
6%
4%
2%
0%
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Source: Company, Emkay Research

Cost-saving initiatives to help build further margin: With a stable mix and raw-material
setting, we see gross margin to expand to 35% in the next 3-4 years, which will help the
company achieve a 16% EBITDA margin. Cost efficiencies would provide extra support to
margins like –

 Increasing production shifts (over the next three years, utilization is expected to see
expansion from ~47% now to 75%) to help save on fuel costs and salary optimization

 Capex is focused on driving opex to lower levels

 All department heads have cost optimization in their annual operating plans (AOP)

 Utility costs to come down with increased volumes

 Packaging costs to see optimization

Exhibit 90: Peer Analysis – EBITDA margin

FY18 FY19 FY20 FY21 FY22 FY23

Haldiram North 18.8% 16.2% 15.5% 15.1% 10.7% 15.1%
Balaji 17.6% 12.7% 10.1% 4.6% 3.7% 13.1%
Haldiram Nagpur 18.3% 19.5% 16.9% 18.5% 14.0% 14.6%
Bikaji 12.8% 10.3% 8.8% 11.0% 8.7% 10.9%
Prataap Snacks 8.3% 7.1% 7.0% 5.1% 2.6% 3.3%
Gopal Snacks 2.1% 1.8% 4.7% 5.3% 7.0% 14.1%
Bikanervala Foods 0.0% 9.9% 7.1% 10.2% 8.1% NA
DFM Foods 11.9% 13.1% 7.6% 10.4% -4.0% -7.1%
Haldiram Prabhuji 4.8% 5.7% 17.7% 12.4% 12.2% 6.6%

Source: Company, Emkay Research

Exhibit 91: Bikaji – Annual EBITDA trend Exhibit 92: Bikaji – EBITDA growth

EBITDA EBITDA (adj for PLI) Reported EBITDA growth EBITDA growth adjusted for PLI

6 100%
5.3 86%
4.8
5 4.5 80%
4.0 3.9
4 60% 53% 53%
3.0 41%
(Rs bn)

3 40% 30%
2.1 23%
14% 18%
2 1.4 1.4 20%
0.9 1%
0.9
1 0%
-4%
0 -20% -7%
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Source: Company, Emkay Research Source: Company, Emkay Research

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
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analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 93: Product mix with margin across savory-snack peers

Product mix Gross EBITDA

Ethnic Western Packaged Extruded
Papad Others margin margin
Snacks Snacks Sweets Snacks
Gopal Snacks 59% 29% 4% 8% 28% 14%
Bikaji 71% 8% 12% 6% 2% 29% 11%
Prataap Snacks 16% 23% 58% 3% 27% 3%

Source: Company, Emkay Research

Balance sheet continues to strengthen

Assets turns to see healthy expansion

As noted in the sections above, Bikaji has built capacity ahead of time, which can support 2x
its base revenue. Going ahead, the company is looking to expand its share of Namkeen and
Western snacks, where it can leverage its brand equity by associating with contract
manufacturers. This along with the scale-up of its capacity utilization is likely to help expand
asset turns.

Exhibit 94: Bikaji – Assets turn to witness gradual expansion ahead

Gross block turns Net block turns

4.5x

4.0x

3.5x

3.0x

2.5x

2.0x

1.5x
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Source: Company, Emkay Research

Exhibit 95: Fixed asset turn for savory-snack players

FY21 FY22 FY23

Gross block (Rs mn)
Gopal Snacks 2,870 3,549 4,170
Bikaji 6,294 7,582 9,765
Bikaji’s asset turns at 2x
Prataap Snacks 7,052 7,232 7,914
are likely to see steady
expansion, with no
Gross block turns (x)
expansionary capex needs
Gopal Snacks 3.9 3.8 3.3
Bikaji 2.1 2.1 2.0
Prataap Snacks 1.7 1.9 2.1

Source: Company, Emkay Research

Note: Gross block includes all tangible and intangible fixed assets

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 96: Plant and machinery (gross block) turns for savory-snack players

FY21 FY22 FY23

Plant and machinery (Rs mn)
Gopal Snacks 1,272 1,712 2,036
Bikaji 3,458 4,161 4,404
Prataap Snacks 2,888 2,971 3,337

Asset turns (x)

Gopal Snacks 8.9 7.9 6.8
Bikaji 3.8 3.9 4.5
Prataap Snacks 4.1 4.7 5.0

Source: Company, Emkay Research

Exhibit 97: Fixed asset turns for savory-snack peers

(x) FY19 FY20 FY21 FY22 FY23

Bikaji Foods 2.3 2.7 3.2 3.4 3.3
Haldiram (Nagpur +Delhi) 3.1 2.9 2.5 2.6 -
Bikanervala 4.5 3.8 2.8 2.5 -
Prataap Snacks 2.2 2.4 2.1 2.5 2.9
Balaji Wafers 3.6 3.6 3.6 4.4 4.8
PepsiCo India 3.5 2.7 2.3 2.3 2.6
DFM Foods 2.9 3.0 3.2 3.4 -
Gopal Snacks 6.5 6.3 7.1 6.9 6.3

Source: Gopal Snacks IPO Document

Note: (PPE + Intangibles/Revenue from operations)

Working capital requirements to be steady

The company has tight control over inventory and receivable days, which have been in a band
and are likely to remain steady at ~15 days. Here, the supply chain salience is likely to have a
major role, where its dependence on the modern retail format has been limited to ~8%.
Payable days are likely to remain around 10 days.

