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HomeMutual FundBikaji Meals Worldwide Ltd – IPO Observe

Bikaji Meals Worldwide Ltd – IPO Observe


Firm Overview: 

Bikaji Meals is one in every of India’s largest fast-moving shopper items (“FMCG”) manufacturers with a world footprint, promoting Indian snacks and sweets, and are among the many fastest-growing firms within the Indian organised snacks market. The corporate is the biggest producer of Bikaneri bhujia with an annual manufacturing of 29,380 tonnes. The corporate can be one of many largest producers of packaged rasgulla with an annual capability of 24,000 tonnes together with that of soan papdi and gulab jamun with annual capacities of 23,040 tonnes and 12,000 tonnes, respectively.  The Rajasthan-based snack main is backed by buyers like Avendus, Axis Asset Administration, Lighthouse Funds, IIFL Asset Administration, and Intensive Softshare, amongst others. The corporate has six working manufacturing amenities, 4 of that are positioned in Bikaner, Rajasthan, and one every in Assam and Karnataka. It additionally has a contract manufacturing unit in West Bengal and a small facility in Mumbai catering to restaurant gross sales. Bikaji intends to determine and operationalise 5 extra manufacturing amenities, one in Rajasthan catering to frozen snacks and candy merchandise owned and operated by the corporate moreover others throughout Rajasthan, Bihar, and Uttar Pradesh, the place it’s going to produce namkeen and western snacks. 

Objects of the Supply:

  • The itemizing will improve its visibility and model picture.
  • To supply a public marketplace for fairness shares in India.

Funding Rationale:

Diversified Choices: Bikaji is the third largest ethnic snacks firm in India with a world footprint, promoting Indian snacks and sweets and the second quickest rising firm within the Indian organised snacks market. The product vary consists of six principal classes corresponding to bhujia, namkeen, packaged sweets, papad, western snacks in addition to different snacks which primarily embrace reward packs (assortment), frozen meals, mathri vary, and cookies. As of June 30, 2022, the corporate’s diversified product portfolio included greater than 300 merchandise throughout all of the product segments. It additionally launched packages of assorted sizes for its merchandise. For instance, Bhujia and namkeen merchandise can be found in packages as small as a pouch that’s 14-25 grams for ₹5 to a one (1) kilogram pouch for ₹350.

Monetary Efficiency: The sale of meals merchandise elevated from ₹1072 crs in Fiscal 2020 to ₹1603 crs in Fiscal 2022, at a CAGR of twenty-two.25% and was ₹332 crs within the three months ended June 30, 2021, and ₹417 crs within the three months ended June 30, 2022. The corporate is the market chief within the household pack phase with a 60.57% share of enterprise coming from SKUs aside from ₹5 and ₹10 packs throughout Fiscal 2022.

Sturdy Observe Document: Bikaji’s historical past and lineage hint again to Gangabishan Agarwal, founding father of the Haldiram model. His grandson, Shiv Ratan Agarwal, the founder and one of many Promoters of Bikaji, continued his legacy and developed in depth expertise within the Indian ethnic snacks trade. The corporate has established a profitable observe document for greater than 3 many years within the manufacturing and processing of bhujia, papad, namkeens, and sweets, amongst different merchandise. Mr. Shiv Ratan Agarwal has greater than three many years of expertise, and different key administrators, particularly, Ms. Sushila Devi Agarwal and Mr. Deepak Agarwal each have greater than 20 years of expertise in the identical line of enterprise exercise. 

Key Dangers:

OFS – The IPO is totally an Supply for Sale (OFS) by its promoters and present shareholders. The corporate won’t obtain any proceeds from the problem. Each the promoters, Ratan Agarwal and Deepak Agarwal, need to offload as much as 25 lakh firm shares every. Different establishments taking part within the OFS embrace India 2020 Maharaja, Ltd; Intensive Softshare Pvt Ltd, IIFL Particular Alternatives Fund, IIFL Particular Alternatives Fund – Collection 2, IIFL Particular Alternatives Fund – Collection 3, IIFL Particular Alternatives Fund – Collection 4, IIFL Particular Alternatives Fund – Collection 5 and Avendus Future Leaders Fund I.

Aggressive Danger – Bikaji faces fierce competitors from the organised, in addition to unorganised sectors, which represent a significant portion of the market at the moment. Nonetheless, with components corresponding to life-style adjustments, rising urbanisation, a rising middle-class inhabitants, native availability, and the supply of snacks in small package deal sizes, together with a low worth and the corporate’s methods to deal with regional style, progress is anticipated within the organised sector.

Outlook: 

The corporate’s listed friends are Prataap snacks, DFM meals, ITC ltd, and many others. At the next worth band, the itemizing market cap will probably be round ~Rs.7485 crs and bikaji is demanding a P/E a number of of 95x primarily based on FY22 EPS, which appears to be excessive for a completely OFS IPO. The corporate’s prime line is within the fast progress part and its Pan India distribution community is likely one of the primary components for the expansion. Nonetheless, many of the revenues are coming from Rajasthan, Bihar, and Assam which possess a geographical focus situation. Primarily based on the above views, we offer a ‘Impartial‘ score for this IPO.

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