Bikaji Foods International Limited — Q1 FY26 earnings call

To the question, if you look at the small pack or the impulse pack, it's not that they have grown slow in terms of category. It is what, we could have done better on the impulse pack side. So that's one, straight to your question. Now, the reason for that has been that there has been, you know what we have witnessed from the market, that lots of small and local players. So, huge discounting and all that stuff have happened in this INR 5 pack primarily.

Analyst questioned the counter-intuitive trend of family packs growing faster than impulse packs, and management clarified it was due to aggressive discounting by regional players in the INR 5 segment, which Bikaji chose not to engage in.

Asked by Abneesh Roy

So Bikaji as a brand is pretty old and pretty strong in the Nepal market. But the challenges, what I were facing was that there's huge custom duty or the import duty, which was there and which was making our product non-competitive. So that was the reason that we thought of having a JV and eventually, start producing there and selling there. So that will make our products much more competitive and will leverage the brand strength what we have. ... we'll jointly open a plant in Nepal, where we'll invest close to INR 30 Crores currently. INR 15 Crores will be outlay from Bikaji... we see at least INR 50 Crores top line in the next two years.

Analyst questioned the JV strategy for Nepal, and management explained it's to overcome import duties, leverage local manufacturing, and target significant topline growth (INR 50 crores in 2 years) with a INR 15 crore investment from Bikaji.

Asked by Abneesh Roy

So, from THF, in this quarter, we have added 2 stores in THF - The Hazelnut Factory. So basically, THF is doing extremely well for us. And, we are largely satisfied with the performance of what they are doing. And this year, they will open close to 8, 9 stores, more in the next 9 months. So, they will open a store in a month pipeline. So, by end of this year, they will be having close to 19, 20 stores, and largely in UP and MP area. ... So, this year will be a lot of expansion. So, major focus will be driving growth and driving open stores this year. So, next year will be 8% to 10% EBITDA. This year will be largely 4% to 5%, 4% to 6% type of EBITDA.

Analyst inquired about the Hazelnut Factory's performance and expansion plans. Management confirmed satisfaction, outlined aggressive store additions (19-20 by year-end), and provided EBITDA margin guidance (4-6% this year, 8-10% next year).

Asked by Abneesh Roy

So, basically, it worked both ways. Like we also increased price in last two quarters. And also, raw material has supported us. So, in both ways, it has worked us in our favor. And also, we've done some saving program in the organization, which is running for the last nine months. ... Currently, we are at close to 35% gross margin at console level. But overall, at standalone level also, we are at highest gross margin. And we see that in next nine months also, we'll be at the same, we'll be maintaining the same gross margin, what we see right now. Unless, we see any major disruption in oil, edible oil also.

Analyst sought clarity on the drivers of gross margin recovery and its sustainability. Management attributed it to price hikes, raw material softening, and cost savings, expressing confidence in maintaining current margins unless there's a major disruption in edible oil prices.

Asked by Nitin

Look palm oil prices came down, but we use multiple oils, like palm, cotton, rice. And so, palm is reduced, but other oils are not reduced much. ... So, it will be, so we'll see in quarter two, something, because we have some stocking had been done. So, we'll see in quarter two. But yes, edible oil price will remain at the same level. We don't see any major changes because productivity and demand is good this year. So, we don't see any major correction in edible oil. It will be at the same, largely same level what we are seeing in quarter one.

Analyst questioned if palm oil price reduction would flow into numbers. Management clarified that while palm oil reduced, other oils did not, and due to stocking and overall demand, they don't foresee major corrections in edible oil prices, implying limited further margin benefit from this specific factor.

Asked by Nitin

So, I think it's too early to comment on this millet bhujia because it has just come out, and so we will be doing some pilot stuff and we'll be riding on these Q-com channels and all that stuff. Distribution would get built over a period of time. ... So, as much voice, what we hear about healthy snacks, if we go down, the consumer that in India, Indian markets, at least, it is not as much there. I think, it will take about 5, 7 more years. That's when people will be talking even more about the healthier snacks and companies would then start focusing on that stuff. But, to be future ready, we have a range of products, which are in amongst the healthier one.

Analyst asked about the market response to millet bhujia and the healthy snack segment. Management stated it's too early for millet bhujia, and while they have healthier options, the Indian market for healthy snacks is still niche and will take 5-7 years to mature.

Asked by Tuisha

So, on the frozen food, we do not sell in Indian domestic market. This is primarily for our exports business. And the frozen part has a huge share of business in our exports business, to the upwards of 35%. ... But the way, we have built our capacities and this, again, we call it being future ready. So, as and when the country or the channels are matured enough to maintain and sell these frozen products, which needs end-to-end cold chain, that's when we shall be launching it in Indian market, but, not in the next couple of years is what, this would be export business product only.

Analyst questioned the frozen food segment. Management clarified it's currently 35%+ of exports and not for the domestic market yet, due to cold chain requirements, indicating domestic launch is not planned for the next couple of years.

Asked by Aditya Tambi

So, basically, we don't see business as an operating cost per kilo on year-on-year or month-on-month basis. We see it as a key cost. We measure key costs, like logistic cost is big for us. Employee cost is big for us, and manufacturing costs. ... So, what we see, it will be improving 50 basis points each year. From another expense lens, you will see there are a few costs, which are sitting in consultancies or many other third-party costs, meaning third-party manufacturing costs, which we'll see improving in the coming 2, 3 years.

Analyst asked for guidance on operating cost per kilo. Management indicated a focus on efficiency across logistics, employee, and manufacturing costs, targeting an improvement of 50 basis points each year, with further improvements expected from reducing third-party costs.

Asked by Priyank