Exhibit 98: Working capital requirement steady at ~20 days

Working capital requirement Inventory days Receivable days Payable days

Days Days
25 25

20 20

15 15

10 10

5 5

0 -
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Source: Company, Emkay Research

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Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 99: Bikaji’s revenue split

Others, 1% Export,
Ecommerce, 2% 4%
Modern trade, 8%

General trade,
85%

Source: Company, Emkay Research

Improving margin with better utilization to aid return

Bikaji’s return profile is likely to see healthy expansion, driven by improving margins,
expanding asset turns, and reducing assets to equity. Adjusted for enhanced liquidity position,
ROIC is likely to reflect better returns at 30%+ over FY25-26E.

Exhibit 100: Bikaji – Return profile to see steady expansion

ROCE ROIC RoE

60%

48%
50%
42%
38%
40% 37%
33%
29%
30% 25% 26%
25%
19% 18%
16% 18%
20% 16% 16%
14%
11% 11% 13% 13% 11% 12% 13%
11%
10%

0%
FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Source: Company, Emkay Research

Exhibit 101: DuPont analysis

FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E

Net margin (%) 6% 5% 7% 5% 6% 11% 10% 12%
Asset turn (x) 1.54 1.78 1.94 1.85 1.81 1.88 1.88 1.94
Leverage (x) 1.24 1.21 1.19 1.22 1.22 1.18 1.14 1.11
Calculated ROE 11% 11% 16% 11% 14% 25% 25% 26%

Source: Company, Emkay Research

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 102: Return profile of listed peers

FY21 FY22 FY23

Capital employed (Rs mn)
Gopal Snacks 2,700 3,407 3,686
Bikaji 6,949 9,804 11,218
Prataap Snacks 6,803 7,041 7,360

RoCE
Gopal Snacks 13.5% 18.7% 43.1%
Bikaji 18.4% 11.6% 16.7%
Prataap Snacks 1.4% 0.7% 0.0%

Net worth (Rs mn)

Gopal Snacks 1,357 1,777 2,909
Bikaji 6,057 8,208 9,536
Prataap Snacks 6,231 6,242 6,762

RoE
Gopal Snacks 15.6% 23.4% 38.6%
Bikaji 14.9% 9.3% 13.3%
Prataap Snacks 2.3% 0.5% 3.0%

Source: IPO Document, Emkay Research

Note: ROE = Net profit / Net worth; ROCE = EBIT (1-Tax)/Capital employed

Exhibit 103: Return profile of savory-snack peers

Return on equity Return on capital employed

FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23
Bikaji Foods International 10.9% 10.7% 14.9% 9.3% 13.3% 16.4% 12.7% 18.4% 11.6% 16.7%
Haldiram (Nagpur + Delhi) 21.8% 17.8% 16.3% 12.4% - 27.8% 19.8% 18.8% 14.6% -
Bikanervala Foods 18.3% 11.1% 11.2% 8.3% - 21.1% 9.9% 12.4% 9.9% -
Prataap Snacks 8.0% 7.7% 2.3% 0.5% 3.0% 9.4% 5.6% 1.4% 0.7% 0.0%
Balaji Wafers 10.2% 9.5% 1.8% 0.4% 22.5% 13.3% 9.8% 1.0% -0.1% 25.5%
PepsiCo India Holdings 0.4% 12.2% 5.6% 1.3% 7.7% 0.4% 9.4% 4.5% 1.0% 13.8%
DFM Foods 25.3% 16.8% 16.1% 16.2% - 30.3% 15.6% 25.1% -17.8% -
Gopal Snacks 29.7% 30.8% 15.6% 23.4% 38.6% 25.6% 32.1% 13.5% 18.7% 43.1%

Source: IPO Document; Note: ROE (%) = Profit after Tax/Total Equity; ROCE (%) = (EBITDA - Depreciation and amortization expense) / (Total Equity +
Short-term borrowings + Long-term borrowings - Cash and cash equivalents)

Limited capital needs for healthy cash generation

With 46-48% capacity utilization, we see incremental capex needs to be limited in the medium
term. With scale and improvement in profitability, we see a healthy ~40% earnings CAGR. We
see earnings to operating cash to remain at or above 100% ahead. Free cash conversion would
also look decent with >80% of earnings and >55% of EBITDA.

