Bikaji Foods: Beyond Bhujia, Premium Valuation Meets Growth Ambition
Overview
Bikaji Foods is expanding its snack portfolio beyond bhujia into sweets, papad, and western snacks, driving improving earnings quality and gross margins. Despite near-term GST disruptions, demand remains robust, with exports showing significant growth. The company has completed its major capex cycle, signaling stronger free cash flow. However, analysts remain on the sidelines due to a premium valuation of 48x FY28 earnings.
Bikaji Foods International Limited, currently trading at ₹702 per share, is navigating a critical growth phase beyond its foundational bhujia brand. The company is transforming into a diversified global snacking powerhouse, with a Q3 earnings update slated for January 27, 2026.
Diversified Snack Portfolio
The brand, once synonymous with bhujia, has cultivated a broad portfolio encompassing ethnic snacks, packaged sweets, papad, western snacks, and adjacent categories like frozen foods and gifting. This strategy de-risks the business model and allows Bikaji to capture opportunities across daily snacking, festive gifting, and premium segments within India's evolving food consumption landscape.
Improving Operating Performance
Recent quarterly results indicate structural earnings improvement rather than one-off gains. Year-over-year revenue grew 15.1 percent, with net profit up 13 percent. EBITDA reached a five-quarter high, a recovery from earlier margin pressures. Gross margins, excluding PLI benefits, expanded to a notable 34 percent, an eight-quarter peak, attributed to easing input costs, a favourable product mix, and stringent operating discipline.
Segmental Growth Dynamics
While Ethnic Snacks remain the core, growth was temporarily impacted by GST-related trade disruptions and near-flat volumes despite pricing actions of approximately 3-3.5 percent. Normalization to mid-to-high teens growth is anticipated as channel dynamics stabilize. The Packaged Sweets segment shows significant promise, driven by festive demand and increasing non-seasonal consumption, repositioning it for higher margins. Papads grew steadily, insulated from GST volatility, while Western Snacks experienced temporary softness due to category-level issues rather than execution errors. The rise of family packs over impulse packs signals strengthening household consumption and gifting appeal.
Exports and Capital Discipline
Exports are emerging as a significant growth driver, surpassing ₹50 crore in the quarter. International expansion and scaling up frozen food capabilities via Ariba Foods offer additional growth avenues. From a capital allocation standpoint, the company's intensive investment phase appears concluded. With FY25 capex around ₹500 crore and existing PLI approval of ₹261 crore, management foresees no major capital expenditure for the next 2-2.5 years, paving the way for enhanced free cash flow generation.
Outlook and Valuation
Bikaji Foods expects ethnic and western snacks to return to mid-to-high teen growth as GST-related disruptions subside. Expanded distribution in both general and modern trade channels positions the company for scaling new, higher-margin categories. Combined with margin recovery, rising export contributions, and a largely completed capex cycle, steady earnings compounding is projected. Nevertheless, the stock's valuation at approximately 48 times FY28 earnings keeps analysts on the sidelines, despite the intact long-term growth narrative.
