Target: ₹760
CMP: ₹716.75
Bikaji Foods International’s Q1-FY25 management commentary reassured us on the topline trajectory, but margin outlook for FY25 looks bland. The management is aiming for 13-15 per cent volume growth for FY25, and expects product prices to increase by about 2-3 per cent. Return of rural demand is likely to aid overall demand recovery, with concentration of Western snacks being high. Bikaji has already achieved expansion to 21k outlets, of its FY25 distribution expansion target of 50k outlets.
Key raw-material prices (particularly of channa, potato, and dry fruits) have been stable y-o-y, but seen inflationary pressure sequentially, which is likely to persist for the rest of the year. Bikaji effected 70-80bps price hikes in Q1, and is mulling a 150bps price-hike in Q2, to pass on the impact of sequential inflation in key raw materials.
Bikaji remains an execution-led, savory snacks play, wherein it has created a relative edge over peers. This reflects in its performance and is also being gradually baked into valuations (54.5x P/E for FY26, on PLI adj. EPS of ₹13.1). As we cut our margin assumptions, our earnings estimates reduce 2-3 per cent over FY25-27. We maintain our Add rating on Bikaji, with new Jun-25E TP of ₹760/sh (vs ₹775/sh earlier), on 55x P/E