Exhibit 104: Bikaji – Summary of Cash flow

(Rs mn) FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E
EBITDA 933 946 1,448 1,395 2,136 3,967 4,525 5,345
PBT 759 636 1,201 1,050 1,706 3,486 4,112 4,997
Tax (214) (117) (173) (411) (466) (819) (1,028) (1,249)
PAT 545 520 1,029 639 1,240 2,667 3,084 3,748
Non-cash and non-operating items 213 348 282 434 554 481 413 348
Changes in working capital (70) (321) (90) (498) (33) 56 (304) (372)
Operating cash flow 687 547 1,220 575 1,762 3,204 3,193 3,724
As a % of PAT 126% 105% 119% 90% 142% 120% 104% 99%
As a % of EBITDA 74% 58% 84% 41% 82% 81% 71% 70%
Capex (733) (405) (737) (1,078) (806) (467) (535) (626)
Free cash flow (46) 141 482 (504) 955 2,737 2,658 3,098
As a % of PAT -8% 27% 47% -79% 77% 103% 86% 83%
As a % of EBITDA -5% 15% 33% -36% 45% 69% 59% 58%

Source: Company, Emkay Research

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Appendix 1: Impulse food options gaining scale

There is a strong rise in savory snacks categories with the surge in the in-between meal
snacking trend. Given divergent preferences for snack consumption, the market is fairly
fragmented with limited national players. However, post GST implementation, as the
formalization in the category accelerated, regional players shifted their focus to the national
level. With access to a wider assortment, overall savory category consumption has heightened.

Exhibit 105: Indian foods and beverages – Market opportunity

Market size Penetration Organized

GST rate (%)
(Rs bn) (%) share (%)
Pouch Milk 7,200 99 15 5
Ghee 2,500 99 25 12
Edible Oil 1,700 99 51 5
Atta 1,208 99 12 5
Savory snacks 796 85 57 12
Sugar 777 99 25 5
Biscuits 692 99 65 18
Spices 675 99 36 5
Packaged sweets 593 85 10 5
Carbonated beverages 500 40 75 40
Tea 400 99 50 5
Confectionaries 260 40 60 18
Bottled water 200 40 50 12
Dry fruits 200 60 5 5
Ice cream 182 70 70 18
Chocolate 150 40 60 18
Bread 135 40 50 0
Instant noodle 135 75 70 18
Coffee 135 70 60 5
Health food drinks 110 10 90 18
Papad 80 60 33 0
Juice 70 40 75 12
Salt 70 99 72 5
Baby Food 65 30 80 18
Cake 55 30 65 18
Cheese 50 25 80 12
Breakfast cereals 40 10 90 5
Ketchup 40 20 60 12
Pasta 35 20 30 5
Honey 30 40 55 0
Chyawanprash 25 30 60 12
Soya chunks 20 15 50 12
Soup 20 5 50 18
Wafers 7.5 5 70 18
Total addressable market
19,505 91 31 8
(INR)
In USD * 235

Source: Emkay Research; Note: *1 USD = Rs83.1

Frost and Sullivan estimate the packaged food market at Rs4.62trn for FY23, registering an
expected 10% CAGR to Rs6.8trn by FY27. In the packaged food market, snacking categories
contribute ~32%. While the unorganized segment remains a dominant part of the packaged
food market, there has been accelerated formalization since GST implementation. The share
of organized has expanded to 19% in FY23 from 13% in FY18. Based on industry sizing, per
capita spending on packaged foods now stands at Rs3,657, expanding at a CAGR of 12% over
FY18-23, and is poised well to register an 11% CAGR over FY23-27. India’s top-25 cities
contribute about 10% of the revenue of the packaged food industry.

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 106: Contribution of the top-25 cities to packaged food revenue

Source: Company

Savory snacks seeing faster formalization

The Indian savory snacks category is sized at Rs796bn, as per Frost and Sullivan, which is
poised to register a CAGR of 11% over FY23-27E. Post GST implementation, the share of the
formal market has been expanding fast and is now at ~43% of the market. Savory snacks are
segmented into western savory, ethnic namkeen, and ethnic bhujia.

Exhibit 107: Indian savory-snack market size is Rs796bn Exhibit 108: Key offerings under the organized savory-snack
market
Organized Unorganized
Western savoury snacks Ethnic Namkeen and Snacks Bhujia

10% 16%

27% 57%

90%

Source: Company, Emkay Research Source: Company, Emkay Research

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Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 109: Indian savory snacks poised for healthy growth ahead

The Indian savory snacks

segment is characterized by
a large number of
unorganized players across
the product segments,
given the divergence in
snacking habits regionally.
As offerings expanded to
new markets, the segment
saw a simultaneous
resurgence in demand

Source: Company, Emkay Research

Exhibit 110: Organized savory-snack categories to note a similar evolution

Western savoury snacks Ethnic Namkeen and Snacks Bhujia

800
Western savory snacks is 700 119
the biggest category in the 600
savory-snack segment, 500 204
(Rs bn)

wherein contribution of 400 67

chips is ~53%, followed by 300 114
the 22% contribution from 200 31
416
extruded snacks 100
57 242
108
0
FY15 FY22 FY26

Source: Company, Emkay Research

Demand for savory snacks is high in North India, followed by West India. These regions are
the major consumers of namkeen, especially Rajasthan and Gujarat, where namkeen forms an
integral part of food habits. Hence, a majority of the namkeen varieties originate from these
regions. Further, the increasing popularity and availability of numerous options in ethnic
namkeen and bhujia segments are driving growth across regions for this segment.
Consumption of savory snacks is considerable in East India along with street food in between
meals, travels, etc. The trend shows that consumption of ethnic savories is about to increase
gradually as companies such as Bikaji and Haldiram look to penetrate the market with their
wide product offerings.

