Buy Mrs Bectors Food Specialities; target of Rs 1770: LKP Research

LKP Research's research report on Mrs Bectors Food Specialities

Mrs. Bectors Food Specialities Limited (MBFSL) reported 14.8% YoY revenue growth to ₹4.9bn in Q3FY25, in line with estimates, but margins were impacted by higher input costs. Gross margin declined 30bps YoY to 45.1% and EBITDA margin contracted 179bps YoY to 12.5% due to higher employee and freight costs. MBFSL has undertaken price hikes and grammage reductions, with full benefits expected from Q1FY26. MBFSL’s Biscuit segment grew 15% YoY to ₹3.1bn, while the Bakery segment rose 20% YoY to ₹1.8bn in Q3FY25, driven by strong retail and institutional demand. Despite a domestic biscuit uptick, exports saw some slowdown due to a high base.

Outlook

We expect MBFSL to clock a Revenue/ EBITDA/PAT CAGR of 15%/15%/17% respectively over FY24-27E on the back of a recovery in domestic biscuits and improving the retail Bakery segment. We maintain our ‘BUY’ rating but revise our target price to ₹1,770 (from ₹2,000) to factor in the slowdown in the export market and a gradual domestic market recovery, which we will closely monitor. We assign a PE of 48x on FY27E EPS of ₹36.7.