Bikaji Foods International Ltd – IPO Note – Equity Research Desk

November 2, 2022 . Equities Desk

Company Overview: 

Bikaji Foods is one of India’s largest fast-moving consumer goods (“FMCG”) brands with an international footprint, selling Indian snacks and sweets, and are among the fastest-growing companies in the Indian organised snacks market. The company is the largest manufacturer of Bikaneri bhujia with an annual production of 29,380 tonnes. The company is also one of the largest manufacturers of packaged rasgulla with an annual capacity of 24,000 tonnes along with that of soan papdi and gulab jamun with annual capacities of 23,040 tonnes and 12,000 tonnes, respectively.  The Rajasthan-based snack major is backed by investors like Avendus, Axis Asset Management, Lighthouse Funds, IIFL Asset Management, and Intensive Softshare, among others. The company has six operating manufacturing facilities, four of which are located in Bikaner, Rajasthan, and one each in Assam and Karnataka. It also has a contract manufacturing unit in West Bengal and a small facility in Mumbai catering to restaurant sales. Bikaji intends to establish and operationalise five more manufacturing facilities, one in Rajasthan catering to frozen snacks and sweet products owned and operated by the company besides others across Rajasthan, Bihar, and Uttar Pradesh, where it will produce namkeen and western snacks. 

Objects of the Offer:

  • The listing will enhance its visibility and brand image.
  • To provide a public market for equity shares in India.

Investment Rationale:

Diversified Offerings: Bikaji is the third largest ethnic snacks company in India with an international footprint, selling Indian snacks and sweets and the second fastest growing company in the Indian organised snacks market. The product range includes six principal categories such as bhujia, namkeen, packaged sweets, papad, western snacks as well as other snacks which primarily include gift packs (assortment), frozen food, mathri range, and cookies. As of June 30, 2022, the company’s diversified product portfolio included more than 300 products across all the product segments. It also launched packages of various sizes for its products. For example, Bhujia and namkeen products are available in packages as small as a pouch that is 14-25 grams for ₹5 to a one (1) kilogram pouch for ₹350.

Financial Performance: The sale of food products increased from ₹1072 crs in Fiscal 2020 to ₹1603 crs in Fiscal 2022, at a CAGR of 22.25% and was ₹332 crs in the three months ended June 30, 2021, and ₹417 crs in the three months ended June 30, 2022. The company is the market leader in the family pack segment with a 60.57% share of business coming from SKUs other than ₹5 and ₹10 packs during Fiscal 2022.

Strong Track Record: Bikaji’s history and lineage trace back to Gangabishan Agarwal, founder of the Haldiram brand. His grandson, Shiv Ratan Agarwal, the founder and one of the Promoters of Bikaji, continued his legacy and developed extensive experience in the Indian ethnic snacks industry. The company has established a successful track record for more than 3 decades in the manufacturing and processing of bhujia, papad, namkeens, and sweets, among other products. Mr. Shiv Ratan Agarwal has more than three decades of experience, and other key directors, namely, Ms. Sushila Devi Agarwal and Mr. Deepak Agarwal both have more than two decades of experience in the same line of business activity. 

Key Risks:

OFS – The IPO is entirely an Offer for Sale (OFS) by its promoters and existing shareholders. The company will not receive any proceeds from the issue. Both the promoters, Ratan Agarwal and Deepak Agarwal, are looking to offload up to 25 lakh company shares each. Other institutions participating in the OFS include India 2020 Maharaja, Ltd; Intensive Softshare Pvt Ltd, IIFL Special Opportunities Fund, IIFL Special Opportunities Fund – Series 2, IIFL Special Opportunities Fund – Series 3, IIFL Special Opportunities Fund – Series 4, IIFL Special Opportunities Fund – Series 5 and Avendus Future Leaders Fund I.

Competitive Risk – Bikaji faces fierce competition from the organised, as well as unorganised sectors, which constitute a major portion of the market currently. However, with factors such as lifestyle changes, rising urbanisation, a growing middle-class population, local availability, and the availability of snacks in small package sizes, along with a low price and the company’s strategies to focus on regional taste, growth is expected in the organised sector.


The company’s listed peers are Prataap snacks, DFM foods, ITC ltd, etc. At a higher price band, the listing market cap will be around ~Rs.7485 crs and bikaji is demanding a P/E multiple of 95x based on FY22 EPS, which seems to be high for a fully OFS IPO. The company’s top line is in the rapid growth phase and its Pan India distribution network is one of the main additives for the growth. However, most of the revenues are coming from Rajasthan, Bihar, and Assam which possess a geographical concentration issue. Based on the above views, we provide a ‘Neutral‘ rating for this IPO.

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