Bikaji Foods International Limited is the third largest ethnic snacks company in India with an international footprint, selling Indian snacks and sweets, and is the second fastest growing company in the Indian organized snacks market. The product range includes six 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.
Bikaji Foods International Limitedis the third largest ethnic snacks company in India with an international footprint, selling Indian snacks and sweets, and is the second fastest growing company in the Indian organized snacks market. The product range includes six 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. In FY22, they were the largest manufacturer of Bikaneri bhujia with an annual production of 29,380 tonnes (tns), the second largest manufacturer of handmade papad with an annual production capacity of 9,000 tns, the third largest player in the organized sweets market with annual capacity of 24,000 tns for packaged rasgulla, 23,040 tns for soan papdi and 12,000 tns for gulab jamun
FINANCIAL HIGHLIGHTS
Issue Date
3rd Nov’22 – 7th Nov’22
Price Band
₹285-₹300
Bid Lot
50 Shares
Issue Size
₹881.2 cr
No. of Shares (Post Issue)
24.9 cr
Post-Issue Implied Market Cap*
₹7,485 cr
P/E Ratio (FY22)*
98.5x
ABOUT – BIKAJI FOODS INTERNATIONAL LIMITED
In the organized ethnic snacks market, Bikaji has a market share of 45% in Rajasthan, 58% in Assam and 29% in Bihar. In FY22, they had exported products to 39 countries, including countries in North America, Europe, Middle East, Africa, and Asia Pacific, representing 3.98% of the sales of food products.
As on 30th June 2022, the company has 6 depots, 38 super stockists, 416 direct and 1,956 indirect distributors that work with the super stockists, located across 23 states and 4 union territories in India.
The primary raw materials required for production of snack foods are pulses, flour, oil, spices and seasoning, sugar, milk and other dairy products. Packaging material required for packaging include laminates, metal tins and cardboard boxes with their brand printed on them.
The company has divided its products in 2 segments – family packs products (i.e., packs priced at more than ₹10) and impulsive purchase packs (i.e., packs priced at ₹5 and ₹ 10). Family pack products contributed 60.57% to the sales of food products in FY22.
The company has 7 owned operational manufacturing facilities – 4 in Bikaner and one in Assam, Karnataka and Bihar each. Also, the company has entered into a contract manufacturing agreement on a non-exclusive basis with a contract manufacturing unit in West Bengal and two contract manufacturing agreements on an exclusive basis for a contract manufacturing facility located in Bikaner and Kanpur. They also have 1 small facility in Mumbai to manage their Mumbai restaurant sales. They also plan to operationalise 2 additional manufacturing facilities, one in Rajasthan that will be operated by them and one manufacturing facility in Bihar, for which they have entered into a contract manufacturing agreement.
PRODUCT PORTFOLIO – BIKAJI FOODS INTERNATIONAL LIMITED
Bhujia: Bhujia is famously known to have been first prepared in Bikaner and enjoys geographical indication tagging. Bikaneri bhujia is manufactured in the manufacturing facility at Bikaner. There are 14 different kinds of bhujia to cater to various regional and international tastes. In FY22, 584.4 million packets of bhujia were sold amounting to ~₹560 crore accounting for ~35% of the sale of food products. Key export regions for Bhujia outside India include Asia Pacific, North America and Middle East.
Namkeen: Namkeen refers to a type of traditional savoury Indian snack (other than bhujia) which are typically a mixture of one or more ingredients including moong dal, dry fruits and fried nuts, amongst others. There are 66 snacks classified under the namkeen category. In FY22, 696.3 million packets of namkeen were sold amounting to ~₹570 crore accounting for ~35.6% of the sale of food products.
Packaged Sweets: More than 30 varieties of dry and wet sweets are manufactured. The selection of sweets is very diversified and popular across India. There are 43 products classified under packaged sweets. In FY22, 22.7 million packets of packaged sweets were sold amounting to ~₹203.5 crore accounting for ~12.7% of the sale of food products.
Other snacks: Other snacks primarily include gift packs (assortment), frozen food, mathri range and cookies.
