Target: ₹500
CMP: ₹284
Recently, we had the opportunity to meet with the management team of Gopal Snacks, which included Bipin Hadvani (MD and Promoter) and Naveen Gupta (Chief Business Officer) for a domestic non-deal roadshow.
Our Buy recommendation stands strong as we anticipate a market share recovery with a full restoration of in-house production by the first quarter of FY26. Despite the setback caused by a fire, the company has efficiently managed the disruption by quickly shifting production to third-party facilities (currently accounting for about 8-10% of production) and gradually transitioning back to its own capacities. The expansion of the Modasa plant’s capacity is expected to be operational from July 1. Efforts are underway to regain business in Gujarat through production ramp-up, while the management is also focusing on enhancing core aspects such as entering the quick commerce sector, expanding into large modern trade channels, and venturing into the vending machine segment.
In the upcoming fourth quarter, the company is likely to face challenges in both revenue and margin. However, we foresee a full recovery and a return to growth with margin recoup by the third quarter of FY25. The management continues to prioritize maintaining business fundamentals, evident through strong dealer relationships and strategic portfolio and supply chain enhancements.
One potential risk to our outlook is the company’s inability to recapture its market share upon achieving full production capacity recovery.
Disclosure: This article was first published on March 6, 2025.
