Mrs. Bector’s Food IPO opens tomorrow!

Mrs. Bector’s Food IPO opens tomorrow!

Last updated: 14 Dec, 2020 | 12:39 pm

Mrs. Bector’s Food IPO opens tomorrow!

About Mrs. Bector’s Foods Specialities 

  • Mrs. Bector’s Food is one of the leading companies in the premium and mid-premium biscuits segment and the premium bakery segment in North India. The company manufactures and markets a range of our biscuits under their flagship brand ‘Mrs. Bector’s Cremica’ and bakery products in savoury and sweet categories under the brand ‘English Oven’.
  • It is one of the largest suppliers of buns in India to reputed quick-service restaurant chains such as Burger King India, Connaught Plaza Restaurants, Hardcastle Restaurants and Yum! Restaurants(KFC, Pizza Hut). Also, it is one of the largest suppliers of biscuits to Canteen Stores Department of GoI (“CSD”) supplying in 33 locations across India and an approved and listed supplier for Indian Railways having a strong presence across Railway Station Canteens and their stores in North India. 

Product Mix 

  • The company’s product portfolio contains two main segments: Biscuits and Bakery products.
  • The company manufactures and sells biscuits, primarily in the premium and mid-premium segments including a wide variety of cookies, creams, crackers, and digestives., they also manufacture ‘Oreo’ biscuits and ‘Chocobakes’ cookies on contract basis for Mondelez India Foods Private Limited. 
  • In the bakery segment, it manufactures and sells various types of premium bakery products in savoury and sweets categories such as bread, buns, pizza bases, and cakes.

Financial Summary

  • Revenue from operations has grown by a modest 10% from FY18 to FY20.
  • Margins have remained stable over time, with Gross margins at 46.5%, EBITDA margin at 12.1% and PAT margin at 3.9% for FY20.
  • ROE (Return On Equity) has deteriorated over time however the company recorded an impressive 21.7% ROE for the half-year ended September 2020.
  • According to management, its capacity expansion mode for FY19 and 20 caused static performance and for H1 FY21 it has yielded benefits of utilization of expanded capacities. With more capacity expansions underway, the company is confident of maintaining growth in top and bottom lines going forward.

Issue Details 

  • Issue open: 15 Dec - 17 Dec 2020 
  • Price band ₹286-₹288
  • Issue Size: ₹540.54 Cr.
  • Face value: ₹10
  • Reservation for QIB - 50% , Non institutional Investors -15% , Retail -35%
  • Bid Size - Multiples of 50 shares

INDmoney Recommendation

  • At the upper price band of ₹288, the company is attractively available at a P/E of 22x on FY21E EPS (annualized) basis.
  • The company has an experienced promoter and management team. One of the promoters, Mr Anoop Bector has been a key factor in the company’s growth and has an extensive experience of over 25 years with deep industry knowledge and understanding.
  • Though the company has not grown exponentially in the past few years, it has a large scope to expand its presence. The recent capex and efficient cost handling will be the future drivers of growth.
  • The company has an established brand and distribution network with several high profile clients. Margins are high owing to 100% in house manufacturing. The company is looking to increased penetration in select export markets and increase its footprints across India. Given all these factors we remain positive on the prospects of the issue with a long term horizon.