Bikaji-productsBikaji-image
SECTOR OUTLOOK – BIKAJI FOODS INTERNATIONAL LIMITED
Indiansavorysnacksmarket is valued at ₹75,100 crore in FY22 and is expected to reach ₹1,22,700 crore by FY26. The market is segmented into 2 parts – western snacks contributing 52% and traditional snacks contributing 48%. Organized players have a market share of 43.7% in the Indian savory snacks market. The Indiansweetmarketis valued at ₹59,300 crore with major share coming from unorganized players. The market is predicted to reach ₹84,600 crore FY26 owing to the sweet tooth of Indians.
The growing, working and young population of India and the rise in the middle-class population will be pivotal in driving higher packaged foods, and savory snacks and sweets expenditure. An increase in disposable income levels, indicative of a higher standard of living, will help improve affordability and demand for packaged foods and savory snacks and sweets.
Strong growth of the online grocery segment is expected to remain in place driving e-commerce demand for packaged, ready-to- eat foods.
The innovationinflavorsandnewsegmentsalong with an increased demand for nutritious, ready to eat or ready to go food owing to the fast-paced lifestyle people live has positively impacted the demand for packaged food.
Ever since the pandemic, consumers are more concerned about the safety and hygiene of food than before. Packaged food serves as the ultimate solution for maintaining the hygiene of food products, making it a preferred option. Also, packaged food has ensured better storage as it has a longer shelf life.
Increase in the number of nuclear families will drive changes in lifestyle patterns, with an increased inclination towards more convenient consumption. Growing trends of higher female labor force participation gives rise to two-income nuclear families can be a key factor driving convenience and packaged food demand in India.
COMPETITIVE LANDSCAPE – BIKAJI FOODS INTERNATIONAL LIMITED
RISK FACTORS – BIKAJI FOODS INTERNATIONAL LIMITED
The company is significantly dependent on the sale of bhujia products and on the sale of family pack stock keeping units (SKUs) for their revenues. Any changes in the consumer tastes and preferences for products may adversely impact their demand, brand loyalty and consequently business prospects and financial performance.
The reputation and consumer goodwill associated with the brand is critical for the success of the business. An inability to maintain or enhance the popularity of “Bikaji” brand may adversely impact the business prospects and financial performance.
They rely on a limited number of super-stockists and direct distributors for a portion of their revenue from operations. A significant decrease in revenue from any of those super-stockists or an inability to expand or effectively manage their growing super-stockist and distributor network, or any disruptions in the distribution chain may have an adverse effect on the business prospects and financial performance
Inadequate or interrupted supply and price fluctuation of the rawmaterialsand packaging materials could adversely affect the business, results of operations, cash flows, profitability and financial condition. The company is also dependent on suppliers of raw materials. They do not sign long term supply arrangements our raw materials, i.e., arrangements which are valid for more than 12 months. If any of the key suppliers of the raw materials fail for any reason to deliver raw materials in a timely manner or at all, it may affect their ability to manage inventory levels, manufacture of relevant products, and ability to supply such products to end retailers
The company has entered into agreements with certain banks for short-term and long terms facilities. They have signed certain agreements which contain restrictivecovenants, including requirements that they obtain consent from the lenders prior to undertaking certain matters including altering our capital structure, further issuance of any shares, etc.
PROMOTER BACKGROUND AND SHAREHOLDING
Deepak Agarwal, the Managing Director and Promoter, has been instrumental in managing their rapidly expanding operations, implementing strategic marketing and business initiatives, and focusing on financial performance.
The promoters of the company are as below:
Shiv Ratan Agarwal (35.4%)
Deepak Agarwal (16.6%)
Shiv Ratan Agarwal (HUF) (24.5%)
Deepak Agarwal (HUF) (0.01%)
STATEMENT OF PROFIT AND LOSS
STATEMENT OF ASSETS AND LIABILITIES
STATEMENT OF CASH FLOW
KEY METRICS
SWOT ANALYSIS – BIKAJI FOODS INTERNATIONAL LIMITED
The company has a growing domestic and global presence with a well-diversifiedproductbasketof more than 300+ products that ranges from wholesome bites to indulgent treats.
To further enhance its brand equity, the company has chosen Amitabh Bachchan as its brand ambassador, with tag line “Amitji Loves Bikaji” since 2019.
The company aspires to set up state of the art product manufacturing facilities across various strategic locations in the country to ensure ease of product serviceability across different zones, retain freshness of the products achieved through reduction in lead times and efficiency of operations
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