Bikaji Foods Q2 Results Review

Bikaji Foods International Ltd.’s Q2 FY24 results missed our estimate. Revenue grew by 5.5% YoY to Rs 6.1 billion with 5.1% volume growth. Going ahead, we believe that the sales growth would be led by volumes improvement.

Ebitdam increased by 330 bps to 14.4% driven by gross margin expansion of 550 bps. Deflation in key commodities like palm oil helped expansion. 

Bikaji Foods witnessed sales growth of 10/9% in ethnic and Western snacks. High margin portfolio is expected to increase from 13% to 18% over next three years.

Though Q2 results came below our estimates, we have upward revised our FY24/25E earnings per share by 6.6/1.4% at 8.0/9.8 to factor in higher growth expected in H2 FY24E and expansion in margins.

We have also introduced FY26E EPS at Rs 12.0.

We believe with high sales growth, margins would improve here on. Value the stock at 52 times FY26 EPS, to arrive at target price of Rs 622. High target multiple to indicates improved confidence in the business. Maintain ‘Buy’.

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