Bikaji Foods International Limited (BIKAJI) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Bikaji Foods International Ltd. Q2 F527 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Amdesh Tiwari. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone. Thank you for joining us for BKG Foods International Q2F-27 on this conference call. From the management team, we have with us Mr. Risarjian Smirso and Mr. Manojwarma, CEO. I now represent Mr. Risarjian to take us through the key opening remarks, after which we can open the floor for question and answer session. Thank you and over to you, sir. And wish you all a happy Danterev.

From Vikaji lands, this quarter has been extremely encouraging. Our top line growth is close to 13% in quarter 2. And this quarter is maybe 2.5. Last year, Diwali was in quarter 2. But at least Diwali is shifted toward quarter 3. So if you look at on this snacking business, so snacking growth is close to 20% plus, 22% value growth of snacking. And overall volume growth in snacking is close to 15% plus versus overall volume growth is 5%. So shifting of sweets and gifting has changed overall quarter, but when we're looking at quarter 2 and quarter 3, overall delivery is quite increasing. From snacking overall growth perspective, the core market in snacking has grown at 20% plus versus the proper market 35% plus in snacking business. When we look at quarter 2 and quarter 3 combined, so earlier we are targeting 15% plus growth at YDD level, but looking at quarter, October has been passed by year 6th November, so we are looking at height in growth at YDD level. We are looking at 17% plus growth at YDD level. That's what we are currently looking at. From sweet gifting also, what we have seen that quarter to sweet and gifting, others are in negative, but quarter to quarter to three combined, the reserve is quite a change, the reserve change, and also there has been quite encouraging, we have seen good demand across from central trade, modern trade. From bottom line perspective, our gross margin in Q2 was 34.4%. And overall, what we've seen at standalone levels, when we're close to making business, we've seen close to 1.7% of gross margin hit when we've seen a gross margin. So largely, what we've seen is that, overall, we've seen multiple price increases at all key dormitories from a market that will. And over all this year due to bad crop, we've seen good price increase in all pulses and in July or August when we've closed all the modern trade deals and gifting and everything, closed all the MRP. So we've not increased the prices in September, October. But yeah, immediately after this, we're taking price selection of close to 3% just post-Diwali. We've increased the MRP and price selection will be done just post-Diwali. But quarter two, we've seen some price rate in gross margin as well as EBITDA. Overall, price rise will be 3% from close to 15 November. But overall, what is what we are looking at the price after the fruit reduction of price of fruit reduction increase and packing material is also softening and edible oil price is also softening with 3 to 4% rises in softening in last two weeks. So the price increase and softening of packing material, edible oil prices plus new crop will come in. So overall, complete price impact will come in fourth quarter. So, from direct to head length, so, Manosur, what do you, you can...

Take one distribution coverage. Sir, hello, you are not audible?

No, sorry.

Hello, am I audible now? Yes, sir.