Exhibit 111: South and West India are the main markets for savory snacks

South
15%

North
38%
East
16%

West
31%

Source: Company, Emkay Research

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |44
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 112: Region-wise split of ethnic savories

Source: Company

Exhibit 113: Region-wise split of western snacks

Source: Company

Exhibit 114: Organized ethnic snacks^ market share for FY23 Exhibit 115: Organized western snacks^ market share for FY23

Prataap
Snacks
11%
Other
Halidiram
Organized
(Delhi &
35% Halidiram
Nagpur) Pepsi
(Delhi &
36% 36%
Nagpur)
15%

Balaji
17%
Gopal Snacks ITC
5% 21%
Balaji
9%
Bikanervala Bikaji
6% 9%

Source: Company, Emkay Research Source: Company, Emkay Research

^Includes namkeen, chaklis, a variety of masala or fried nuts, etc, and ^Includes chips (52%), extruders (33%), and bridges (15%)
they are region-specific even within India

Exhibit 116: Key tailwinds aiding the formalization of savory snacks

Small players are struggling to operate under GST, as raw material with GST limits
profitability

Continued contraction of the wholesale channel affected the supply chain of small
players

Consistency in supply and product quality key for the supply chain to continue
distribution

Given industry-wide food adulteration, consumer preference for branded players,

who were able to launch offerings at affordable price points (Rs5/10), has increased

Source: Emkay Research

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |45
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 117: Organized ethnic savory snacks market – Channel split

Supermart/Hypermart CSD Railways Ecommerce

3% 5% 4% 1%

Food chains/Food
Stores
3%
Convenience stores
1% Paan
shop
12%

Grocery
71%

Source: Company, Emkay Research

Packaged sweets adoption to heighten due to hygiene-

related preference
The Indian packaged sweets market is sized at Rs593bn, where the share of organized is quite
small at ~10%. With the emergence of large players, who are helping expand regional formats,
there is an accelerated formalization in the segment. Hygiene with enhanced shelf life helps
consumers remain loyal to the traditional way of gifting, particularly during festivals.
Additionally, with migration, consumers can meet their impulse needs in packaged formats.

Exhibit 118: Indian packaged sweets market (size: Rs593bn, as of Exhibit 119: Indian packaged sweets market to see faster
FY22) formalization

Organized Unorganized Unorganized Organized

900
800 101
10% 700
600
58
(Rs bn)

500
400
745
300
535
200 400
90%
100
0
FY15 FY22 FY26

Source: Company, Emkay Research Source: Company, Emkay Research

Note: Unorganized represents standalone mithai shops

Exhibit 120: Indian packaged sweets market split for FY22 Exhibit 121: Indian packaged sweets – Expected mkt split for FY26E

Milk based Soan papdi Dry fruits Others Milk based Soan papdi Dry fruits Others

Others
Others Milk based 33%
34% 28% Milk based
28%

Soan papdi
Soan papdi
Dry fruits 21% Dry fruits
22%
17% 17%

Source: Company, Emkay Research Source: Company, Emkay Research

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |46
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 122: Indian organized packaged sweets – Market share (as of FY22)

Other Regional
Organized Players
41% Haldiram (Delhi &
Nagpur)
34%

Bikano
KC Das 10%
4%
Haldiram - Prabhuji Bikaji
(Kolkata) 6%
5%

Source: Company, Emkay Research

Exhibit 123: Regional concentration of packaged sweets

The sweets market is driven
by North India with 35% South
13%
share, with contribution
from UP, Delhi NCR, Punjab,
and Haryana. This is North
35%
followed by eastern India,
West
with Bengali mithais 24%
dominating the market. The
West and South contribute
East
~24% and ~13%, 28%
respectively, to the sweets
industry

Source: Company, Emkay Research

Exhibit 124: Region-wise split of sweets

Source: Company

Exhibit 125: India’s organized papad snacks market – Supply-chain split

Convenience stores Railways Ecommerce

1% 1% 1%
Food chains/Food
Stores CSD
2% 3%
Supermart/Hypermart
5%

Grocery
87%

Source: Company, Emkay Research

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |47
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Papad category seeing penetration

Papad has gradually become a part of every meal with improved availability. The category size
is Rs83bn, 34% of which is the share of the organized category. Lijjat remains a dominant
player in the segment, with pan-India availability.

