The public issue of Mrs Bectors Food Specialities, a leading premium biscuit and bakery firm in north India with a 4.5 percent market share, was subscribed 198 times on the morning of December 17, the final day of bidding.
The offer received bids for 262.1 crore equity shares against the initial public offering (IPO) of more than 1.32 crore equity shares (excluding the anchor book), data available on the exchanges showed.
The portion set aside for non-institutional investors has seen subscribed 620.85 times and that of qualified institutional buyers 176.85 times. Retail investors and employees' reserved portion was subscribed 29.3 and 45.45 times respectively.
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The IPO comprises a fresh issue of Rs 40.54 crore and an offer-for-sale of Rs 500 crore. A price band of Rs 286-288 per share band has been fixed for the public issue.
The company manufactures its biscuits under the flagship brand Mrs. Bector's Cremica, and bakery products under the English Oven brand. Its customers include Burger King India, Connaught Plaza Restaurants, Hardcastle Restaurants and Yum! Restaurants (India).
The company has maintained an average gross margin of 44.35 percent for biscuits, which is higher compared to peers owing to its in-house manufacturing and 50.1 percent for bakery segment, in the past three years, looks encouraging, said Manali Bhatia of Rudra Shares.
Besides, the company introduced new products such as sub breads, pizzas, garlic breads, cheese garlic bun fills and frozen cookies to improve sales.
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"Financially, too, the company looks attractive; has shown good CAGR revenue growth of 12 percent compared with 10 percent for Britannia in FY17-19," Bhatia said.
On the working capital front, the company has shown improvement by reducing overall working capital days from 33 days in FY18 to 25 in 1H FY21. Net debt also reduced from Rs 121.77 crore in FY18 to Rs 74.80 crore in 1H FY21, bringing down its debt equity ratio to 0.21 times.
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"On an upper price band of Rs 288, with estimated EPS at Rs 14.03 for FY21, the stock is currently available at a P/E of 20.52x, is justified compared to its similar sized peers," she added. Hence, considering the growth prospects in biscuit and QSR segments, Bhatia recommended subscribing the issue for listing as well as long term perspective.
In the financial year 2019-20, the company's products were supplied to retail consumers in 26 states in India as well as to "reputed institutional customers" with a pan-India presence and to 64 countries.
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Prashanth Tapse, AVP Research at Mehta Equities, said Bectors Food IPO offered investors a unique opportunity to invest in India's fastest growing retail and institutional bakery business.
"We like Bectors packaged foods story with a unique integrated business model, having uniquely positioned in biscuits export market with approx 12 percent share of the Indian biscuit export market and contribute more than 50 percent by value of biscuit exports," said Tapse. He advised investors to subscribe Bectors Food IPO with a medium to long-term perspective.