The Rs 540.54 crore-IPO of Mrs. Bectors Food Specialties Ltd has received a robust response from investors as the issue was subscribed 17.3 times so far on December 17, the last day of bidding.
The issue of the bread and biscuit maker received bids for 22.89 crore equity shares against an offer size of more than 1.32 crore equity shares (excluding anchor book), data available on the exchanges showed.
The portion set aside for retail investors and employees was subscribed 20.7 times and 40.5 times, respectively, while that of non-institutional investors saw 22.2 times subscription. The portion reserved for Qualified institutional buyers witnessed 7.4 times subscription.
The IPO comprises of a fresh issue of equity shares worth Rs 40.54 crore and an offer for sale (OFS) worth Rs 500 crore by existing shareholders Linus Pvt Ltd, GW Confectionary PTE. Ltd., GW Crown PTE. Ltd and Mabel Pvt Ltd
The lot size of the issue is 50 shares. A retail-individual investor can apply for up to 13 lots (650 shares or Rs 187,200).
The proceeds from the fresh issue will be used for financing the project cost towards the expansion of Rajpura facility by establishing a new production line for biscuits.
SBI Capital Markets, ICICI Securities and IIFL Securities are the Book Running Lead Managers to the Offer.
Most brokerages advise subscribing to the issue for listing gains given its attractive valuations as compared to peers. Strong financials and growth prospects will also help the firm in the near term, analysts added. However, stiff competition, higher dependency on the north Indian market for growth are key risks.
“At the higher price band of Rs 288, the stock is valued at 28 times its trailing 12-month earnings of Rs 10.32, which looks quite attractive considering the brand equity, distribution network, strong fundamentals and robust growth prospects,” LKP Securities said.
The company has also turned free cash flow positive in H1FY21, added the brokerage. Net debt of the company has also reduced from around Rs 133 crore in FY18 to Rs 107 crore in H1FY21, bringing down its net debt to equity ratio to 0.21 times, it said.
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