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Dolat Capital Report
Bikaji Foods International Ltd.'s Q1 FY24 revenues in line but profitability exceed our estimate. Revenue grew by 15.0% YoY to Rs 4.8 billion. Going ahead, we believe that the sales growth would be led by volumes improvement.
Ebitdam increased by 630 basis points to 13.6% driven by gross margin expansion of 840 bps. Deflation in key commodities like palm oil helped expansion.
Bikaji Foods witnessed broad based sales growth across all segments. High margin portfolio is expected to increase from 13% to 18% over next three years.
We upward revised our FY24/25E earnings per share estimate by 7.0/0.9% at 7.5/9.7 to factor in Q1 performance.
We believe that the company's revenue growth would remain high driven by growth opportunity in non-penetrated states. Also, with high sales growth, we expect margins to improve here on.
We value the stock at 60 times FY25 EPS, to arrive at target price of Rs 582. Increased target multiple to indicates improved confidence in the business. Maintain 'Buy'.
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