Buy Gopal Snacks; target of Rs 375: Motilal Oswal

What happened

Motilal Oswal reiterated its Buy rating on Gopal Snacks and set a revised target price of Rs 375. The report says second-quarter revenue rose 23% year over year to INR4.6b, while the company added 50 distributors and opened a besan manufacturing unit in Nagpur.

Confirmed

Global impact / market context

Revenue growth and wider distribution can bring more sales, while producing besan in Nagpur is expected to reduce transport costs. If the new unit and Rajkot expansion improve production efficiency as projected, lower costs could support higher profit per sale; the report expects EBITDA margin to reach 9.7% by FY28.

Analyst inference

The report combines an improved operating outlook with risks from reliance on Gujarat and possible supply interruptions, which could hurt sales and profit per sale. Motilal Oswal says it trimmed earnings estimates despite retaining Buy, so the Rs 375 target reflects its valuation view, not a guaranteed share price.

Analyst inference

What to watch

1. Check whether Gopal Snacks sustains distribution growth and sales across focus and other states; broader reach is important to reducing dependence on its core Gujarat market. Analyst inference
2. Track production ramp-up at Rajkot and Nagpur and any evidence of lower besan transport costs, since the report links these changes to future profit per sale. Analyst inference
3. Compare actual EBITDA margins with the report’s 9.7% FY28 expectation; EBITDA means operating profit before interest, taxes, depreciation, and amortization. Analyst inference

Evidence

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