Yeah, so good afternoon, everyone. While Bishop spoke about, you know, gave an understanding on how that we are looking at in terms of our top line, but the driver of this top line is certainly the most important S&D element, which is about increasing continued coverage and reach. So in this quarter as well, we added flows to about 20,000 outlets, and by end of the year, we are poised to over-deliver the numbers what we called for ourselves in the beginning of the year. In terms of demand, creating demand, we did quite many initiatives in this quarter. So first and foremost was to drive the small fact, what we call them as OTG. OTC Facts, which is 5 and 10 rupees for us. We did a Paytm campaign wherein, you know, you did a payback, cashback of as much amount in collaboration with the Paytm team. We did extremely well, we did it on over 33 years, across detail and lots of other activations we did around that, due to call about safety of the cows, the cashback cows and child supplies and all of those collaborations we did. And also what we did was we created some new films, TV series with Amitabh Bhatian on a different kind of a thematic ad on Robo, Robo's ad. So we created 11 films. I am featured 13 plus products in this film across FrankDyne and many of the channels there. Also, in a part of our marketing initiative, we did a tag with Mejraport, Kankaj Rupati, we already looped them, and did some extension of our campaign, what we had done last year, Bika Ji Kao, then Bika Ji Oto, Amit Ji Laug, Bika Ji, and Kya Baat Ji. So, we extended that stuff. On KVT, we were there on the prime time, wherein our wish pay gifts were also given to the winners of that call. So was social media call. Talking about the performance, in quarter 2, if you look at, I mean, it will be repetitive, what Rishabh said. So, volume growth overall, if you look at, it's 5%. But the core businesses are snacking, so ethnic snack and restaurant snack. Ethnic Snack grew at 19.7% in this quarter. Recent Snack, a 44% growth in this quarter. Overall, growth looks a little muted on the back of package fee, which is the shift which has moved from quarter 2 to quarter 3. So the catch-up, you know, one with fees in quarter 3 and this is what we always have been talking about, that fees, business and gifting is to be looked summation of quarter 2 and quarter 3. Now, with this shift, there is a slight stuff if you look at that quarter two year on year. So, last year quarter versus this year quarter two. So, the role of package, the role of ethnic snacks or the restaurant snacks is by far high. That is just an outcome of because sweets have moved. Otherwise, broadly picture remains as is. Focus market performance has grown at 7.6. 4 has grown at 17.5 and the others are looking at a degrowth. But just to call out, the contribution of tweets and gifting is highest in the reverse order. So highest in other states, then focus and then force. And that's what is the reflection in these numbers. Otherwise, if we knock off these tweets and giftings, the numbers look exactly in line with what we have been talking about. So, again, the impact of family facts have grown yet. This again, as I know, again, the impact of each moving to the next quarter. But impulse facts, if you look at, is a fantastic growth approach of 20%, which is 5 and 10 facts, and also where we did the Paytm offers. Over to you, Rishabh. I think broadly I have covered on distribution business.

So from a retail business perspective, we have the current store, current store is 34, and in this balance in last six months, we've opened six most, five, six more stores. So this will be at 40 by end of this year. And our overall business contribution is, we've grown at 68% in quarter. 58% in quarter 2, and overall 64%. So overall, at a yearly level, we will be doing at the same pace in last 6 months, when actually October is peak in for retail season, and this year October and November will be peak for retail operation. And THF is doing an amazingly good job for us. We also opened Vikadi's store in Salazar in September mid, and this is doing very well. From overall bottom line perspective, over the overall growth margin, And at the standard level is hit by close to 1.7% and overall EBITDA is close to 12.6% over the company level. That's from the rendition. Thank you.

Thank you very much. So, should I start the question and answer session?

Yeah, please.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and run on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and tune. Participants are requested to use handpits while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Binem Shukla from Phillip Capital, India. Please go ahead.

Yeah, hi, sir. Thanks for the opportunity. First question on the focus market. Since the growth in focus market has been quite volatile, So, in previous quarter, 8%, first half growth was close to 12%. Even when I look at your CQ, 26,000 growth is close to 7%. So, just wanted to understand that the focus market was impacted, just wanted because of the fact it should demand 50 to CQ. Or also, there is some relevance of the competition factor from the other regional players. And secondly, and also, if you were able to share the what kind of percentages, like that, what percentage of the sales of package trade is coming from the focus market.

Okay.

So, one is, if you look at, you know, in terms of focus markets, you have outperformed all the focus markets. So, there is absolutely no impact. I mean, certainly competition is strong, which has always been. But in terms of that, we have lost, I mean, we have not witnessed any of the market growth in any of these focus days. So, this solely is an impact of gift-in and free. Now, to your question on how much do they contribute. So, if you look at in our overall business contributions, it is about 12.5%. Now, if you look at it at fully 11, is our free contribution. Whereas if you look at in poker states, the contribution is 25%, it's two-eighths of that stuff. And in the other states, it's even higher. And hence, in the four states, it's much better. So that's the kind of impact.

Thank you sir. So from second half, what kind of growth should we expect on overall company level and also for a focus market?

So focus market should be growing up to 22-23% and overall growth company what you are looking at? I see growth for second half. No, that I'm saying overall, so it's certainly high fees or plus 20 in second half, overall as a company, a full year level, we will close the year on a high fee, so close to 70, 30.

