Bikaji Foods International Limited IPO Review

About the Company

Bikaji Foods International Limited is a leading fast-moving consumer goods ("FMCG") brand in India. The product range consists of six major categories: bhujia, namkeen, packaged sweets, papad, western snacks, and other snacks, which principally comprise gift packs (assortment), frozen food, mathri range, and cookies. They sold over 250 items under the Bikaji brand in the six months ending September 30, 2021. Shiv Ratan Agarwal, Deepak Agarwal, Shiv Ratan Agarwal (HUF), and Deepak Agarwal are the company's promoters (HUF). The category allocation for qualifying institutional buyers is 50.0%, 15.0% for non-individual investors or high net worth individuals, and 35.0% for retail investors.

Bikaji Foods International Limited IPO

Opening Date03, November 2022Closing Date07, November 2022Refund Initiation14, November 2022Listing Date16, November 2022Face Value₹1 per equity shareIPO Price Band₹285 to ₹300 per equity shareMinimum Order Quantity50 SharesIssue Size₹881.22 Cr

On Thursday, Bikaji Foods launched an initial public offering (IPO) to obtain funds up to Rs 881 crore. The IPO Bikaji is purely an offer for sale (OFS) by existing shareholders, which means the company would get no proceeds from the transaction. Fresh shares will not be issued in this.

For three trading days till November 7, Bikaji Foods shares will be available for bidding between 10 a.m. and 5 p.m. The IPO consists of an offer for sale (OFS) of approximately 2.94 crore equity shares by promoters and existing shareholders. Bikaji Foods raised 262.11 crores from 36 anchor investors ahead of its IPO on November 2.

Bikaji Foods said in a BSE filing that it has finalized the allocation of 87.37 lakh equity shares to anchor investors after consulting with merchant bankers. These shares were offered to anchor investors for $300 each.

Objective of the Issue

Receive the advantages of listing equity shares on stock exchanges.

Bikaji expects the listing to enhance company exposure and brand image while also offering a public market for equity shares in India.

Financials

Bikaji's revenue from operations grew 22.90% to Rs. 1610.96 crore for fiscal 2022 against Rs. 1310.75 crore for fiscal 2021, primarily due to increase in the sale of food products, and an increase in volume and realization of products, in particular, bhujia, Namkeen, papad, western snacks, and packaged sweets, while its net profits stood at Rs 76.03 crore in FY22. For the three months ending June 30, 2022, revenue from operations stood at Rs 419.16 crore and net profit was Rs 15.70 crore.

Strengths

• Bikaji is a well-known pan-India brand that focuses on a varied variety of quality goods, authentic ethnic Indian flavor, creative packaging, and smart pricing strategies that cover all important price points.
• The firm offers a diverse product range targeted at various consumer categories and marketplaces, with over 300 products now available.
• It has a large distribution network in India, with 6 depots, 38 super stockists, and 416 direct and 1,956 indirect distributors.
• BFIL has seven functioning production plants, including four in Bikaner (Rajasthan), one in Guwahati (Assam), one in Tumakuru (Karnataka), and one in Muzaffarpur (Bihar).
• Experienced and well-qualified promoters and senior management team with a proven track record of Consistent financial performance

Risks

• The Company will not receive any proceeds from the Offer
• Investment in unsecured debt instruments.
• Major reliance on revenue from the sale of its bhujia and family pack stock-keeping units.
• Inadequate or interrupted supply, as well as price fluctuations in raw materials and packaging materials, might have a negative impact on the business.
• Inability to sustain or grow the popularity of its "Bikaji" brand.

Outlook & Valuation

Due to shifting lifestyles, rising incomes, and urbanization, India's packaged food industry has experienced tremendous growth over the past five years. Currently, pan-Indian demand for regional snacks is booming. Bikaji is a popular brand in this segment and is among the top three Indian ethnic snack manufacturers in India with a pan-India presence. The company has a strong management team and a significant percentage of promoter holdings. It generated strong revenue growth in the last 3 years where revenue improved from Rs. 1082.9 crores in FY2020 to Rs. 1621.45 crores in FY2022. However, the company's margins are on the declining side and a P/E valuation of 95.2 looks expensive. Finally, this issue is a complete offer for sale, and thus we recommend a Subscribe rating, but only for high-risk investors.

Listing Dates

The company will finalize the IPO share allotment on November 11 and refunds will be credited to the bank accounts of unsuccessful investors by November 11. The IPO shares will be transferred to Demat accounts of eligible investors by November 14. Bikaji Foods will make its debut on the BSE and National Stock Exchange on November 16.