Biscuits and bakery products maker Mrs Bectors Food Specialities shares listed at a massive 74 percent premium over its issue price on December 23, after stellar subscription to its IPO last week.
The share price opened at Rs 501 on the BSE, higher by Rs 213 compared to issue price of Rs 288, while on the National Stock Exchange, it listed at Rs 500, a 73.61 percent premium.
The BSE has fixed the upper price band for shares at Rs 601.20 and the lower price band at Rs 400.80 for the listing day. This is 20 percent higher and lower respectively compared to the opening price.
Shares hit the upper circuit of Rs 601.20 on the BSE and Rs 600 on the NSE in the initial trade.
Experts said the listing was on expected lines given the healthy response to the IPO from investors, one of the leading positions in the premium biscuits and bakery products in North India, better institutional business in bakery segment and strong biscuits exports business market share.
Mrs Bectors Food raised Rs 540.54 crore through public issue during 15-17, which was subscribed 198.02 times, the highest subscription received by an IPO in the current calendar year.
In the long run, Keshav Lahoti, Associate Equity Analyst at Angel Broking thinks that the company should be able to grow in line with the industry as it is managed by promoters having more than 25 years of experience in the sector.
The company has gained market share in the H1 FY21 and reported results better than its peers. Mrs Bectors has a wide pread and established distribution network with presence across 26 states. It registered a revenue growth at a CAGR of 5 percent, but profit declined by 8 percent CAGR during FY18-FY20.
Mrs Bectors improved its financial performance in the first half of FY21 with a profit of Rs 39 crore on a revenue of Rs 431 crore.
It is one of the leading biscuits and bakery products manufacturers in North India with a market share of around 4.5 percent in the premium and mid-premium segments.
"The strong foothold in the global market and consistent focus on product development in premium and mid-premium segment, has helped the company achieve better price realisation (from around Rs 18 to Rs 22 per pack) and operational efficiency resulting in sustainable margins," said KR Choksey.
The company is also consistent in incurring capex in greenfield and brownfield expansion which acts as a catalyst in its robust growth. Currently, Mrs Bectors is operating at a capacity utilization of around 72 percent per annum. It plans to expand its production capacity to produce additional 14,400 tones of biscuits by FY22.
Mrs Bectors Food, which manufactures biscuits under the flagship brand 'Mrs. Bector's Cremica' and bakery products under the brand 'English Oven', will utilise its fresh issue proceeds for financing the project cost towards the expansion of the Rajpura manufacturing facility by establishing a new production line for biscuits.
"With improving price realisation and asset turnover, the additional capacity has the potential to grow the topline at a CAGR of around 15-18 percent in next 2-3 years," said KR Choksey.
Mrs Bectors Food is the largest supplier of buns in India to reputed QSR chains such as Burger King India, Connaught Plaza Restaurants, Hardcastle Restaurants, and Yum! Restaurants (India).
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