Initial Public Offer (IPO) of Mrs Bectors Food comprising a fresh issue worth ₹40.50 crore and an offer for sale of ₹500 crore aggregating to ₹541 crore is open. Angel Broking gives ‘Subscribe’ rating to the IPO.” We are positive on the long term growth prospects of the industry and the company, and hence recommend to “Subscribe” to the issue for long term as well as for listing gains. The price band for the issue has been fixed at ₹286-288 a share. The IPO issue will close on December 17.
Mrs Bector Food Specialities, one of the leading companies in the premium and mid-premium biscuits segment in northern India has a market share of 4.5%.
The brokerage believes the company 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,”says Keshav Lahoti, Associate Equity Analyst, Angel Broking.
The brokerage holds positive views on domestic biscuit and bakery market for the next few years.”We expect the domestic biscuit and bakery market to grow by 9% due to urbanization, increase in disposable income, favorable government policy. On the other hand, the institutional Indian bakery industry is expected to grow by 20% due to increasing market share of QSR chain,” says Lahoti.
The brokerage brings out a few investment concerns in Mrs Bectors Food as below:
(1) The outbreak of Covid-19 has an impact on the smooth running of the business
(2) Restriction in the use of the brand name
(3) Negative publicity of the products
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