Bikaji Foods International Limited

IPO Note
Recommendation: Avoid
About the Company:
⚫ Incorporated in 1995, Bikaji Foods International is the 3rd 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 company has owned 7 operational manufacturing facilities – 4 in Bikaner, one in Assam, Karnataka and
Bihar each. The primary raw materials required for production of snack foods are pulses, flour, oil, spices
and seasoning, sugar, milk and other dairy products.
⚫ 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’s products include Bhujia, Namkeen, Packaged
sweets, Papad, Western snacks and other snacks.

Issue Highlights:

Issue Size Rs. 2,206 Crores

Fresh Issue Rs. 500 Crores
Offer for Sale Rs. 1,706 Crores
Issue Date 3rd November, 2022 - 7th November, 2022
Price Band Rs. 319 - Rs. 336
Lot Size 44 shares per lot
Post Issue Market Cap at lower price band Rs. 8,580 Crores
Post Issue Market Cap at higher price band Rs. 9,011 Crores

Issue Objective:
⚫ The Selling Shareholders will be entitled to the entire proceeds of the Offer after deducting the Offer
expenses and relevant taxes thereon. The Company will not receive any proceeds from the Offer.

Promotor Holding:
⚫ 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.
⚫ Apart from the MD, the promoters of the company are Shiv Ratan Agarwal, (35.4%), Deepak Agarwal
(16.6%), Shiv Ratan Agarwal (HUF)(24.5%)

Shareholding Pre-issue No. of shares Post-issue No. Of shares

(pre-issue) (Post Issue)
Promotors 77.97% 194,543,900 75.97% 189,543,900
Public 22.03% 54,965,980 24.03% 59,965,980
Total 100% 25,33,03,930 100% 26,81,84,882
⚫ The major shareholders of the company are Shiv Ratan Agarwal, Deepak Agarwal and India 2020 Maharaja,
Limited who offer 8.5% (74.9 crores), 8.5% (74.9 crores) and 41.2% (363.06 crores )

Promotor Name Pre-issue Post-issue % of Offer for Sale

Shareholding Shareholding issued
Shiv Ratan Agarwal 35.4% 34.4% 8.5%
Deepak Agarwal 16.6% 15.6% 8.5%
India 2020 Maharaja, 7.3% 2.4% 41.2%
Limited

Financial Highlights:
⚫ Bhujia: 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: 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: 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.
⚫ Most of the company’s revenue came from two segments, bhujia and namkeen. Bhujia and Namkeen
accounted for 70% of revenue, followed by packaged sweets with nearly 13% of total sales.

Competitive Landscape:

Parameter Nestle India Britannia Bikaji Foods

Industries International
Revenue Rs. 14,709.4 Crores Rs. 44,431 Crores Rs. 9,011 Crores
Return on Capital 147.86% 41.6% 13.9%
Employed
EBITDA Margin 24.4% 15.6% 8.7%
PAT Margin 14.6% 10.7% 4.7%
P/E 88.6x 50.6x 98.5x

⚫ In terms of revenue, Bikaji foods is below Britannia and Nestle but above smaller companies (Pratap and
DFM).
⚫ All companies in the segment are trading at higher PE (Except DFM). PE of Bikaji is on the higher side
compared to its peers.
⚫ The revenue has grown at a CAGR of 22.45% over the last 3 years.
 Well-established Bikaji brand with a diversified range of products has helped the company in achieving a
strong growth rate.

Industry outlook:

⚫ Packaged food industry has been a fast growing one in India in the recent years. The packaged food industry
is currently valued at ₹424000 crores. The Indian savory snacks market is expected to grow to ₹122700
crores by FY26 from its current value of ₹75,100 crores in FY22.
⚫ The growth in the industry has been due to rising incomes, urbanization and changing lifestyles. The
estimated growth of CAGR has been approximately at around 8% in the next 5 years.
⚫ The strong growth of the online grocery segment is expected to continue which will eventually drive the
demand for ready-to-eat, packaged foods.

Rating:
At the upper price band the company demands a trailing PE of 98 times and price to sales of 4.4 times. In terms
of revenue, Bikaji foods is below Britannia and Nestle but above companies like Pratap. Pratap which reported
similar revenue but reported a loss due to cost pressures in the past 12 months trades 1.5 times sales. Given the
high valuation, stiff competition and low margin business we recommend not to subscribe it.
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RESEARCH
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