Mrs Bectors Food Specialties IPO from the Ludhiana based bakery products maker plans to raise Rs 540 crore. Mrs Bectors IPO consists of a fresh issue of Rs 40.54 crore and an offer for sale of Rs 500 crore by selling shareholders. Bectors Food manufactures and sells biscuits under its brand name “Mrs. Bector’s Cremica” whereas bakery products are manufactured under the brand name of “English Oven”.
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Mrs Bectors Food Specialties IPO Details
| Issue Period | Tue, 15th Dec – Thu, 17 Dec 2020 |
| Issue Details | Fresh Issue upto ₹ 40.54 Cr + OFS upto Rs. 500 cr. |
| Issue Size (₹ Cr) | ₹ 540.54 Cr |
| Price Band | ₹ 286 -288 |
| Bid Lot | 50 Shares |
| Issue Structure : | |
| QIB | 50% of the net offer |
| NIB | 15% of the net offer |
| Retail | 35% of net offer ( ~ 6,608,542 Shares – ₹ 189 Cr) |
| Application for 1x Retail | 1,32,170 |
| BRLMs | SBI Capital Markets, ICICI Securities, IIFL Securities |
| Registrar | Link Intime |
Updates
ANCHOR ISSUE: Mrs. Bectors Food raised 162.01 crore from the Anchor Investors. The Anchor investor list is quite long and included Mutual fund names like Franklin, SBI, Nippon Asset, Aditya Birla , Axis, HDFC, Sundaram, IDFC etc. and other investors like Nomura, Goldman Sachs, Jupiter, Macquarie, Bajaj Alianze, Abakkus etc.
About Mrs Bectors Food Specialties
- Mrs Bectors Food Specialties incorporated on 1995 is one of the leading companies in the premium, mid-premium biscuits segment and the premium bakery segment in North India.
- ‘Mrs.Bector’s Cremica’ is one of the leading biscuit brands in the premium and mid-premium segments across North India with a market share of 4.5% and its Bakery products brand ‘English Oven’ is also one of the largest selling brands in Tier-I & II cities with a market share of 5% in the branded breads segments in India.
- Mrs Bectors Food Specialties is promoted by Mr. Anoop Bector
- The companies products are manufactured in-house at their 6 manufacturing facilities located in Phillaur and Rajpura (Punjab), Tahliwal (Himachal Pradesh), Greater Noida , Khopoli and Bengaluru.
- The company manufactures and sell a variety of bakery and frozen products like buns, kulchas, pizzas, and cakes to QSR customers. These include names like Burger King India, Connaught Plaza Restaurants, Hardcastle Restaurants, Yum! Restaurants (India). It also sells to , cloud kitchens such as Rebel Foods, multiplexes like PVR, and many hotels, restaurants and cafés.
- The company also manufacture ‘Oreo’ biscuits and ‘Chocobakes’ cookies on contract basis for Mondelez India Foods.
Mrs Bectors Food Specialties: Financials
| Particulars/ Rs. In Cr | H1Fy21 | H1Fy20 | FY20 | FY19 | FY18 |
| Revenue from Operations | 430.99 | 364.62 | 762.12 | 783.67 | 693.97 |
| EBITDA | 72.22 | 39.05 | 92.85 | 96.15 | 85.5 |
| EBITDA (%) | 16.76% | 10.71% | 12.18% | 12.27% | 12.32% |
| Profit Before Tax | 52.14 | 12.09 | 39.18 | 50.66 | 52.84 |
| Net Profit | 38.88 | 10.17 | 30.4 | 33.15 | 35.89 |
| Net Profit Margin | 9.02% | 2.79% | 3.99% | 4.23% | 5.17% |
| EPS (₹ ) | 6.79 | 1.78 | 5.31 | 5.79 | 6.27 |
| Equity Share Capital | 57.27 | 57.27 | 57.27 | 57.27 | 57.27 |
| Reserves | 300.5 | 247.14 | 262.03 | 237.48 | 209.35 |
| Net worth | 357.77 | 304.41 | 319.3 | 294.75 | 266.61 |
| Long Term Borrowings | 101.2 | 93.94 | 85.65 | 107.21 | 94.71 |
| Short Term Borrowings | – | 28.55 | 18.05 | 32.71 | 26.27 |
| RoNW (%) | 10.87% | 3.34% | 9.52% | 11.25% | 13.46% |
| NAV | 62.47 | 53.15 | 55.76 | 51.47 | 46.56 |
| ROE (%) | 21.72% | 6.68% | 9.90% | 11.81% | 14.30% |
| ROCE (%) | 24.22% | 9.33% | 12.68% | 15.90% | 18 |
| Equity Post IPO | 58.75 | ||||
| FV | 10 | ||||
| IPO Price | 288 | ||||
| EPS (Post IPO) FY21 ann | 10.35 | ||||
| PE | 27.83 | ||||
| Market Cap | 1692 | ||||
| Market Cap / Sales | 2.2 |
Pros
- The company’s Cremica brand is one of the leading biscuit brands in the premium and mid-premium segment in th states of Punjab, Himachal Pradesh, Jammu and Kashmir and Ladakh.
- Mrs Bectors Food Specialties as on FY 2020 had 4.5% share of the premium and mid-premium biscuits market in North India.
- The company logged 12% share of the total exports of biscuits from India in CY 2019.
- Diversified product portfolio of more than 500 stock keeping units (SKUs) in the biscuits and bakery segment. As of June 30th, 2020, its bakery segment had a total of 96 products and the Biscuits segment had a total of 384 items.
- Established presence in retail and institutional bakery business.
- The company has a modern and automated production process with quality control in place.
- It has a wide spread and established sales and distribution network;
- Mrs Bectors has experienced promoter and management team.
Cons
- Mrs Bectors Food Specialties does not have any long-term contracts with its QSR customers.
- The company has overdependence on biscuits business.
Mrs Bectors Food Specialties IPO: Assessment
- Indian biscuits and bakery market with a size of Rs 450 billion recorded a CAGR of 10% between FY 2015-2020.
- Good growth is expected on account of favorable demographics and lower biscuit consumption per capita.
- Mrs Bectors Food Specialties present capacity utilization of biscuits and bakery products at 72% leaves scope for further revenue growth.
- Company is able to maintain a high average gross margin compared to peers owing to in house manufacturing.
- Mrs Bectors Food Specialties business financials have been flat for the past 3 years, with a marked n improvement in financials in H1FY21. This could also be due to pantry stocking during lockdown and trend going forward needs to be observed.
- Mrs Bectors Food Specialties has shown the the ability to build a successful new brand (‘English Oven’) that commands about 5% market share in the branded breads in the country.
- Mrs Bectors Food Specialties is coming at a P/E of 28x on FY21E EPS (annualized), which looks reasonable with respect to the segment in which it operates, valuation commanded by peers and growth prospects.
- Mrs Bectors Food Specialties IPO is generating good interest amongst investors. Due to this and recent craze seen for some IPOs, Allotment will be tough.
- Mrs Bectors IPO GMP has been in an uptrend and is about Rs. 220 on 14-12-20.
- I intend to apply in Mrs Bectors Food Specialties IPO.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.