Nuvama initiates coverage on Bikaji Foods, sees upside potential of over 21%
Nuvama initiated coverage on Bikaji Foods, with a target price of Rs 885, as the company has emerged as a heavyweight in the rapidly expanding Indian savoury snacks market.
“With capex largely incurred, rising asset utilisation shall propel its RoCE to 32% by FY27E. Insatiable scope for savoury snacks, brand equity, favourable trends and expansion make it covetable,” said Abneesh Roy, Analyst at Nuvama.
The Indian market for savoury snacks is projected to expand at a CAGR of 11% to Rs 1.2 lakh crore over FY24–27E (against Rs 79,600 crore in FY23). Bikaji is poised to outgrow the industry with an 18% CAGR over FY24–27E, powered by volume growth of 14–15% annually.
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Bikaji Foods is the third-largest player in the organised ethnic snacks market (9% share), market leader in family packs (60% salience) and leader in its core states, i.e, Rajasthan, Assam and Bihar.
Bikaji is now eying the untapped potential in focus regions such as UP, Punjab, Haryana, Delhi, Karnataka and Telangana, wherein it has clocked a remarkable 21% CAGR (FY20–24). These six states account for 32% of the industry while Rajasthan, Assam and Bihar contribute 18%.
Savoury snacks are in demand due to shifting consumer preferences. Additionally, growing popularity of ethnic snacks and consolidation of the unorganised sector may continue to spice up Bikaji's growth over coming years.
In the last one year, Bikaji Foods shares have risen by 77.65% while
