Target: ₹440
CMP: ₹356.80
Bikaji, buoyed by its strong lineage, has become the 3rd largest player in India’s fast-growing organised ethnic snacks segment (pegged at INR 181bn, expected to grow at 15.6% over FY22-26) with a market share of 9 per cent. In the packaged snacks industry, brand equity, a wide portfolio, and supply chain capabilities are all critical for success.
While key organised players do have these capabilities, Bikaji’s leadership position and higher portfolio skew towards the family pack segment, is what differentiates it vs peers and points to the strength of the brand as a preferred brand for home consumption.
Further over FY21-23, Bikaji has strategically added new facilities to augment its manufacturing capabilities, which should help it improve direct reach in core markets, and scale up its presence in focus markets. Its proven on-ground execution is reflected in sales CAGR of 19%/41% in core/focused markets over FY17-22.
With receding RM headwinds, improving utilisation levels, and capex largely done; profitability, return metrics and cash flow generation are expected to improve. We initiate coverage on Bikaji with a TP of ₹440 (45x FY25).