And that's all. And also, because we wanted to understand, you have seen your mention about October month in terms of demand rise is quite global. So, will you be able to share any income of growth? Will it be more than 50% or any idea or any qualitative or quantitative figure to be able to share the October month and going forward?

So, Piotr, what we can give you a guidance about it, we can talk about because October is past five. So, the momentum on our snacking business continues. You know, Rupin wrote what we have seen with his demand. That's one. And, of course, sweet certainly is a, you know, very, very high trigger, but that is a shift of, you know, which moved from September to October. That's the reason. But yes, you said, if I look at months on a y-o-y basis, it would be of course a 50% cost.

And this is the last question, the margin factor. Can we expect on a Q&A improvement on margin level because of the improvement on product risk level and also we have taken a price increase? So flow through of a previous quarter price increase, supplement a new price increase, CLIF and maybe 40-50% can exist in CQ. So what would be the gross margin expansion could we see next quarter on the Q&A level?

So, full price impact of price increase in this quarter 3 will come in quarter 4. So, we will be taking price increase and we will get 45 days in this quarter. So, next quarter will be full of price increase. Also, this quarter, September, October, we have not done a major price rise versus cost pressure was high. So, and now we see we are seeing some softening of edible oil prices, the crude ads, crude ads came down. So, some tachymetral price was softened. So, overall what we have seen, looking at that quota code will be normalized margin and will go with high for next year from gross margin and beta perspective. Quarter 3 will be largely in pressure, but quarter 4 will be a normalised gross margin in the future. Thank you very much, sir.

Thank you so much. Thank you.

Thank you. The next question is from the line of Abneesh Roy from Nuwama. Please go ahead.

Thank you. Some of the categories like tea have told us that out-of-home consumption last few months in Q2 and Q1 got impacted because severe heatwave was there. If you could clarify in your category how much is the impact of out-of-home travel consumption, etc. Do you think there is any significant impact or all this because of the festival change, this slower volume growth is there?

So, we should be looking out of home or what we call 5 and 10 single consumption stuff. So, they have grown faster in that stuff. So, we did not see any impact on that stuff. When we say our Western snacks grew at 44% of them, they are primarily or the most of it is the on-the-go or out-of-home consumption as well. And similarly, in our ethnic snacks or the traditional snacks in DC, so we have done fairly well. So perhaps we as an organization did not felt as much heat on this time.

Second and last question, a lot of other SMCV categories we have seen sharp price height, for example, detergent, and even in the slightly adjacent category like paint, etc., we have seen double date height. So, I wanted to understand, is the competitive scenario this higher than, say, two years back? And how has the number one player taken or are they also taking similar, say, three and a half percent price size and similar dates? And generally, local players lose market share when this kind of staff administration happens. So, any signs you are seeing there or it's as fierce competition from local players as earlier?

Yeah, so Agnish on your first point in terms of I think that's not an apple to apple comparison when you look at home care versus the food category, right, so that's one. Second is, it so happens that, you know, during festive times, so we, our same products get into our gift boxes, and this preparation starts much earlier than it actually starts going to distributor or to the sales. So now half the product then is already done, so it becomes now extremely, extremely difficult or confusing if we take the price right and make profit. So that's a hard call one is to take and keep up the momentum. So therefore, you know, those egg-sharp or cross-pricing fees could not have been taken. And this is what Rishabh has just said, that immediately after Diwali, so 15th of November onwards, you will see all MRPs going up and all this stuff. That's one. So against competition, if you look at, I think this is not a choice. You will see across that these prices would be going up because end of the day commodities and all this stuff would impact them as well as much besides the efficiency group and whatever one would do. The third thing, you know, you spoke about wasn't, the third question was... Sorry Avnish, you can see the repeat so that it's the third point you asked more than.

Right, I think I'm going to ask someone to follow, so I think I'm going to ask someone to follow.

I'm sorry to interrupt us, sir. You're not audible. You're sounding very distant.