Exhibit 126: Indian papad market (Rs83bn, as of FY23) Exhibit 127: Papad market to see faster formalization

Organised Unorgnaised Organised Unorgnaised

120

100
34%
80
67

(Rs bn)
60
55
40 46
66%
20 39
28
20
0
FY18 FY23 FY27

Source: Company, Emkay Research Source: Company, Emkay Research

Exhibit 128: Papad category's market share as of FY23

Other organsied
27%
Lijjat
Gopal Snacks 54%
3%
Shree Ram papad
4%
Agarwal 420 papad
6%
Bikaji
6%

Source: Company, Emkay Research

Exhibit 129: Papad market split by region

Papad is eaten with every
East
meal and as a snack in the 14%
states of Rajasthan,
Gujarat, and Madhya
Pradesh. The North North
39%
South
contributes ~38%, followed 15%

by West and South India at

30% and 15%, respectively

West
32%

Source: Company, Emkay Research

Exhibit 130: Region-wise split of papad

Source: Company

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |48
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Appendix 2: Company Financials

Exhibit 131: Profit and loss statement

(Rs mn) FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E
Revenue from operations 9,014 10,746 13,107 16,110 19,661 23,339 26,765 31,296
- Growth 15.4% 19.2% 22.0% 22.9% 22.0% 18.7% 14.7% 16.9%
Raw Material 6,443 7,449 9,369 11,703 13,952 15,138 17,585 20,627
- As a % of revenue 71.5% 69.3% 71.5% 72.6% 71.0% 64.9% 65.7% 65.9%
- YoY chg 15.6% 25.8% 24.9% 19.2% 8.5% 16.2% 17.3%
- As a % of Net sales 71.7% 69.5% 71.6% 72.8% 71.1% 67.7% 67.3% 67.1%
Gross profit 2,570 3,296 3,739 4,407 5,709 8,201 9,180 10,669
- YoY chg 15.5% 28.2% 13.4% 17.9% 29.5% 43.7% 11.9% 16.2%
Gross Margin - With PLI 28.5% 30.7% 28.5% 27.4% 29.0% 35.1% 34.3% 34.1%
Gross Margin - Without PLI 28.3% 30.5% 28.4% 27.3% 29.0% 32.3% 32.7% 32.9%
Employee costs 550 646 699 901 1,030 1,226 1,410 1,622
- YoY chg 42.9% 17.5% 8.1% 28.9% 14.4% 19.0% 15.0% 15.0%
- As a % of sales 6.1% 6.0% 5.3% 5.6% 5.2% 5.5% 5.4% 5.3%
Ad-spends 145 368 306 291 330 492 470 553
- YoY chg 153.0% -16.7% -4.9% 13.4% 48.9% -4.4% 17.7%
- As a % of sales 1.6% 3.4% 2.3% 1.8% 1.7% 2.2% 1.8% 1.8%
Other expenses 942 1,336 1,286 1,819 2,212 2,516 2,774 3,149
- YoY chg 41.8% -3.8% 41.5% 21.6% 13.7% 10.3% 13.5%
- As a % of sales 10.5% 12.5% 9.8% 11.3% 11.3% 11.3% 10.6% 10.2%
Ebitda 933 946 1,448 1,395 2,136 3,967 4,525 5,345
- Ebitda margin 10.3% 8.8% 11.0% 8.7% 10.9% 17.0% 16.9% 17.1%
- YoY chg -7.0% 1.4% 53.0% -3.6% 53.1% 85.7% 14.1% 18.1%
- Ebitda margin-ex PLI 10.3% 8.8% 11.0% 8.7% 10.9% 13.5% 15.0% 15.7%
- YoY chg - Ex PLI -7.0% 1.4% 53.0% -3.6% 53.1% 41.3% 30.0% 23.1%
Depreciation 228 342 331 383 471 590 598 609
- growth 50.3% -3.1% 15.7% 22.8% 25.4% 1.5% 1.8%
- As a % of revenue 2.5% 3.2% 2.5% 2.4% 2.4% 2.5% 2.2% 1.9%
- As a % of gross block 6.7% 5.7% 5.5% 5.4% 5.9% 5.7% 5.5%

Other income 93 84 115 105 147 221 276 345

- growth -10.1% 37.3% -8.5% 40.2% 50.0% 25.0% 25.0%

- As a % of cash and cash equivalents 7.7% 10.4% 7.6% 8.6% 7.9% 6.0% 5.6%

Finance costs 39 51 30 67 106 112 91 84

- As a % of borrowings 8.0% 4.2% 5.4% 6.4% 7.0% 6.5% 7.0%
PBT 759 636 1,201 1,050 1,706 3,486 4,112 4,997
- margin 8.4% 5.9% 9.2% 6.5% 8.7% 14.9% 15.4% 16.0%
- YoY chg -24.4% -16.1% 88.7% -12.6% 62.5% 104.3% 17.9% 21.5%
- YoY chg - Ex PLI -16.1% 88.7% -12.6% 62.5% 48.6% 38.3% 27.6%
Tax (249) (73) (298) (290) (440) (819) (1,028) (1,249)
Tax rate 32.9% 11.4% 24.8% 27.6% 25.8% 23.5% 25.0% 25.0%
Reported PAT 509 564 903 760 1,266 2,667 3,084 3,748
- margin 5.7% 5.2% 6.9% 4.7% 6.4% 11.4% 11.5% 12.0%
- YoY chg -49.2% 10.7% 60.3% -15.8% 66.5% 110.7% 15.6% 21.5%
Adj. PAT 509 564 903 760 1,266 2,667 3,084 3,748
- margin 5.7% 5.2% 6.9% 4.7% 6.4% 11.4% 11.5% 12.0%
- YoY chg -49.2% 10.7% 60.3% -15.8% 66.5% 110.7% 15.6% 21.5%
- YoY chg- Ex PLI 10.7% 60.3% -15.8% 66.5% 53.3% 35.6% 27.6%

