Share Price of Bikaji Foods Sinks After Q3 Profit Drops by 39%

Bikaji Foods' share price plunged nearly 13% on February 7, 2025, after the company reported disappointing Q3FY25 financial results. A significant drop in profitability and contracting margins caused investor concerns, resulting in a major sell-off. Let's examine the details of their market performance and financials.

Q3FY25 Financial Performance: How Did Bikaji Foods Fare?

Bikaji Foods faced a challenging Q3FY25, with a sharp 39% drop in net profit to ₹28.6 crore, compared to ₹46.6 crores during the same period last year. Despite a 14.5% revenue growth to ₹714.9 crore, operational inefficiencies weighed heavily on the company's bottom line.

Here's a snapshot of their key financial metrics:

What's Behind the Margin Pressure?

The EBITDA margin contracted significantly by 425 basis points (bps) to 7.8%. Rising raw material costs and inflationary pressures primarily drove this decline, which directly impacted the company's profitability.

Nine-Month Financial Summary

For the nine months ending December 31, 2024:

• Revenue: ₹2,008.2 crore (+17.1% YoY).
• EBITDA: ₹253.9 crore
• EBITDA Margin: 12.6%.
• Profit After Tax (PAT): ₹154.4 crore, highlighting a net margin of 7.7%.
• Essential EPS: ₹6.24.

Stock Performance: What's Happening in the Market?

The Q3 earnings announcement triggered a steep sell-off, with Bikaji Foods' share price falling 12.8% intraday to touch a low of ₹638.10. This marks a dramatic decline from its 52-week high of ₹1,005 recorded in September 2024.

Key Stock Metrics

• 52-Week High: ₹1,005 (September 2024).
• 52-Week Low: ₹475.50 (March 2024).
• Current Price Decline: 36% below the 52-week high.
• 2025 Performance: Down 5% in February 2025 so far and 11% in January, continuing a five-month losing streak.

Although the stock is 34% above its 52-week low, its recent downward trend has shaken investor confidence. Notably, Bikaji Foods gained 30% over the past year, but this momentum has reversed.

Why Are Investors Concerned?

Several factors have contributed to the bearish sentiment surrounding Bikaji Foods' stock:

1. Rising Input Costs: Higher raw material prices have squeezed profit margins.

2. Inflationary Pressures: Operational inefficiencies have magnified the impact of cost increases.

3. Revenue-Expense Imbalance: While revenue grew by 14.5%, the decline in EBITDA and margins signalled trouble for sustainable profitability.

Summary: The Road Ahead for Bikaji Foods

Bikaji Foods is facing a tough road ahead as it grapples with inflationary pressures and shrinking margins. Despite steady revenue growth in core segments, the significant drop in profitability and poor investor sentiment has overshadowed its positive performance in specific categories.

With rising costs eating into profits, the company's ability to manage expenses and boost operational efficiency will be key to reversing its downward trend.