Yeah, it's better now? Yeah, it's better. So, sorry for that. So, in the price back points of 5 and 10, how much gram is cut you're planning or already have taken?

So, it'll be about a gram to which put each about 3 to 4 percent signed over on a weighted average on these small times.

Okay, understood. That's a quick question. Thank you.

Yeah.

Thank you. The next question is from the line of Shiriz Fardeshi from Motilal Oswal. Please go ahead.

Hi, Manoj, Jishab and team. Thank you and good afternoon. Manoj, this shift in Diwali, which has been, understandably, most of the sectors has been pointing out, But for us, the gifting and the festive season is also a very strong sales in terms of overall packs and even sweet market. So, I'm just looking at on a base of 18-19% of sweet contribution. Is the indicative growth is much higher and sharper in this quarter? Because I also feel there is a sweet, there is an inflation which is setting. So, have you taken also the position that sweet price increase will happen after 14 or you are dispatching with the price increases?

So, Shree, we sit on high inventory, so now the last could be only two days at the max. So, 15 onwards, you will see that stock moving out of our factory would be the market. Maybe on the shelf, you will see a delay of 5-7 days, but from complete realization standpoint, so 15 would be the date. And to the first section, yes, you will see quarterly growth would be far, far higher. So, which will make up as of YTG December, the numbers would look practically different.

Yeah, I understand that because all the men's players are talking big numbers and they reach conclusions. So, I am thinking because you already have an established network, you would definitely have a better group. Yeah. Okay. My second question is on the inflation. Because I just was looking at Dalmo's prices, which should be about 85-90 rupees, which has already suddenly gone up to 135. Now, is that inflation is also concerning? So, my question here is two parts. What is the weighted inflation we are having? And will this 3% will help us to recoup substantial parts, or is there any sort of price increases required in December?

So, this 3,3 and 3,5 persistent rise increase will manage because what we are looking at is the level of rise is also softening and most water and the food is coming down. So, speculative also softening for a bit. And like Pareto, this October, this quarter, is on peak because it's the end of the season. So, by December and December, we will see fresh crop from a few pulses. So, largely, what we are looking at is that quarter 4 will be, we will see some benefits from pulses also, price also, and this price is what we are taking. So, I think we will not require any further price increase till March end, unless something different happens.

So, we are trying to say that now, at least for the next 3-4 months, we are covered with the price increase of concurrency tax.

In March, I don't see any, maybe don't see any major price increase. Okay.

Okay. Last question on THF, I think you have given the guidance, the number of stores and everything, it's happy. Let's go. If you look at last two quarters and next two quarters, how full year for THF looks like? I mean, obviously you will have road map, number of stores, and how things are happening. But if you can give me some help, how full year looks like for THF?

So THF, this year, like last year, we had done close to 102 rupees in THF. This year will be even 60, even 70, type of thing, 60-70% root in THF. And from a short perspective, they will be as close to The growth momentum continues. They have opened 2-3 different types of models which can be expandable. Currently, they are opening 2,000 square feet outlets. They are drying up with 6-700 square feet which can be opened in every malls of India. So, we are doing multiple tiers, multiple experiments. Also, we are focusing on sweets and gifting. That's a very big business and very much profitable. So, that's what we are focusing on. Because, ultimately, we want to make a brand in this. We don't want to only focus on KSR. So, that's not so much profitable. Our major focus is that when India, think of premium sweets, it could be THS. And that's what we are majorly focusing on. We are also trying to have a few onboarding two stars, a few brand ambassadors. Next year, we will be onboarding some brand ambassadors in THF, so multiple things, we look, THF is a big brand in next three to four years, and it can grow at 50-60% at least for year on year for next four, three, four years. That's the potential it is the brand has.

Yeah, that's exactly what I wanted to tell because recently I saw that they have cut the size of the store also. So, since the new model and expansion strategy which has worked, I'm sure you guys would have done some pilot. So, I think the premium speaks is one of the fashion. Of the fashion, it is picking up very well. I mean, you look at South Wales are also penetrating. So, I am just asking this question. If this store growth is one thing, which is really going to drive and maybe my point is that it's going to be smaller stores. So, per square foot revenue momentum will come down or will go up because then you are focusing on the premium side of the business.

