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Mrs Bector’s Food Specialities Ltd IPO : Should You Invest ?

MRS. BECTOR’S FOOD SPECIALITIES LTD IPO was incorporated in 1995. The company was started by Mrs. Rajni bector in 1971. Today it is a market leader in the segment of premium bakery products and biscuits in North India. The company has some major products in its bakery portfolio like cookies, cream, digestives, crackers etc. while the major products in the biscuit segment are breads, pizza bases, buns, cakes etc.

The biscuits are sold under the brand name “CREMICA” while bakery products are sold under the brand name “ENGLISH OVEN”. Today the company exports food products to more than 65 countries.

The company is the largest bun supplier to all the reputed QSR brands like Burger king, Hardcastle Restaurants Pvt. Ltd, Connaught PLaza Restaurants Pvt. Ltd. etc. The company has 6 manufacturing facilities. They are located in Punjab, Himachal Pradesh, Uttar Pradesh, Maharashtra and Bengaluru.

IPO Details :-

The IPO momentum is constant in the post COVID era. Mrs. Bector’s food specialities ltd. IPO is set to launch on 15th December. Mt. Anoop Bector is the promoter of the entire company. Promoters of the company own almost 52.39% of the shares.

On the first day of listing the IPO has already been subscribed 4.67 times on part of retail investors. The part reserved for employees (Rs. 50 lakh shares) has been subscribed for 1.5 times. The part reserved for Non institutional investors has been occupied 66% and part for qualified institutional investors is 0.03% subscribed. In all the IPO has been subscribed 2.67 times on the first day of its listing.

Retail investors can apply for maximum 13 lots at a time. This means the investor can apply for almost 650 shares amounting to Rs. 1,87,200.

IPO DATE	15th December – 17th December
LISTING DATE	28th December
ISSUE TYPE	Book built issue
FACE VALUE	Rs. 10
ISSUE SIZE	540.54 crore Rs.
FRESH ISSUE	40.54 crore Rs.
OFFER FOR SALE	500 crore Rs.
IPO PRICE	286 Rs. – 288 Rs.
LOT SIZE	50 shares
LISTING AT	BSE, NSE

Plan for Raising Money :-

The company has suggested that it will use most of the funding for expansion of its Rajpura manufacturing facility. Company is expanding to open up a new production line of premium biscuits.

Another reason is to fulfil the general corporate purposes.

Company Financials :-

Mrs. Bector’s food specialities ltd. share price is set at Rs. 288 which is valued at P/E of 56 times on EPS of FY 20.

PARTICULARS (in million ₹)	March’18	March’19	March’20
ASSETS	5110	5771	5658
REVENUE	6958	7856	7653
INCOME	6958	7861	7649
PAT	358.96	331.55	304.04

Mrs. Bector’s Food Specialities Ltd Tentative Dates:-

IPO DATE	15 DEC – 17 DEC
ALLOTMENT DATE	22 DEC
INITIATION OF FUNDS	23 DEC
CREDIT OF SHARES TO D-MAT A/C	24 DEC
IPO LISTING DATE	28 DEC

Investor Quota’s :-

EMPLOYEE	Upto 50 lakh Rs.
QIB	Max 50%
NII	Min 15%
RETAIL INVESTORS	Min 35%

PROS :-

Company is a leader in the premium biscuit segment in North India.
Has a wide range of product portfolio
Owns a good part of land on which it has its retail outlets
Strong distribution channel of 154 stock handlers and 644 distributors. It has more than 4.58 lakh retail outlets.
Has more than 14% export business for the biscuits made.
Company has modern technology based manufacturing facilities.
Due to more than 48 years of presence the company has an experienced senior management.

CONS :-

COVID effect may hamper the business furthermore.
Food business is all about taste and quality. Hence establishing new product line with similar taste is a challenge
Export business is risky due to fluctuations on foreign currency.
Many properties owned by the company are on lease hence any changes in lease terms or cash crunch situation operations are likely to suffer.
Company relies on third party transportation facilities for raw materials as well as dispatch of finished goods.
No long term contracts with its QSR customers.
Company works on labor laws and industry standards and hence there is always a fear of strikes or work stoppages.
The biscuit business attracts a huge amount of capital investment. Hence the company needs to have a constant cash flow.
Company with single promoter.