Mrs Bectors Food Specialties IPO subscribed 3.7 times, HNIs portion fully booked on Day 1

The initial public offering of bakery products maker Mrs Bectors Food Specialties had been subscribed 3.7 times on December 15, the first day of bidding.

The public issue received bids for 4.9 crore equity shares against an offer size of 1.32 crore equity shares, excluding the anchor book portion, the data available on the exchanges showed.

The company raised Rs 162 crore from anchor investors.

Retail investors showed interest in the IPO as the portion set aside for them was subscribed 6.8 times and that of employees had been bid 9.5 times. The reserved portion of non-institutional investors witnessed a subscription of 1.37 times and that of qualified institutional buyers 1.1 percent.

Mrs Bectors Food Specialties' public issue consists of a fresh issue of Rs 40.54 crore and an offer for sale of Rs 500 crore shares by selling shareholders Linus, Mabel, GW Crown PTE Ltd and GW Confectionary PTE Ltd.

Mrs Bectors Food is one of the leading companies in the premium and mid-premium biscuits segment and the premium bakery segment in North India. It manufactures and markets a range of biscuits such as cookies, creams, crackers, digestives and glucose  under flagship brand 'Mrs Bector's Cremica'. It manufactures bakery products including breads, buns, pizza base and cakes under the brand 'English Oven'.

The price band for the IPO has been fixed at Rs 286-288 per share. "At the upper end of the price band of Rs 288, the company's IPO is valued at P/E of 56x on FY20 EPS, which is expensive, and P/E of 22x on annualised H1FY21 EPS, which looks decent. The company will always enjoy premium post listing owing to its dominance in the premium biscuit segment with established brands," said Ajcon Global.

The brokerage recommended subscribing to the issue as the company is a leading premium bakery player in India. Its English Oven is the fastest growing large-scale premium bakery brands in India, with EBITDA margins of around 20 percent, sole/preferred supplier to some of the largest QSR franchises in India like Burger King India, Connaught Plaza Restaurants, PVR etc, positive operating cashflow, low debt/equity of 0.28x as on H1FY21, low working capital cycle and decent return ratios.

The offer included a reservation of Rs 50 lakh worth of shares for eligible employees. Employees will receive shares at a discount of Rs 15 per share.

The company will utilise fresh issue proceeds for expansion of the Rajpura manufacturing facility by establishing a new production line for biscuits.