EPS (Rs) 2.09 2.32 3.72 3.05 5.07 10.69 12.36 15.02
- growth -49.2% 10.7% 60.3% -18.0% 66.5% 110.7% 15.6% 21.5%
PLI Adj. EPS (Rs) 2.1 2.3 3.7 3.0 5.1 7.8 10.5 13.5
- growth 10.7% 60.3% -18.0% 66.5% 53.3% 35.6% 27.6%

Source: Company, Emkay Research

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |49
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 132: Balance Sheet

(Rs mn) FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E
Gross assets + CWIP 4,927 5,321 6,294 7,582 9,765 10,232 10,767 11,393
Capex 394 973 1,288 2,183 467 535 626
% of sales 4.4% 9.1% 9.8% 13.6% 2.0% 2.0% 2.0%
Gross block turns 1.8 2.0 2.1 2.1 2.0 2.2 2.4 2.7
Cumulative Depreciation (762) (1,100) (1,433) (1,811) (2,213) (2,802) (3,401) (4,010)
Net block 4,165 4,221 4,861 5,771 7,553 7,429 7,366 7,383
Net block turns 2.2 2.5 2.7 2.8 2.6 3.0 3.5 4.2
Investments 30 365 688 1,263 203 203 203 203
Other long-term assets 84 118 125 329 119 119 119 119
Cash & cash equivalents 1,127 1,053 1,156 1,622 1,800 3,795 5,375 6,865
Inventories 383 365 568 729 784 918 1,073 1,262
days of sales 16 12 16 17 15 15 15 15
Receivables 390 417 473 733 792 918 1,073 1,262
days of sales 16 14 13 17 15 15 15 15
Other current assets 131 227 301 574 1,465 1,224 1,431 1,683
days of sales 5 8 8 13 27 20 20 20
% change 74% 32% 91% 155% -16% 17% 18%
Current assets 1,648 1,698 1,930 2,929 4,057 5,937 7,879 9,811
Creditors 293 143 425 428 534 612 715 842
days of sales 12 5 12 10 10 10 10 10
Other current liabilities 160 389 444 418 621 612 715 842
days of sales 7 13 12 10 12 10 10 10
% change 143% 14% -6% 48% -1% 17% 18%
Current provisions 16 27 29 27 32 38 43 50
days of sales 1 1 1 1 1 1 1 1
% change 76% 6% -5% 15% 19% 15% 17%
Current liabilities 468 560 897 874 1,187 1,262 1,474 1,734
Net current assets 1,531 1,972 1,978 2,947 4,176 5,975 7,922 9,861
Total assets 5,841 6,207 7,274 10,147 11,530 13,345 15,166 17,045
Borrowings 735 540 874 1,597 1,695 1,495 1,295 1,095
Addition (196) 335 723 98 (200) (200) (200)
Other long-term liabilities 408 375 325 343 312 327 344 361
% YoY -7.9% -13.4% 5.5% -9.1% 5.0% 5.0% 5.0%
% of sales 4.5% 3.5% 2.5% 2.1% 1.6% 1.4% 1.3% 1.2%
Deferred grant income - - 13 14 11
Equity share capital 243 243 243 250 250 250 250 250
Other equity 4,455 5,049 5,814 7,958 9,287 11,287 13,292 15,353
Minority interest - - 18 (1) (14) (14) (14) (14)
Total Liabilities 5,841 6,207 7,274 10,147 11,530 13,345 15,166 17,045

Source: Company, Emkay Research

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |50
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Exhibit 133: Cash Flow

(Rs mn) FY19 FY20 FY21 FY22 FY23 FY24E FY25E FY26E
PBT 759 636 1,201 1,050 1,706 3,486 4,112 4,997
Adjustments for
Depreciation 228 342 331 383 471 590 598 609
FX (10) (7) (1) 0 (4) - - -
Gain on lease modification - - (0) 0 (0) - - -
Interest income (63) (75) (69) (68) (108) (221) (276) (345)
Finance costs 39 51 30 67 102 112 91 84
Others 19 36 (9) 52 93 - - -
Operating profit before working capital 971 984 1,483 1,484 2,261 3,967 4,525 5,345
Decrease in trade receivables (56) (24) (52) (269) 73 (126) (155) (189)
Decrease in loans 18 (60) 48 0 0 - - -
Decrease in other current financial assets (18) (80) 11 (98) 61 - - -
Decrease in other current assets (28) (23) (101) (27) (291) 241 (206) (253)
Decrease in inventories (69) 17 (213) (159) (17) (134) (155) (189)
Decrease in non-current financial assets (8) 35 (20) (3) (2) - - -
Decrease in other non-current assets (4) (81) (27) (12) 36 - - -
Increase in trade payables 74 (150) 267 7 (158) 78 103 126
Increase in other current financial liabilities (68) (20) 39 17 (9) - - -
Increase in other current liabilities (9) 54 (16) 42 275 (9) 103 126
Increase in provisions 97 10 (27) 3 1 6 6 7
Cash generated from operations 901 663 1,392 986 2,228 4,023 4,221 4,974
Tax paid (214) (117) (173) (411) (466) (819) (1,028) (1,249)
Net Cash generated from operations 687 547 1,220 575 1,762 3,204 3,193 3,724
Net capex (733) (405) (737) (1,078) (806) (467) (535) (626)
Net investments (246) (245) (535) (1,296) (594) - - -
Interest received 63 75 83 58 119 221 276 345
Net Cash generated in investing (915) (575) (1,189) (2,316) (1,281) (246) (259) (281)
Proceeds from share issuance 1,220 - - 1,348 - - - -
Issue expense paid (38) - - (1) - - - -
Proceeds from borrowings 263 9 49 480 261 - - -
Repayment of borrowings (768) (152) (235) (118) (201) (200) (200) (200)
Net change in cash credit (178) (57) 184 117 81
Grant received - - 20 - - - - -
Dividend paid (59) (59) (49) (50) (25) (667) (1,079) (1,686)
Principal paid on lease liabilities (5) (4) (30) (10) (49) - - -
Interest paid (37) (49) (29) (65) (101) (112) (91) (84)
Interest paid on lease liabilities (1) (2) (2) (13) (15) - - -
Net Cash generated in financing 398 (315) (91) 1,688 (49) (978) (1,370) (1,970)
Net cash change 170 (343) (59) (53) 432 1,980 1,564 1,473

