The Rs 540.54 crore IPO from the baker and biscuit Mrs Bectors Food Specialties Ltd will open for subscription on 15 December at a price band of Rs 286-288 per share.
This is the Ludhian company’s second attempt at an IPO. It tested in 2018 and secured the nod from SEBI but chose to postpone the plans due to the then market conditions.
Read here: Mrs. Bectors Food fixes an IPO price group at 286-288 rupees per share
Here are key things to know before you invest in the business.
About the IPO
The IPO consists of a new issue of shares worth Rs 40.54 crore and a sale offer (OFS) worth Rs 500 crore by existing shareholders Linus Pvt Ltd, GW Confectionary PTE. Ltd., GW Crown PTE. Ltd and Mabel Pvt Ltd.
The size of the lot is 50 shares. A retail individual investor can apply for up to 13 lots (650 shares or 187,200 rupees).
This offer includes a reservation of up to such Shares, amounting to Rs 50 lakh for purchase of eligible employees. A discount of Rs 15.00 per share will be offered to eligible employees bidding in the Employee Reserve Part.
The share reserved for retail investors is 35 percent, qualified institutional buyers are 50 percent and that for non-institutional buyers is 15 percent.
The proceeds of the new issue will be used to finance the project cost to the expansion of Rajpura facility by establishing a new product line for biscuits.
SBI Capital Markets, ICICI Securities and IIFL Securities are the Book Running Top Managers to the Offer.
About Mrs. Bectors Food Specials
Ms. Bectors Food Specialties is one of the leading companies in high and medium quality biscuits and high quality bakery segments in North India – the Company’s biscuit products are sold under the main brand “Ms. Bector’s Cremica”, and the high quality bakery products sold under the English Oven brand.
The leading brand “Mrs. Bector’s Cremica” is one of the leading biscuit brands in the upper and middle premium segment in Punjab, Himachal Pradesh, Jammu and Kashmir and Ladakh; “English Oven” is one of the best-selling high-quality bakery brands in Delhi NCR, Mumbai and Bangalore.
The company manufactures and markets a wide range of biscuits such as cookies, creams, biscuits, digestible and glucose, and various baked goods such as bread, kulcha, bun, cake and pizza. The company has also launched products such as “bottom loaves” for DIY sandwiches, and multi-grain loaves to capitalize on food trends.
The company has a large base of reputed institutional clients. It is the largest supplier of buns in India to reputed QSR chains like Burger King, McDonald’s and KFC. It also sells a variety of bakeries and frozen products to cloud kitchens like Rebel Foods and multicomputers like PVR.
The Company is also one of India’s leading exporters of biscuits, and exports biscuits under its own brand, as well as under third-party brands to more than 64 countries to reputed retail chains and distributors.
The company exhibited EBITDA growth of 84.94 percent from H1FY20 to H1FY21 due to revenue growth of 18.2 percent and expansion in EBITDA margin of 10.71 percent in H1FY20, to 16.76 percent in H1FY21.
As a result, the company has seen its EPS rise from 5.30 in FY20 to 13.56 for H1FY21, and its RoNW grows from 9.52 percent in FY20 to 19.61 percent in H1FY21.
What analysts say
“We think Ms. Bectors Food Specialties could grow in line with the industry managed by the promoters, who have more than 25 years of experience in the sector. Corporate results were better than the industry in the first half of fiscal 2021,” he said. Keshav Lahoti, Associate Stock Analyst, Angel Broking.
Company peers such as Britannia Industries, Nestle India, Prataap Snacks and DFM Foods trade on PE tracking respectively 50.2, 85.6, 57.1 and 97.6. On the other hand, the company has a secret PE price of 27.9, he noted.
“Considering the significant discount compared to listed peers, there is comfort in the valuation. We are positive about the long-term growth prospects of the industry and the company, and therefore recommend ‘Subscribe’ the issue in the long run as well as list earnings,” Lahoti said.
Nirali Shah, Senior Research Analyst, Samco Securities noted that the company showed a strong CAGR revenue of 12 per cent compared to Britannia’s 10 per cent CAGR in FY17-19. Its free cash flow has improved from the previous year and its debt-to-equity ratio has declined despite the pandemic.
“Mrs Bectors is trading with a lower valuation multiple of 53.9x-54.2x P / E compared to its UK counterpart, which is trading at 62.3x P / E, making it a good bet from a subscriber point of view. However, some risks like fierce competition, higher dependence on the North Indian market for growth and a high-end target market that may not appeal to the rural and suburban areas make Ms. Bectors a prime candidate just to list gains, ”Shah said.