Bikaji Foods surges 20%; stock up 31% from Tuesday's low

In the past eight trading days, between February 6 and February 18, the stock had corrected 29 per cent.

Shares of Bikaji Foods International (Bikaji) moved higher by 20 per cent to Rs 679 on the BSE in Wednesday’s intra-day trade backed by heavy volumes. The stock of packaged foods company bounced back 31 per cent from its low of Rs 520, which was touched in Tuesday’s intra-day deals. 

 

In the past eight trading days, between February 6 and February 18, the stock corrected 29 per cent. It had hit a record high of Rs 1,005 on September 27, 2024.

 

At 02:37 pm; Bikaji was quoting 18 per cent higher at Rs 667.30, as compared to 0.19 per cent decline in the BSE Sensex. The average trading volumes at the counter nearly doubled with a combined 1.5 million equity shares changing hands on the NSE and BSE.

 

Bikaji is India’s third largest ethnic snacks manufacturer and the second fastest growing company in the Indian organised snacks market. The Traditional Snacks category has been a major contributor, accounting for 62 per cent of Bikaji’s total revenue, followed by the Packaged Sweets category, which contributed 18 per cent.

 

The company also exports its products to 25 international countries, including North America, Europe, the Middle East, Africa, and Asia Pacific. Bikaji Foods' product range includes six principal categories: bhujia, namkeen, packaged sweets, papad, western snacks as well as other snacks which primarily include gift packs (assortment), frozen food, mathri range, and cookies.

 

During October to December 2024 quarter (Q3FY25), Bikaji’s profit after tax (PAT) declined 39.6 per cent year-on-year (Y-o-Y) and 59.5 per cent quarter-on-quarter (Q-o-Q) to Rs 27.8 crore, due to higher operational expenses.

 

In Q3FY25, Bikaji's revenue from operations declined 0.09 per cent Y-o-Y to Rs 714.90 crore. In Q3FY25, the company booked PLI income of Rs 17.5 crore. Earnings before interest, tax, depreciation and amortisation (Ebitda) was down by 26.0 per cent Y-o-Y and 48.0 per cent Q-o-Q with an Ebitda margin of 7.8 per cent, down from 14.8 per cent in Q2FY25 and 12.0 per cent in Q3FY24.

 

The management said the company experienced inflationary pressures in key commodities such as edible oil, potato, and besan, which impacted gross margin. The sharp rise in prices could not be fully passed on to the consumer, the management said.

 

The high base and Bikaji’s deliberate call to limit sales for protecting margin have hurt the Q3 growth trajectory (volume grew 3 per cent vs mid-teen quarterly growth trend). Q4 volume is also likely to be stressed, given a high promotion base, but analysts at Emkay Global Financial Services see value growth recovering.

 

“After the unexpected raw material inflation in Q3, gross margin (ex-PLI) contracted by 400 bps Y-o-Y to 27.5 per cent which will prompt Bikaji to take price actions. Employee-cost changes are likely to normalize ahead on a high ESOP base in FY25. After the 25 per cent stock price correction in the last 3M, valuation at 46x P/E for FY27E looks attractive for a high-earnings growth player; but we await margin pressure to ease,” the brokerage firm said. Analysts retain ‘Buy’ rating on the stock and set new 12-month target price of Rs 725 on 60x P/E (cut from 65x).