In a country like India, where farmers and agriculture sector is given foremost priority, premium valuations to FMCG stocks could not be restricted. FMCGs are considered as defensive, necessity and growth-oriented stocks in a portfolio by think tanks. One could easily look at the success stories of HUL, Britannia, Dabur, Marico, Nestle and Tata Consumer Products and the returns which they have generated for the investors. It is inevitable to say that IPOs have been given a delight welcome in recent months due to rising market and in order to get the benefits of up-trending equity market, premium-biscuit maker and leading bun supplier Mrs. Bectors Food Specialities is set to launch on. This is the second attempt (earlier was in 2018) of Ludhiana-based biscuit maker to get list on the Indian bourses which has been finalized after seeing the overwhelming response of investor’s towards Burger King India IPO which has been subscribed 157 times.
The issue size is a mix of fresh issue of Rs. 40.5 crores and offer for sale of Rs. 500 crore by Linus Pvt Ltd, Mabel Pvt Ltd, GW Crown Pte Ltd and GW confectionary Pte Ltd. According to Draft Red Herring Prospectus, the issue comprises of Rs. 40.5 crores to be raised from issuance of fresh equity will be utilized for financing Rajpura Expansion project while the residual will be used for augmenting general corporate purposes.
Mrs. Bector Food Specialties IPO Details:
- Issuer Company: Mrs. Bectors Food Specialties.
- Industry: Bakery Products
- IPO Size: 540 cr.
- Price Band: 286-288
- Issue Open Date: 15 Dec, 20
- Issue Close Date: 17 Dec, 20
- Listing Date: 28 Dec, 20
- Minimum Lot Size: 50 shares
- Employee Discount: 15 Rs. Per share
- Face Value: 10 Rs. Per share
- Retail Allocation: 35%
- Listing Exchange: NSE, BSE
About the Company
Started as an enterprise in 1978 on the foundation of quality, freshness and taste, Mrs. Bector Food Specialties has become the largest bun supplier to QSR (quick service restaurants) chain in India. The company is the leading producer of non-glucose biscuits and premium breads in North India. The company sell its products under the brand names of ‘Cremica’ and ‘English Oven’ in which the former brand name is stick to selling premium biscuits while the latter one is connected to breads and buns. The company has kept delighting the customers by providing consistent taste in their products and customization of bread segments as they are catering the requirements of Burger King and McDonalds. The company is known for its innovative offerings as the changing consumption pattern of people, packaging and its commitment to quality. The company has food certifications from BRC, USFDA and FSSC. It is a leading exporter in 64 countries.
Industry Growth Drivers
The organized Indian bakery industry has gained a lot of traction in last decade as a shift in traditional pattern of Indian families from buying bakery products from local stores to organized and quality-assured bakery has gained their sales, which has assured a constant growth of the Indian bakery market. The rationale behind favoring for organized bakery products are accounting transparency, continuous updating in their product offerings, less outlets penetration and organized operations with quality control, which will keep the ongoing momentum intact. As Indian families are getting more health conscious and offerings from organized bakeries is an optimal fit for their dining.
On the financial front, the company had reported a net profit of 30.40 crores for the year ending 2020. The company do not claims the tag of debt-free as an amount of Rs. 90.88 crores in the form of non-current liability is occupied in balance sheet. Return on Equity of the company stands at 9.53% while the Return on Capital Employed stands at 7.5%. The company is raising funds for the purpose of expansion and shorter cash conversion cycle will keep restricting their working capital requirements. In the listed space, the company will face tough competition from Britannia and ITC. However, the rising trends in QSR chains will keep the momentum of ‘English Oven’ intact.
SBI Capital Markets Limited, ICICI Securities Limited and IIFL Securities Limited are the book running lead managers to the issue.