Image source: Food vector created by pch.vector - www.freepik.com
In the 1970s, a housewife in Ludhiana, Mrs. Rajni Bector, with a passion for cooking started a home baking business that was commercialized in the late 1970s with a mere investment of Rs. 20,000 that went on to become a larger than Rs. 1,000 crore business. That's wow!
Mrs. Bectors Food is coming up with 540 Cr. IPO and here are the 10 important things you must know before subscription:
Also Read : How to Apply for IPO online (step by step guide)
Incorporated in 1995, Mrs. Bectors Food Specialities Ltd is one of the leading companies in the premium bakery segment and premium and mid-premium biscuit segment in North India. The company's product portfolio mainly consists of two categories of products; Biscuits (cookies, creams, crackers, digestive, etc.) and Bakery products (bread, buns, pizza bases, cakes, etc.).
Mrs Bectors Food is also a supplier of buns to quick-service restaurant (QSR) chains such as McDonald's, KFC, and Burger King among others.
Mrs. Bectors manufactures and sells biscuits under its brand name "Mrs. Bector's Cremica" whereas bakery products are manufactured under the brand name of "English Oven" and offered in the premium market segments such as Delhi NCR, Mumbai, and Bengaluru. As of June 30, 2020, its bakery segment has a total of 96 products and the Biscuits segment has a total of 384 items.
2) IPO Details:
IPO Opening Date: Dec 15, 2020
IPO Closing Date: Dec 17, 2020
Min Order Quantity: 50 Shares
IPO Price: ₹286 to ₹288 per equity share
Listing At: BSE, NSE
Basis of Allotment Date: Dec 22, 2020
Initiation of Refunds: Dec 23, 2020
Credit of Shares to Demat Account: Dec 24, 2020
IPO Listing Date: Dec 28, 2020
Also read: 25 Upcoming IPOs and How to Apply for it
As the promoter is not selling any equity, the shareholding of promoters will fall to 51.13%, from 52.39%. The public shareholding, however, will go up to 48.87% after the IPO.
4) Grey market premium
The grey market suggests a premium of whopping 70% over the issue price band of ₹286-288 per share.
5) Financials and Valuations:
Mrs. Bectors Food revenue from operations jumped from ₹695 crore in FY18 to ₹764 crore in FY20. In first half of this fiscal (FY21), its revenues had jumped to ₹438.55 crore.
This company has shown strong revenue CAGR of 12% compared to a 10% CAGR by Britannia Industries in FY17-19.
- 37% of revenue comes from Biscuit - Domestic
- 22% of revenue comes from Biscuit Export.
- 27% of revenue comes from Bread and Bakery (B2C).
- 17% of revenue comes from Bread and Bakery (B2B).
- 6% of revenue comes from contract manufacturing.
The Company has shown a improvement in its financials over the last three years on various parameters such as margins, cash flows, working capital and borrowings. The company has improved its EBIDTA margins from 12% in FY18 to 17% in H1FY21 with overall improvement in the gross margins by 400 bps over the same period. PAT margins further witnessed incremental expansion owing to lower finance costs.
Valuations: Mrs Bectors trades at a lower valuation multiple of 53.9x-54.2x P/E compared to its peer Britannia Industries which is trading at a 62.3x P/E which makes it a good bet from a subscription standpoint.
6) Peer Comparison
The Rs 38,000-crore Indian biscuit space is dominated by Britannia Industries Ltd., Parle Products Ltd. and ITC Ltd., which collectively own 65% of the market. Mrs. Bectors own 1% of the biscuit segment. Parle derives a large portion of its revenue from mass product Parle-G, while Britannia’s top line is led by its mid-premium and premium products.
7) Few Random Important Facts:
a) All of its products are manufactured in-house across 6 strategically located manufacturing units in 5 different cities i.e. Maharashtra, Karnataka, UP, Himachal Pradesh, and Punjab.
b) The company has a very strong distribution network of 154 super-stockists and 644 distributors supplying products through 458,000 retail outlets and 3,594 preferred outlets.
c) It sells its products to 23 states in India and also exports its products under its own brand name and third-party private labels to 64 countries all over the world.
d) ‘English Oven’ is one of the largest selling brands in Tier-I & II cities with a market share of 5% in the branded breads segments in India.
e) Per capita biscuit consumption in India is very low 2.5 kg/year as compared to UK which is 13.6 kg/year.
The funds raised through the Mrs. Bectors Food IPO are proposed to be utilized towards below objects:
- To finance the cost of Rajpura Expansion Project.
- To meet general corporate purposes.
- A leader in biscuits and bakery segments in North India.
- Well-diversified product portfolio.
- Major food certifications i.e. BRC, USFDA, and FSSC.
- Leading biscuits exporter to 64 countries.
- Modern production process.
- Strong sales and distribution network.
- The continuing effect of the Covid-19 pandemic.
- Inability to anticipate, respond to and meet the tastes, preferences or consistent quality requirements of consumers or inability to accurately predict and successfully adapt to changes in market demand or consumer preference.
- Restriction on use of the brand name and any negative publicity of products.
- The company has incurred indebtedness and may incur additional debt in the future, exposing it to interest rate fluctuations, and restrict its operational flexibility in certain ways.
- A disruption or shutdown of manufacturing operations or under-utilisation of its manufacturing facilities or its failure to commission new facilities successfully or a shortage or non-availability of fuel, electricity, or water.
- It does not have any long-term contracts with QSR customers and any disruption in its business operations with its QSR customers will adversely affect business, financial condition and results of operations.
- Inability to manage its inventory and foresee accurate demand for products for a future period may adversely affect its reputation, business, results of operation and its financial performance.
- May not be able to successfully grow its premium biscuits and bakery segments.
- Any contamination or deterioration of its products could result in legal liability, damage its reputationConcerns over nutritional values of its products may reduce demand or increase the cost of its products
How to Apply for it?
This link will explain a step by step process to apply for the IPOs in India.
Suggestion: Apply for only 'one lot' and Subscribe this issue for big listing gains as well as for long term investment.
Join our Free Telegram channel here (Or Simply search marketnotes.in in Telegram app) or Subscribe here
Note: Data has been taken from Mrs. Bectors' Red Herring Prospectus, Bloombergquint, ET, financialexpress and BusinessLine
Research Analyst (SEBI Regd.)
Linkedin | firstname.lastname@example.org
If you are new to stock market then open your demat account here in just 2 hours and start investing.
Get Stock Advice from SEBI Registered Professionals: here