The maiden public offer of Mrs Bectors Food Specialities, so far, has received good response from investors as the issue was subscribed 11.4 times on December 16, the second day of bidding.
The Rs 540.54-crore IPO has received bids for 15.09 crore equity shares against offer size of more than 1.32 crore equity shares (excluding anchor book), the subscription data available on the exchanges showed.
The so far strong response was seen from retail investors and employees as their reserved portion was subscribed 16.36 times and 30.45 times respectively.
The portion set aside for non-institutional investors witnessed subscription of 8.6 times and that of qualified institutional buyers 4.7 times.
Mrs Bectors Food Specialties IPO subscribed 3.7 times, HNIs portion fully booked on Day 1
The public issue comprised a fresh issue of Rs 40.54 crore and an offer for sale of Rs 500 crore by public shareholders. The price band has been fixed at Rs 286-288 per share.
Mrs Bectors Food Specialties IPO opens: Here are 10 key things to know
At the upper end of the IPO price band, "the issue is offered at 28.1x its trailing twelve months (TTM) earnings, demanding Rs 1,691.8 crore market cap, which we believe is quite reasonable. Further, its listed peers like DFM Foods and ADF Foods are currently trading at 50.5x and 24.9x respectively of its TTM earnings. We further believe that there is a good possibility of listing gains given lower valuations as compared to other listed peers," Anand Rathi said.
Further considering attractive valuation and strong future growth prospects in packaged biscuits, the brokerage recommended a subscribe rating to this IPO for the long term.
Mrs Bectors Food Specialties IPO opens: Should you subscribe?
Incorporated in September 1995, Mrs Bectors Food Specialities formally known as Quaker Cremica Foods Private Limited. The company is one of the leading companies in the premium and mid-premium biscuits segment and the premium bakery segment in North India.
The company manufactures and market a range of its biscuits such as cookies, creams, crackers, digestives and glucose under its flagship brand 'Mrs. Bector's Cremica'. They also manufacture and market bakery products in savoury and sweet categories which include breads, buns, pizza bases and cakes under its brand 'English Oven'.
Company has six in-house manufacturing facilities located in Phillaur and Rajpura, Tahliwal, Greater Noida, Khopoli and Bengaluru, which enables them to have an effective control over the manufacturing process and to ensure consistent quality of their products.
Company would utilise fresh issue proceeds for expansion of the Rajpura manufacturing facility by establishing a new production line for biscuits.
For the next few years, Angel Broking expects the domestic biscuit and bakery market to grow by 9 percent due to urbanisation, increase in disposable income, favourable government policy.
On the other hand, the institutional Indian bakery industry is expected to grow by 20 percent due to increasing market share of QSR chain.
"We think Mrs Bectors Food should be able to grow in line with the industry managed by the promoters having more than 25 years of sector knowledge. Company results were better than the industry in the first half of the fiscal 2021. Company peers such as Britannia Industries, Nestle India, Prataap Snacks and DFM Foods are trading at trailing PE of 50.2, 85.6, 57.1 and 97.6 respectively. On the other hand, the company is priced at trailing PE of 27.9. Given the significant discount compared to listed peers there is comfort on the valuation," said Angel Broking.
The brokerage is positive on the long term growth prospects of the industry and the company, and hence recommended to subscribe to the issue for long term as well as for listing gains.
Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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