So what we are, so current first 6 months, we are seeing 6 to 8% same store growth in the stores. In the same store, Lucknow, when they have fixed the growth and it's from last 4-5 years, they have not opened single store Lucknow. In Lucknow also, they are going at 6 to 7% plus store level growth. So, we are looking, this brand is doing good reasonably. And also, we are trying three types of models here. One is normal 2,500 square feet model, one is 7,800 square feet. And we are also opening one very premium store in Gurugam, next month mostly. So, that will be the name of company by THF. And that will be most experiential where it will make light baklava, coffee from soco, beans. So, largely, JAX will be more experimental and more experiential to uplift the brand of THX. So, we are trying multiple things, but overall, this community, what we look at, is extremely encouraging.

Okay. Thank you, Manoj, and thank you, Rishabh, and happy Diwani to you. Thank you.

Thank you. The next question is from the line of Avishad Mathur from Systematics Group. Please go ahead.

Yeah. Hi, sir. Good afternoon and thank you for the opportunity. Just wanted to check in an earlier call, we had said that because of the disruption in the Bhujia manufacturing that we had faced in our Bikanir location due to the Bengal elections, we would evaluate alternative locations for this to avoid this. Just wanted to check what is the progress on that and also if this kind of thought, this kind of move is happening, then will it impact the GI tags that we enjoy for the Bikaniri Bhujia? Yeah, that's the first question.

Okay. So, yes, I think you rightly recalled it. So, first half of quarter one was impacted on account of this big oil elections, the production issues and all that stuff. But if you see the momentum from the second half of quarter one, it is on the high. So, our Bhujia growth is now in the likes of 20 percent. That's what it is. In terms of future such disruptions to proactively work towards it, what we have done is that now our mother deposit has come up so as to ensure that deeply we can at any point in time increase our inventories at that level. So as to ensure or plan for any disruption, forcing disruption. Now, to the point on geotagging, yes, this is, if, unless an entity produces in Geekane, we cannot try Geekane di Gujiya. So that's one stuff, the rest of the places, we will be making out the basin Gujiya, the rest of it, but we'll ensure that how do we have, you know, undisrupted flow of Gujiya there, and for that we have done those arrangements.

Got it. So, the alternate locations where this will be manufactured, we will not be able to tag it as Dika Niri Bhuchaya?

You cannot call it Dika Niri Bhuchaya.

Got it. Secondly, sir, what seems to have impacted the other expenses for the quarter which have grown by about 30% of what is getting in there? And the next question to that is, you spoke about margins earlier on the call. Possible for you to give a numerical guidance on the four-year margins? Yeah.

So, from expense perspective, largely what we have seen is that on conservative level, the gross margin impact is close to 0.6%, but on standard level, it's close to 2% compared to last quarter. And also, what we have seen in this quarter, this year, that all the expense at each line level, like in fact, fuel cost, logistic cost, because the user price has increased. So, overall, each price has increased this year. But in this quarter, overall, at standalone level, what is employee cost we have seen some efficiency because overall we have done a good growth in this quarter over last quarter one. But in standalone level, That's advertisement which is big because with 0.7% increase in ad cost compared to last year, so we are investing in advertising because we want to continue the momentum what we are building as of now and lifelong. Our focus rate in snacking is growing at 30% plus in snacking largely this quarter and the same momentum continuing in October. So that's why we are majorly focusing on advertisement and building momentum. But overall, each cocktail will change some price increase.

Right, and Grishav, any guidance for the full-year operating margin?

So, full-year operating margin, because currently we are at close to, close to 13% as of now. And as a full year level, what we see is that quarter 4 will be of course higher than this, quarter 4 will be 13.5%. Quarter 3 will be a little challenging because we have not taken rise increase in September-October and we have seen some major uplift in cost pressure and we will get benefit for 35-40 days in this quarter. So quarter 4 will be good, so overall at exit run rate will be at 13% plus EBITDA at run rate. What a cool day.

