The company is one of India’s largest fast-moving consumer goods (“FMCG”) brands with an international footprint, selling Indian snacks and sweets, and are among the fastest growing companies in the Indian organized snacks market. Bikaji founder and promoter Mr. Shiv Ratan Agarwal is one of the pioneers in the Indian snack industry and has more than three decades of experience in this industry.
To ensure production of superior quality products in snacks and sweets segment, the company has given paramount importance by significantly investing in strengthening the brand recall and consumer goodwill over the years. The company is one of the pioneers in the Indian packaged snacks industry which has given a novel twist to classic Indian snacks with a contemporary taste along with maintaining the regional flavors to address the evolving consumer preferences in India and internationally.
Diversified product portfolio:
The company has a growing domestic and global presence with a well-diversified product basket of more than 250 products that ranges from wholesome bites to indulgent treats, such as namkeen, sweets, papad, western snacks, chips and cookies. Namkeen is the highest selling category followed by Bhujia, Sweets, Papad and Others contributing to 37%, 36 %, 12 %, 7 % and 8 % of the total sales in Fiscal 2021. The diversified products basket comprises of the following:
Largest producer of Bikaneri bhujia - In Fiscal 2021, Bikaji was the largest manufacturer of Bikaneri bhujia with annual production of 26,690 tonnes. The facility of manufacturing Bikaneri bhujia is largely automated one ensuring the consistency in quality and taste. The Bikaneri bhujia was given the Geographical Identification (GI) tag in 2010 since it is a popular cottage industry of Bikaner, providing employment to a large group of people in the region. None other than the registered users are allowed to use the name of “Bikaneri bhujia” as generic product. The company is amongst the first to introduce convenient pouch packaging for Bhujia. The company was instrumental in transitioning and adapting to the packaging innovations by starting packaging Bikaneri bhujia in single-layered pouches and soon shifting to 4-layer colored packaging to retain the freshness of the product, avoid contamination, increase its shelf life and appeal. User friendly and attractive packaging has helped enhance the brand identity of Bikaji in the product segment.
One of the largest manufacturers of packaged sweets - Bikaji is one of the largest manufacturers of packaged rasgulla with the annual capacity of 24,000 tonnes and one of the largest manufacturers of Soan Papdi and Gulab Jamun with annual capacity of 23,040 tonnes and 12,000 tonnes respectively. Though the product is handmade in nature involving human intensive operations, high quality production is achieved due to automated backend nature of operations.
Second largest manufacturer of handmade papad - Majority of the papad produced by the company is Handmade and is well-known as their specialty product with focus on unmatched taste. However, they also manufacture machine made Papads. The company is the second largest manufacturer of Handmade papad with an annual production capacity of 9,000 tonnes in Fiscal 2021. The company produces diverse range of papads ranging in size from small disco papads of 1.5 inch to big 9 inch papads and popular variants such as Baat Cheet Papad, Aas Pass papad and Dil Khush Papad.
Strong Presence in Family pack segment sales - Amongst their competitors, the company is the market leader in family pack segment and recorded highest share of 63% amongst its other SKUs of INR 5 and INR 10 packs during Fiscal 2021. This reflects their brand resilience, driven by taste and the brand preference. The products in the family pack segment are considered as trustworthy with consumption at multiple occasions by families who believe in superior quality and consistency. Bikaji has offered their products in pouches of various sizes – from a small pack of 14-18 grams to a family party pack of 1 kg to serve wide range of consumers across all SECs’ in rural and urban markets. The snack products are available in different price points to cater to the entire spectrum of mass and niche markets.
Enhancing brand equity by roping celebrity as brand ambassador - To further enhance its brand equity, the company has chosen Amitabh Bachchan as its brand ambassador who is one of the most popular celebrities across all age, socio economic groups, gender, rural and urban regions with tag line “Amitji Loves Bikaji” since 2019. Bikaji’s advertisement expenses percentage to sales are the highest across the Indian traditional snacks product category. Bikaji reported ~ 2.34 % of advertisement expenses in Fiscal 2021 which is by far the highest amongst its competitors in traditional snacks product category.
Strengthening presence in E-comm, new gen and institutional channels - The importance of consuming packaged snacks and sweets with focus on quality and hygiene assumed paramount significance during Covid 19 pandemic. Collaborating with leading e-commerce players such as Amazon, Grofers, Swiggy, Milkbasket, Big Basket etc to sell their products. Actively making sales across other e-commerce platforms such as Udaan, Shop Kirana, Store King, Deal Share etc which are primarily B2B platforms to help the company increase their reach and penetration deeper in the market. Bikaji has a strong presence in Railway stations across which gives immense visibility and major purchase space. The company is also under process of getting listed in Canteen Stores Department (CSD), having more than 30,000 stores.
Pan India Presence:
The company’s vision is to expand across geographies and emerge as a dominant pan-India player. Apart from its home turf of Rajasthan, the company has a very strong presence in the states such as Bihar and Assam. The company has over the years established market leadership in the ethnic snacks market in its core three states and have gradually expanded their footprint across India, with operations across 22 states and 3 union territories serviced through 2130 distributors.
In their core markets Rajasthan, Assam and Bihar, the company has established deep penetration in Fiscal 2021 enjoys ~44.5%, ~58.1% and ~29.2% respectively, of the market share of total organized Indian ethnic snack category in such states.
The current annual production capacity for ethnic & western snacks, sweets and papad in Rajasthan is 2.15 lakh tonnes and 12,000 tonnes for western snacks in Karnataka. A contract manufacturing unit has been set up in Kolkata for manufacturing chips, corn rings and fingers. New facilities are also being planned in the states including Bihar, UP and Rajasthan.
Apart from strong domestic presence, the company is a leading exporter of Indian ethnic snacks, sweets, frozen food besides savories from India with exports in 35 countries of North America, Asia Pacific, Middle East, EU, Africa and UK regions. Exports contributed ~ 5.09 % of the total sales predominantly in North America and Asia Pacific regions during Fiscal 2021.
Possible Market opportunity for Bikaji
*ROTA- Return on Tangible Assets
*Share price as of 29 Sep 2022
The Business is generating more than 20% on tangible assets an average basis. The management is prudently employed capital to generate 15% ROCE on an average in last 3 years. There is a 94-95% retention ratio which means growth of the Business can be measured by ROE (=ROE*(1-payout ratio)). The cumulative CFO of last 3 years (excluding FY22) is 11% higher than pre-tax earnings which means business is able to collect cash on timely basis where cash conversion happens in almost 20 days. FY22 is year they have done major capex on new stores and explore new areas. Interest coverage ratio is pretty good there is less pressure of interest payments.
Valuation is very much lower than other food consumer peers like Nestle, Tasty Bites Eatables, ITC.
According to VcCircle news WhiteOak capital was picked up 2% stake at 7200Cr. Valuation which is 6.65x of current share price.
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