Mrs. Bectors Food Specialties

IPO Size

`540 Cr

Price Band

`286-288 Per Share

Minimum Lot Size

50 Share

Face Value

`10 Rs. Per Share

Employee Discount

`15 Rs. Per Share

Retail Allocation

35%

Issue Open Date

15 Dec, 20

Issue Close Date

17 Dec, 20

Listing Date

28 Dec, 20

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.

Outstanding Litigation:

S.No. 1 - Company 2 - Directors 3 - Promoters
Entity Name By the Company Against the Company By the Director Against the Director By the Promoter Against the Promoter
Criminal cases 9.07 - - 18.65 - 18.65
Material civil cases - - - - - -
Taxation matters - - - - - -
Regulatory Procedings - 72.91 - - - -
Amt. (In Million Rs.) 9.07 72.91 - 18.65 - 18.65

Financial Statements:

Income Statement FY20 FY19 FY18
Gross Operating Income 7649.76 7860.29 6957.55
Cost of Employee & Inventory 5253.47 5337.6 4774.26
Other Expenses 1439.59 1538.23 1310.52
EBITDA 956.7 984.46 872.77
Depreciation 414.88 351.83 283.47
Interest  150.39 126.75 61.06
Profit Before Tax 391.43 505.88 528.24
 Tax 87.77 175.06 169.48
Profit After Tax 303.66 330.82 358.76

Recommendation

As per CA Ajay Chouhan, SEBI Registered Research Analyst, recommendation is to ‘Subscribe’. The Indian bakery market is expected to grow with a CAGR of 10.29% and presence of Mrs. Bector product portfolio in the preference list of customers would result in an outperformance from the benchmark. Mrs. Bector is the leading supplier of buns to QSR (quick service restaurants) chains and Indian food chain is in a ‘growth’ phase too. Therefore, long term growth story of Mrs. Bector will remain intact. However, revenues of the company are growing at a CAGR of 5.88%, which has been a concern to look after The company has a debt of 90.88 crores in their balance sheet. Mrs. Bector Food IPO is demanding 54.23 P/E multiple (considering the FY20 earnings), lower than the industry P/E of 74.42 times.

Promoter of the Company

The promoter of the company is Mr. Anoop Bector.

Peer Comparison

There is no denying the fact that brand names under Mrs. Bector will face a ruthless competition. The listed companies such as Britannia, ITC and Parle have strong presence in bakery products. However, Parle Industries has been unable to alter their offerings as their major sales come from a single product while the product line offered by Britannia Industries is so huge and Indian families have been seen much devoted to the Britannia. Brand name ‘Cremica’ will find stiff competition from small players too such as Priyagold and Anmol Biscuits while the brand name ‘English Oven’ faces rivalry from Harvest Gold, Bonn and Vibbs.

Objectives of the Issue

Offer for Sale

Offer for Sale: The object of the Offer for Sale is to allow the shareholders to sell an aggregate of up to 1,73,61,111 Equity Shares held by them. The company will not receive any proceeds from the Offer for Sale. Offer for Sale Size is of 1,73,61,111 Equity Shares of ₹10 aggregating up to ₹500.00 Cr.

Fresh Issue

Fresh Issue: The company has planned to raise fresh capital comprising an aggregate of 14,06,250 shares having ₹10 aggregating up to Rs. 40.5 Cr at the upper price band of Rs. 288. The net proceeds will be utilized for financing Rajpura Expansion project while the residual will be used for augmenting general corporate purposes.