Opening cash 3 172 (171) (229) (283) 149 2,129 3,692

Closing cash 172 (171) (229) (283) 149 2,129 3,692 5,165
FCF (46) 141 482 (504) 955 2,737 2,658 3,098

Source: Company, Emkay Research

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
Emkay Research is also available on www.emkayglobal.com and Bloomberg EMKAY<GO>.Please refer to the last page of the report on Restrictions on Distribution. In Singapore, this research report or research
analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.
May 9, 2024 |51
Bikaji Foods International (BIKAJI IN) India Equity Research | Initiating Coverage

Bikaji Foods International: Consolidated Financials and Valuations

Profit and Loss Balance Sheet

Y/E Mar (Rs mn) FY22 FY23 FY24E FY25E FY26E Y/E Mar (Rs mn) FY22 FY23 FY24E FY25E FY26E
Revenue 16,110 19,661 23,339 26,765 31,296 Share capital 250 250 250 250 250
Revenue growth (%) 22.9 22.0 18.7 14.7 16.9 Reserves & Surplus 7,958 9,287 11,287 13,292 15,353
EBITDA 1,395 2,136 3,967 4,525 5,345 Net worth 8,208 9,536 11,537 13,541 15,603
EBITDA growth (%) (3.6) 53.1 85.7 14.1 18.1 Minority interests (1) (14) (14) (14) (14)
Depreciation & Amortization 383 471 590 598 609 Deferred tax liability (net) 0 0 0 0 0
EBIT 1,012 1,665 3,378 3,927 4,736 Total debt 1,940 2,007 1,822 1,639 1,456
EBIT growth (%) (9.3) 64.5 102.8 16.3 20.6 Total liabilities & equity 10,147 11,530 13,345 15,166 17,045
Other operating income 29 26 979 636 555 Net tangible fixed assets 5,771 7,553 7,429 7,366 7,383

Other income 105 147 221 276 345 Net intangible assets 0 0 0 0 0
Financial expense 67 106 112 91 84 Net ROU assets 0 0 0 0 0
PBT 1,050 1,706 3,486 4,112 4,997 Capital WIP 0 0 0 0 0
Extraordinary items 0 0 0 0 0 Goodwill 0 0 0 0 0
Taxes 290 440 819 1,028 1,249 Investments [JV/Associates] 1,593 322 322 322 322
Minority interest 0 0 0 0 0 Cash & equivalents 1,622 1,800 3,795 5,375 6,865
Income from JV/Associates 0 0 0 0 0 Current assets (ex-cash) 2,036 3,042 3,061 3,577 4,208
Reported PAT 760 1,266 2,667 3,084 3,748 Current Liab. & Prov. 874 1,187 1,262 1,474 1,734
PAT growth (%) (15.8) 66.5 110.7 15.6 21.5 NWC (ex-cash) 1,162 1,855 1,799 2,103 2,475
Adjusted PAT 760 1,266 2,667 3,084 3,748 Total assets 10,147 11,530 13,345 15,166 17,045
Diluted EPS (Rs) 3.0 5.1 10.7 12.4 15.0 Net debt 318 207 (1,972) (3,736) (5,409)
Diluted EPS growth (%) (18.0) 66.5 110.7 15.6 21.5 Capital employed 10,147 11,530 13,345 15,166 17,045
DPS (Rs) 0.8 0.8 2.7 4.3 6.8 Invested capital 6,932 9,408 9,228 9,469 9,857
Dividend payout (%) 25.0 14.8 25.0 35.0 45.0 BVPS (Rs) 32.9 38.2 46.2 54.3 62.5
EBITDA margin (%) 8.7 10.9 17.0 16.9 17.1 Net Debt/Equity (x) 0.0 0.0 (0.2) (0.3) (0.3)
EBIT margin (%) 6.3 8.5 14.5 14.7 15.1 Net Debt/EBITDA (x) 0.2 0.1 (0.5) (0.8) (1.0)
Effective tax rate (%) 27.6 25.8 23.5 25.0 25.0 Interest coverage (x) 0.1 0.1 0.0 0.0 0.0
NOPLAT (pre-IndAS) 733 1,236 2,584 2,945 3,552 RoCE (%) 12.8 16.7 28.9 29.5 31.5
Shares outstanding (mn) 249.5 249.5 249.5 249.5 249.5 Source: Company, Emkay Research

