Motilal Oswal has initiated coverage on four packaged food companies, highlighting strong structural growth drivers in India's processed food sector.
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Motilal Oswal Report
Motilal Oswal has initiated coverage on four packaged food companies, highlighting strong structural growth drivers in India's processed food sector.
The brokerage assigns 'Buy' ratings to Bikaji Foods International Ltd., Gopal Snacks Ltd. and Prataap Snacks Ltd., while Mrs. Bectors Food Specialities receives a Neutral rating.
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India's food and food processing sector, valued at Rs 86.8 lakh crore in FY24, is projected to grow to Rs 109.6 lakh crore by FY27. The food processing industry, which accounts for ~35% of the total food sector, is expected to clock a CAGR of ~9.7% over FY24–27.
Within this sector, packaged foods make up ~30-32% of the industry. The packaged food market is expected to record a CAGR of ~11%, which consist of staples (37%), other packaged food (35%), dairy (20%), beverages (6%), and meat (2%).
Bikaji Foods is positioned for industry-leading growth, supported by its pan-India distribution network, strong ethnic snack portfolio, and expansion into western snacks and frozen foods.
Motilal Oswal forecasts 15% revenue CAGR and 39% PAT CAGR over FY25–28, reiterating a Buy with a DCF-based target price of Rs 900 (55x FY28E P/E).
Gopal Snacks is expected to deliver robust growth through product diversification beyond gathiya and distribution expansion. The brokerage projects 12% revenue CAGR and assigns a Buy with a target price of Rs 400 (40x FY28E P/E).
Prataap Snacks is seen as a turnaround story, with plant consolidation and automation driving margin improvement. Motilal Oswal estimates 11% revenue CAGR and initiates Buy with a target price of Rs 1,500 (45x FY28E P/E).
Mrs. Bectors, a premium biscuit player, is expected to grow steadily but faces valuation constraints. The brokerage initiates Neutral with a target price of Rs 280 (34x FY28E P/E).
Key risks:
Weak macroeconomic conditions may dampen consumer spending,
volatility in raw materials affecting costs and margins,
intensifying competition from both organized and unorganized players, and
price wars and competitive pressure may adversely impact profitability.
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