Alright, so that's it for me. Thanks. All the best 10 seasons. Greetings to you and the team.

Thank you. A reminder to all the participants, you can press tower and run to ask questions. The next question is from the line of Nitin from HTSC Securities. Please go ahead.

Great. Thank you for taking my question. I will conclude with the previous answer. Like, for Q3, you guided for a bit-muted margin. But here, we will have a substantial share of fees, which is a margin-operative. So, don't you think we'll be able to sort of improve or maintain a better margin?

So, Q3, of course, sweet contribution will be higher in Q3, October largely, and December will be less of sweet. But overall, what we have seen, we have seen an increase in packing material and sugar prices from sweet perspective. And in September, October, we have not taken any big price rise, and we have seen a lot of pressure. So, this quarter, 40% of the quarter will see good margin, but first 60% there was a muted margin. So, overall quarter 4 will be what we see, it will be 13% plus EBITDA, in fact, even higher, but that's what we are looking at. Quarter 4 will be exit-rended will be normalized EBITDA and normalized growth margin.

Sir, thank you. My second question pertains to like, like, if we combine Q2 and Q3, last year grew 9%. So, any sort of expectations here for this year, that how we are seeing other growth will be?

Yeah. So, now, if you will see YPJ December, so quarter 2, quarter 3, if you look at, so it will be upwards of 10%.

Okay, this is good to know. And last question pertains to your ANP spending. If you can highlight like what is the the ANP spend we have done in this quarter. And additionally, if you can talk about this paytm cashback, like what is the period and also just wanted to check on like how we account for this cashback scheme.

So, on the Paytm offer, so this is a collaboration with Paytm. So, what we do, all collector's or comps, and the redemption is picked by the Paytm team in that stuff. So, that's how it goes. So, it is like whatever, I mean, so the POP, on-ground, ATL, DTL, whatever do we do. So, along with our products, we say the Paytm advertisement also do happen. So, that's the benefit what they get. Also, how Paytm benefits with this collaboration is that they get more customer acquisition, right? Because, you know, customer is then enticed to, you know, use Paytm and that's what is their benefit. But the payout does not go from our pocket. So, therefore, it's a much cost effective for what we do. Rikav, if you can run through on the NTSCOM.

Okay, so the NTSCOM target for the full year, what we have visited in our email was close to 2% and we will be maintaining this 2% for the full year.

And, uh, uh, Manuji, can you highlight this, uh, uh, Paytm cashback period? So, yeah, so this is, this is still March,

September till March, that's the period. So, this is more or longer period compared to the scheme we ran last time? No, last time we traded for six months. Yeah, so this time because we said Diwali would be coming in, so that's what we... So, till March this would be existing. What we'll do is that, say, in the beginning of March, we will start, you know, pumping in the non-promo stock as well. So, as, you know, the endeavor would be that come April 1st, there are no premiums left in the market.

And there is investment from our side, from Ptm perspective, that's the change of technology. There is no major investment that we are not giving any money to Ptm for the cash, it's a collaborative approach.

Yeah, this was the clarity I was expecting, like, I was on the view that whether we are incurring any cost. But this is super interesting. Thank you. Thanks for answering my question.

Yeah.

Thank you. Sure, sure. Thank you. Happy Diwali. Happy Diwali to you all.

Thank you. A reminder to all the participants, you can restart and learn to ask questions. As there are no further questions from the participants, I now hand the concerns over to the management for closing remarks.

So, thank you all for being part of this call.

Our endeavor was to answer all your questions and also the PPT was pretty much clear. So, to give you a clarity on what's happening. Also, we spoke about how quarter three is looking like in the full year guidance. Even if in case anything is left out, we would be happy. Our team would be happy to answer or clarify any of your questions. With this, on behalf of Dikaji, we would like to wish all our investors, everyone in the call and their families, a very, very happy Diwali Day. Thank you.

On behalf of Bikaji Foods International, that concludes this conference. Thank you for joining us and you may now disconnect your lines.