Should You Subscribe to Mrs Bectors IPO?

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By Aditya Raghunath — Mrs Bectors Food Specialties has launched its IPO (initial public offering) for subscription on December 15 at a price band of Rs 286-Rs 288 per share. Mrs Bectors is best known to the masses as the maker of Cremica biscuits and English Oven bakery products. It is also a  major supplier of burger buns to multinational quick-service restaurants like McDonald’s (NYSE:), KFC, and Burger King India Ltd (NS:).

The IPO consists of a fresh issue of Rs 40.54 crore and an offer for sale of Rs 500 crore.

The offer is available at a P/E of 22x on FY21 EPS. Its competition in the market is trading at much higher P/E levels. Nestle (NS:) India is at 81x, Britannia Industries (NS:) at 48x, Prataap Snacks Ltd (NS:) at 84x, and DFM Foods Ltd (NS:) at 99x.

It was the same scenario with Burger King India when it launched its IPO earlier this month. The offering costs Rs 60 a share. Today, on the second day after its debut on the stock markets, it is trading at Rs 162, up 170% in less than two days.

Cremica accounts for contributed 68% of total revenue in the first half of FY21 and English Oven accounts for 20.51% in the same period.

The company has six manufacturing facilities in five cities in India and the funds from the issue will be used to expand the Rajpura manufacturing facility where the company will set up a new production line for biscuits.

Brokerages including Geojit and LKP have recommended a ‘Subscribe’ to the IPO and it would be surprising if this offering didn’t see multiple levels of subscriptions.


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