Synopsis: FMCG stock gained attention after HDFC Securities initiated coverage with a Buy rating, seeing up to 40 percent upside driven by capacity expansion and growth recovery
The article outlines HDFC Securities’ upside rationale for this company, which is a major Indian fast-moving consumer goods (FMCG) company known for its brand Gopal Namkeen, offering popular products like gathiya, namkeen, and wafers
With a market capitalization of Rs 3,241 crore, Gopal Snacks Ltd’s shares on Monday made a day high of Rs 268.55 per share, up by 3.47 percent from its previous day’s close price of Rs 258.85 per share. The share of the company is trading at a discount of 34.8 percent from its 52-week high of Rs 398.
Brokerage’s View
HDFC Securities has initiated coverage on Gopal Snacks with a ‘Buy’ rating and a target price of Rs 360 per share, compared to the previous closing price of Rs 258. This implies a potential upside of about 39.53 percent. The brokerage believes the company’s growth will be supported by capacity expansion, recovery in its Gujarat business, and expansion into new markets.
Shift Towards Branded Snacks
The brokerage believes more people will gradually move from unbranded snacks to branded products. As inflation reduces the quantity in Rs 5 packs, customers may start buying more Rs 10 packs. This could help Gopal Snacks, especially as it is a leading player in the gathiya segment.
Plans to Grow the Business
HDFC Securities said the company wants to regain its market share in Gujarat while expanding into other parts of the country. It is also adding products like cupcakes and popcorn, working on snacks with lower oil content, and increasing its presence on quick commerce platforms.
Growth Expected to Improve
The brokerage expects Gopal Snacks to report around 20 percent sales growth in FY27 with an EBITDA margin of about 7 percent. It believes earnings can improve further from FY28 as the new capacity starts operating fully and the business returns to normal.
Recovery After Rajkot Fire
HDFC Securities said Gopal Snacks was able to keep its sales stable even after the fire at its Rajkot plant in December 2024. The brokerage expects the company to return to a stronger growth path from FY27, helped by higher production at its Modasa plant and the restart of the Rajkot facility.
Main Risks Remain
HDFC Securities said strong competition and high raw material prices remain the biggest risks for the company. As Gopal Snacks focuses on increasing sales and winning back market share, higher costs could put pressure on margins in the near term.
Capacity Expansion to Support Future Growth
The Modasa plant has an installed capacity of 63,085 MT and has been set up to recover the production lost after the Rajkot fire. Commercial production has already started, and the facility is expected to gradually increase output, helping the company meet higher demand and support its growth plans.
Ethnic snacks remain the company’s biggest business, with gathiya contributing 27 percent of revenue and namkeen 22 percent. Snack pellets account for 16 percent, followed by wafers at 10 percent, besan at 8 percent, other products at 5 percent, papad at 3 percent, extruded snacks at 2 percent, and spices at 1 percent.
The company also has enough room to increase production as demand grows. Besan is operating at 74 percent capacity utilisation, followed by wafers at 55 percent, snack pellets at 48 percent, gathiya at 36 percent, namkeen at 28 percent, extruded snacks at 26 percent, papad at 21 percent, and spices at 10 percent, giving the company capacity to support future growth.
About the Company
Founded in 1999, Gopal Snacks is a leading manufacturer in the fast-moving consumer goods sector, dealing in ethnic snacks, western snacks, and other products. The company is headquartered in Rajkot and has a strong presence across 12 states and 3 union territories.
Financial highlights: Revenue from operations of Rs 410 crore, compared to Rs 317 crore in Q4 FY25, marking a 29.3 percent YoY increase. Operating margin improved to 8 percent in Q4 FY26 from 1 percent in Q4 FY25. The company also reported a net profit of Rs 30 crore in Q4 FY26, compared to a net loss of Rs 40 crore in Q4 FY25. EPS stood at Rs 2.40 in Q4 FY26, against a loss per share of Rs 3.17 in Q4 FY25, reflecting a strong turnaround in profitability.
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