Bikaji Foods Q2 FY26: Navigating GST Headwinds with Robust Growth

Bikaji Foods International Limited has demonstrated a resilient performance in the second quarter of Fiscal Year 2026, delivering strong financial results despite encountering short-term market disruptions. The company reported a consolidated revenue from operations of INR 830.3 Crores, marking a significant 15.2% year-on-year growth. This robust top-line expansion was complemented by an impressive 20.1% increase in EBITDA, reaching INR 128.2 Crores, and a healthy 13.5% rise in Profit After Tax (PAT) to INR 77.7 Crores. These figures underscore Bikaji's operational strength and strategic agility in a dynamic market landscape.

The quarter's performance, however, was not without its complexities. While the months of July and August saw strong momentum, September experienced temporary headwinds. This was primarily attributed to distributor de-stocking activities in anticipation of the GST rate revision for ethnic snacks, which saw a reduction from 12% to 5%. This change, while beneficial in the long run for formalizing the industry, caused a short-term impact on sales. Consequently, the ethnic snacks category, a core segment for Bikaji, recorded a growth of 4.6% for the quarter. In response, the company proactively adjusted its Maximum Retail Prices (MRPs) downwards and increased the grammage on impulse packs to maintain competitiveness and consumer value.

Here's a financial summary of Bikaji Foods' Q2 FY26 performance:

Segmental Performance and Strategic Responses

Bikaji's product mix played a crucial role in its Q2 FY26 performance. The gross margin reached 35.0%, marking the highest in the last 8-9 quarters, a testament to a more balanced product portfolio and effective hedging policies against commodity price fluctuations. The packaged sweets segment delivered exceptionally well, achieving a 32.3% volume growth, partly benefiting from an early Diwali, which shifted some demand from Q3 to Q2. This strong performance in sweets helped mitigate the impact of the GST-related disruptions on ethnic snacks.

Conversely, the Western snacks category experienced a muted performance, declining by 5.2% in Q2 FY26. Management acknowledged an overall slowdown in this category, compounded by the GST transition. Despite these challenges, the company's export business continued its strong momentum, contributing over INR 50 Crores in revenue. This growth is a direct result of consistent investments in building a capable team, expanding market coverage, and strengthening product capabilities, including the strategic acquisition of Ariba Foods for its frozen product capabilities.

Expanding Reach and Innovation Pipeline

Bikaji Foods is aggressively expanding its market reach and distribution network. The company is on track to achieve 3.5 lakh direct distribution outlets by the end of the current financial year and aims to further expand this to 5 lakh outlets within the next three years, adding approximately 50,000 outlets annually. This expansion focuses on core and focus states, targeting both urban and rural areas to enhance service quality and throughput.

In the retail segment, Bikaji is also growing its footprint. The Halwai Factory (THF) outlets are performing strongly, with plans to reach close to 25 outlets by year-end and 35-40 outlets in the next two years. This direct-to-consumer approach strengthens brand presence and engagement. The company is also committed to New Product Development (NPD), with recent launches including paneer bhujia, which has been performing extremely well, and millet bhujia, catering to the growing demand for health-conscious snack options. NPDs are expected to contribute 2-3% to overall revenue.

Future Outlook and International Ventures

Looking ahead, Bikaji Foods anticipates a strong recovery in the ethnic snacks category, projecting high-teens growth in Q3 and Q4 FY26 as market demand normalizes post-GST transition. The company has completed its major capex cycle in FY25, investing INR 500 Crores, ensuring sufficient production capacity for the next 2-2.5 years. This strategic investment, coupled with the INR 261 Crores PLI scheme grant, positions Bikaji for sustained growth without immediate large-scale capital expenditures.

Bikaji is also venturing into international markets through a joint venture with CG Group of Nepal. This partnership aims to establish Bikaji as one of the top three players in the Nepalese ethnic snacks market, targeting a high single-digit market share within three years. While production from the JV is expected to commence in 1-1.5 years, the company will continue to supply products from India in the interim. The management's proactive approach to market challenges, coupled with strategic investments and a robust expansion plan, reinforces confidence in Bikaji Foods' long-term growth trajectory and market leadership.