Premium biscuit-maker and leading supplier of buns to fast-food chains like Burger King and McDonald's, Mrs Bectors Food Specialities, is preparing up to launch its initial public offering (IPO) next week, people with knowledge of the matter told Moneycontrol.
The move comes close on the heels of the Burger King IPO, which opened on December 2, satiated the palate of investors in all categories and was oversubscribed a jaw-dropping 157 times.
"As of now, the firm is planning to launch the IPO on December 15th after having received a speedy approval from Sebi in 29 days. Perhaps, the fastest for a non-PSU IPO in recent years," said one of the persons cited above.
This is the Ludhiana-based firm's second attempt at an IPO. It made an attempt in 2018 and had secured SEBI's nod but chose to defer the plans due to market conditions.
"The financial performance of Mrs Bectors Food Specialities has been impressive in the last few months despite the initial impact due to the pandemic and the subsequent lockdown. The firm clearly wants to ride the ongoing momentum in the capital markets and take advantage of the attractive valuations in the food segment," this person added. Recently, the Sensex had hit 45,000 for the first time.
"The IPO is being driven by the private equity investors CX Partners and Gateway Partners who are seeking a partial exit. The OFS ( offer for sale) component is for Rs 500 crores and due to better valuations , the fresh issue of shares component has now been reduced slightly to around Rs 40 crores," a second person told Moneycontrol.
Both the persons spoke to Moneycontrol on the condition of anonymity. Moneycontrol is awaiting an email response from Mrs Bectors Food Specialities and has sent reminders. This article will be updated when we hear from the firm.
Initially, the fresh issue of shares as per the DRHP was for Rs 50 crore. Moneycontrol was the first to report the filing of the firm’s DRHP on October 20, 2020. The proceeds of the IPO will be used for growth capital linked to the firm's manufacturing unit at Rajpura, Punjab and for general corporate purposes.
The company manufactures and markets a range of biscuits under its flagship brand 'Mrs Bectors Cremica' and its bakery products under the brand ‘English Oven’. ITC & Britannia are the firm’s key listed peers in the biscuits and bakery products segment while other branded rivals include Parle, Modern and Harvest Gold.
SBI Capital, ICICI Securities and IIFL Capital are the merchant banks working on the IPO, according to the DRHP. Law firm Shardul Amarchand Mangaldas is the legal advisor to the company and the banks and AZB & Partners is the legal advisor to Gateway Partners.
Dough you know!
According to the documents filed with SEBI, Mrs Bectors Food Specialities is the largest supplier of buns in India to leading QSR (quick service restaurant) chains such as Burger King , McDonalds, KFC and Pizza Hut. It has also ventured into the frozen dough segment where it competes with rival vendor Baker's Circle, which has the largest market share.
As of March 31, 2020. The firm’s revenues stood at Rs 762 crore with the profit after tax at around Rs 30 crore. A report dated 24th May, 2019 by ratings agency ICRA indicated the liquidity position of Mrs Bectors.
"Despite sizeable capex, the liquidity profile of the company remains adequate as the business has inherently low working capital intensity and the cash flow generation remains strong," it said.
The Indian biscuits and bakery retail market is valued at $7 billion and is expected to grow at a CAGR (compounded annual growth rate) of approximately 9 percent over the next five years. Biscuits and other snacking bakery products such as rusks, wafers and tea cakes contribute nearly 89 percent to the total market share and the balance 11 per cent is contributed by breads including loaves, buns and pizza bases.