Bikaji Foods hits new high, surges 10% for the second straight day

On November 16, Goldman Sachs India Equity Portfolio purchased 1.74 million equity shares of Bikaji Foods at Rs 324.50 per share via open market deals.

Shares of Bikaji Foods International have rallied 10 per cent for the second straight day, hitting a new high at Rs 379.20 on the National Stock Exchange (NSE) in Thursday’s intra-day trade amid heavy volumes. Bikaji Foods now traded at its highest level since its debut on November 16.

In the past two trading days, the stock of packaged foods company has zoomed 21 per cent, and quoted 27 per cent higher against its issue price of Rs 300 per share. The stock hit a low of Rs 303 on November 18, 2022.

On November 16, Goldman Sachs Funds - Goldman Sachs India Equity Portfolio had purchased 1.74 million equity shares of Bikaji Foods at a price of Rs 324.50 per share via open market deals, the NSE bulk deal data showed. The name of the seller was not disclosed.

At 10:44 am, the stock quoted 9 per cent higher at Rs 375.15, as compared to 0.56 per cent rise in the Nifty 50. A combined 7.9 million equity shares had changed hands on the NSE and BSE.

Bikaji Foods is the third largest ethnic snacks company in India along with a presence in international markets. It is also the second fastest growing company in the Indian organised snacks market. Namkeen is the highest selling category followed by bhujia, sweets, papad and others contributing to 35.6 per cent, 34.9 per cent, 12.7 per cent, 6.7 per cent and 10.0 per cent, respectively, to total sales in FY22.

With the new capacities in place and upcoming facilities in Rajasthan and Bihar, the management is upbeat about maintaining more than 20% revenue CAGR in the next 3-4 years. In addition, lower capex requirements and price hikes to protect gross margins at 30 per cent are expected to maintain healthy profitability and cash flow, the brokerage firm Ventura had said in IPO note.

At the IPO price, the stock was available at 98x FY22 EPS. Though FY22 earnings were depressed due to high commodity prices, even on normalised earnings, the valuation multiple is premium to peers, analyst at ICICI Securities had said in IPO note.

The raw material volatility could continue to pressurise margins, sales concentrated in small number of states, high competitive intensity and high dependence on wholesale network are key risks & concerns, the brokerage firm added.