The packaged foods industry is buzzing with excitement as shares of Bikaji Foods and Gopal Snacks soar 5% following the GST Council’s decision to cut rates on namkeen. This regulatory shift is anticipated to boost sales for companies in the sector, with Bikaji Foods recently hitting a remarkable 52-week high after acquiring a majority stake in frozen food player Ariba.
Bikaji Foods: A Stock to Watch
Bikaji Foods has been on a roll, experiencing an impressive 8% surge to reach new peaks. For investors considering whether to buy, the stock’s performance reflects strong fundamentals. In the June 2024 quarter, the company reported net sales of ₹572.16 crore, marking an 18.69% year-on-year increase. Additionally, Bikaji has delivered a robust Return on Equity (ROE) of 21.8%, significantly outperforming its five-year average of 14.99%.
Financial efficiency is also noteworthy; the company spent less than 1% of its operating revenues on interest expenses and just 5.01% on employee costs for the year ending March 31, 2024. Such figures indicate a well-managed company poised for sustained growth.
Technical Indicators Favoring Growth
Recent technical analysis adds to the positive outlook. A daily MACD crossover appeared on September 19, 2024, historically indicating an average price gain of 4.96% within 10 days in the last decade. This technical signal suggests that the stock may continue its upward trajectory, making it an attractive option for traders.
A Record-Breaking Rally
Bikaji Foods has rallied over 50% in the last three months, hitting a record high of Rs953.25 on Sep20, 2024. Chart patterns indicate that this rally may still have room to grow, with experts suggesting a target of ₹1020-1040 in the next 2-3 Months for short-term traders.
Strategic Acquisitions
A significant factor in Bikaji’s recent success is its strategic acquisition of a 55% stake in Ujjain-based Ariba Foods. This move not only diversifies Bikaji’s product offerings but also strengthens its position in the frozen food segment, allowing it to capture a larger share of the market.
Conclusion: Time to Buy?
Given the recent developments, favorable technical indicators, and strong financial performance, Bikaji Foods appears to be a promising investment opportunity. Whether you’re a short-term trader or a long-term investor, keeping an eye on this stock could prove beneficial as it continues to ride the wave of positive momentum in the packaged foods industry.
