Bikaji Foods International is expecting decent growth in FY27, even as gross margins remain under pressure due to volatility in raw material prices. The company said it is targeting overall revenue growth of around 14-16 per cent for the year, which has been supported by a strong festive season and continued expansion of its distribution network.
Speaking exclusively with ET Now Swadesh about the company’s Q1 performance and outlook, Bikaji Foods’ CFO Rishabh Jain said volume growth remained healthy, while commodity prices, particularly edible oils and pulses, continued to remain volatile.
“Our first quarter has grown around 12.5 per cent. Our overall yearly target is close to 14-16 per cent, which is our medium-term target,” Jain said.
Gross margins under pressure
The company said gross margins stood at around 36 per cent in the first quarter, despite continued volatility in the raw material basket.
Rishabh has pointed to geopolitical developments and lower rainfall as factors affecting edible oil and pulses prices.
“After this geopolitical war started, edible oils and pulses, because rainfall has been quite low and has changed, there has been a lot of disturbance in edible oils. Prices have been quite complicated,” He added.
Despite the pressure on raw material costs, the company said its gross margin performance remained relatively strong compared with the previous few quarters.
At the EBITDA level, the company incurred higher advertising and other expenses. EBITDA margin stood at around 12.5 per cent in the first quarter, while the company continues to target an overall EBITDA margin of around 13.5 per cent.
No price hike in next 3-4 months
On the pricing outlook, Jain said it has already taken two price increases during the past three months, including an increase in maximum retail prices.
“We have taken two price hikes in the last three months. We have taken an MRP increase. Overall, we don’t see the need to take a price hike for the next three to four months unless there are some major changes in the geopolitical situation. We have overall covered this,” the management said.
Western snacks business growing 20 per cent
The company said margins in the western snacks business are broadly comparable with its traditional ethnic snacks portfolio.
“Our western snacks have grown quite well, and 20 per cent growth over the last two years. Overall, our margin also is close to traditional snacks. There is no major change in our margin,” the management said.
The company currently aims to increase the contribution of western snacks from around 8 per cent of its business to 11 per cent over the next two years.
He has said, “the business remains a major focus area and is targeting 20-25 per cent growth going forward.”
Nepal plant to start operations in 6-8 months
Bikaji Foods is also expanding its manufacturing presence in Nepal, where it has been operating for several years.
“We have been in Nepal for quite a long time. In Nepal, because the customs tax is quite heavy, we have put up a plant there. The plant will start around March and will be operational in the next six to eight months,” management said.
Once operational, the facility is expected to help the company become more competitive on pricing and improve its business in the Nepal market.
Distribution network reaches 37,000 outlets
Rishabh said, “We are now reaching around 37,000 shops. Our target is 5 lakh outlets by FY29. Every year, we want to add around 50,000 outlets and we are on track.”
Festive demand remains strong
The company expects the upcoming festive season to provide further support to demand. Management said the festive period has already started with Raksha Bandhan, followed by Diwali over the coming months.
“Festivity is looking quite strong. Rakhi also looks quite good for us this year. Overall, for the festive season, we are targeting around 14-16 per cent growth,” management said.
Focus on sweets and Diwali gifting
“Sweets are a major focus during this season. Our Son Papdi, Rasgulla and Kaju Katli Special, along with various new sweets, are launched specifically for Diwali,” the management said.
PLI scheme to support FY27
Management said Bikaji Foods has received around Rs 61 crore in PLI-related benefits so far and expects to book further income during the current financial year.
The company said FY27 is the final year of the PLI scheme and expects the government-linked payment process to take around six to eight months after the required filing.
Exports impacted by geopolitical issues
“Export was disturbed because of the geopolitical issue and freight cost increased quite a lot. Because of that, the entire export business was disturbed. But overall, this year we expect to grow. Our target is to double exports over the next three to four years,” the management added.
Bikaji Foods was trading at Rs 613.25, down Rs 2.95 or 0.48 per cent from the previous close of Rs 616.20.
