Bikaji Foods eyes 2-3% volume growth as GST cut boosts snack demand

Leading snacks major Bikaji Foods says the company expects a significant boost to volumes in the second half of the current financial year due to GST cuts on traditional and ethnic snacks to 5% from 12%.  

“We expect a good volume growth compared to the first half. Our estimate is an incremental 2-3% volume growth once the new rates come into effect,” Rishabh Jain, CFO of Bikaji Foods told Fortune India. 

He pointed out that while the first half of the year focused more on pricing adjustments, the second half will shift towards volume-led expansion, supported by increased demand during the festive season.

The move, aimed at simplifying tax structures and easing costs for consumers, covers nearly 90-94% of Bikaji’s portfolio, including its core offerings like bhujiya and namkeens. While nothing major has been changed on GST from the input lens, Jain said “most of the benefit” will be passed on to the consumers.

For the full fiscal year 2026, Bikaji expects overall volume growth of around 10-11%. Jain attributed this to a combination of factors, including the favorable GST revision and a growing consumer base.

The company is preparing for this anticipated demand surge by managing inventory levels carefully. Currently, utilisation of manufacturing capacity stands at roughly 50%, giving it sufficient headroom to meet the expected spike. 

However, Jain acknowledged that distributors are cautious in the run-up to the change, building lower inventories to avoid carrying excess stock purchased under the old tax regime. He added that unsold stocks will likely be offloaded at lower prices, as distributors aim to pass on benefits to consumers.

“It's a tough situation for the trade, but once the new GST rates come in, demand will shoot up,” he added.

Beyond the immediate benefits of the tax cut, Jain flagged a longer-term policy concern. With GST rationalisation, state-level investment subsidies previously linked to GST input-output differences are expected to vanish. He called on the government to consider converting these into turnover-linked subsidies, especially given the substantial capital investments companies like Bikaji have made in the sector.

On the cost front, Jain said the raw material situation has largely stabilised, with the exception of edible oils, which remain volatile. “Other than edible oil, everything has been controlled this year. Crop yields were good, and we are seeing comfortable input prices overall,” he said.

For the quarter ended June 2025, Bikaji Foods International reported net sales of ₹623.65 crore, up 11.09% from ₹561.40 crore in June 2024. Net profit rose 4.32% to ₹63.17 crore, compared to ₹60.55 crore in the same quarter last year.

On September 9, the Enforcement Directorate summoned the Managing Director of Bikaji Foods to be present in-person in connection with an investigation under the Prevention of Money Laundering Act, according to several media reports, sending the shares sharply lower by over 2% on that day. 

Jain clarified that the company had sponsored a local Rajasthan cricket team through the Rajasthan Cricket Association, which is now under litigation. “All the sponsors have been given the summons, not just us. All sponsorships were fully documented, and this is a normal procedural issue. We have already filed an explanation with the stock exchange. There is nothing to worry about,” he said.