Source: Company, Emkay Research

Cash Flows Valuations and Key Ratios

Y/E Mar (Rs mn) FY22 FY23 FY24E FY25E FY26E Y/E Mar FY22 FY23 FY24E FY25E FY26E
PBT 1,050 1,706 3,486 4,112 4,997 P/E (x) 170.7 102.5 48.6 42.1 34.6
Others (non-cash items) (16) (19) (221) (276) (345) P/CE(x) 115.6 76.1 40.6 35.9 30.4
Taxes paid 0 0 0 0 0 P/B (x) 15.8 13.6 11.2 9.6 8.3
Change in NWC (498) (33) 56 (304) (372) EV/Sales (x) 8.1 6.6 5.7 4.8 4.0
Operating cash flow 986 2,228 4,023 4,221 4,974 EV/EBITDA (x) 93.2 60.8 32.2 27.8 23.3
Capital expenditure (1,078) (806) (467) (535) (626) EV/EBIT(x) 131.0 79.5 38.6 32.7 26.8
Acquisition of business 0 0 0 0 0 EV/IC (x) 19.1 14.1 14.1 13.6 12.9
Interest & dividend income 0 0 0 0 0 FCFF yield (%) (0.1) 1.1 2.7 2.9 3.4
Investing cash flow (2,316) (1,281) (246) (259) (281) FCFE yield (%) (0.1) 1.0 2.6 2.7 3.2
Equity raised/(repaid) 1,347 0 0 0 0 Dividend yield (%) 0.1 0.1 0.5 0.8 1.3
Debt raised/(repaid) 362 60 (200) (200) (200) DuPont-RoE split
Payment of lease liabilities 0 0 0 0 0 Net profit margin (%) 4.7 6.4 11.4 11.5 12.0
Interest paid (78) (116) (112) (91) (84) Total asset turnover (x) 1.8 1.8 1.9 1.9 1.9
Dividend paid (incl tax) (50) (25) (667) (1,079) (1,686) Assets/Equity (x) 1.2 1.2 1.2 1.1 1.1
Others 107 32 0 0 0 RoE (%) 10.7 14.3 25.3 24.6 25.7
Financing cash flow 1,688 (49) (978) (1,370) (1,970) DuPont-RoIC
Net chg in Cash 358 898 2,799 2,592 2,722 NOPLAT margin (%) 4.5 6.3 11.1 11.0 11.3
OCF 986 2,228 4,023 4,221 4,974 IC turnover (x) 2.6 2.4 2.5 2.9 3.2
Adj. OCF (w/o NWC chg.) 1,484 2,261 3,967 4,525 5,345 RoIC (%) 12.0 15.1 27.7 31.5 36.8
FCFF (92) 1,422 3,557 3,686 4,348 Operating metrics
FCFE (159) 1,316 3,445 3,595 4,264 Core NWC days 4.5 5.2 4.4 4.5 4.5
OCF/EBITDA (%) 70.7 104.3 101.4 93.3 93.0 Total NWC days 26.3 34.4 28.1 28.7 28.9
FCFE/PAT (%) (20.9) 103.9 129.2 116.6 113.8 Fixed asset turnover 2.3 2.3 2.3 2.5 2.8
FCFF/NOPLAT (%) (12.6) 115.1 137.7 125.2 122.4 Opex-to-revenue (%) 18.7 18.2 18.1 17.4 17.0

Source: Company, Emkay Research Source: Company, Emkay Research

This report is intended for [email protected] use and downloaded at 05/09/2024 07:26 PM
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1
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1. EGFSL, its subsidiaries and/or other affiliates and Research Analyst or his/her associate/relative’s may have Financial Interest/proprietary positions in
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Emkay Rating Distribution

Ratings Expected Return within the next 12-18 months.

BUY >15% upside

ADD 5-15% upside

REDUCE 5% upside to 15% downside

SELL <15% downside

Emkay Global Financial Services Ltd.

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EGFSL or its associates may have financial interest in the subject company.

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Analyst or research entity (EGFSL) have not been engaged in market making activity for the subject company.

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Research Analyst may have served as an officer, director or employee of the subject company.

EGFSL or its affiliates may have received any compensation including for investment banking or merchant banking or brokerage services from the subject
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SESHADRI
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pseudonym=133422712594461905DSVUy8kk9un4ET,
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4e39548b678bafc1f29f6e1ced7, postalCode=400011,

KUMAR SEN
st=Maharashtra,
serialNumber=07837cb61a11364e9d2229a78d0af55
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cn=SESHADRI KUMAR SEN
Date: 2024.05.08 23:55:01 +05'30'

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