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Mrs. Bectors Food Specialities IPO Opens on 15th Dec: Should You Invest? – Research & Ranking

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The initial public offering of Mrs. Bectors Food Specialities, the largest supplier of buns to international quick-service restaurant (QSR) chains in India such as Burger King India and McDonald’s will be open for subscription from 15th to 17th Dec 2020.

Mrs. Bectors Food Specialities manufactures and sells biscuits, primarily in the non-glucose category such as cookies, creams, crackers and digestives, under the ‘Mrs. Bector’s Cremica’ brand biscuit brands and has a significant presence across markets in Punjab, Himachal Pradesh, Jammu and Kashmir, Haryana and Rajasthan.

Key export markets of the company include Africa, Middle East, North America, Central America, Asia, Europe and Australia, where biscuits are exported under own brand as well as under private labels for international retail chains through reputed buying houses such as Monteagle International (UK) Limited. The company also undertakes contract manufacturing of ‘Oreo’ and ‘Bournvita’ biscuits on a contract basis for other biscuit manufacturers such as Mondelez India Foods Private Limited.

The company also manufactures and sells various types of bread, including whole wheat, multigrain fruit and sandwich bread under the ‘English Oven’ brand, which caters to the premium segment in Delhi NCR, Maharashtra and the Northern region of India.

The company intends to use the proceeds for financing expansion of its Rajpura production facility by establishing a new production line for biscuits.

Here are some quick facts about the Mrs.Bectors Food Specialities IPO:

Price band

The price band for the Mrs.Bectors Food Specialities IPO is set at Rs. 286-288.

Lot size

The minimum lot size is of 50 shares. A retail individual investor can bid for a maximum of 650 shares or 13 lots.

Issue size

The issue size for Mrs. Bectors Food Specialities IPO is Rs. 540 crores.

Listing date

Shares of Mrs. Bectors Food Specialities are expected to be listed around December 28th, 2020.

Key opportunities for the company

Rising incomes, urbanization, favourable demographics in the country offers a vast opportunity for growth in the packaged biscuits and bread business segment.

Sales of biscuits and bread (packaged food) grew at CAGR of 10% from 230 billion rupees in the year 2013 to 387 billion rupees in the year 2018 is estimated to touch 631 billion rupees.

With a shift in consumption patterns of consumer towards premium products, the market for mid and premium biscuits is expected to grow to ₹ 469 billion by Financial Year 2023 at a CAGR of 12.10% over the next five years.

The Coronavirus pandemic has led to strong demand for packaged foods which has helped the company attain healthy growth in domestic branded retail sales. This trend is likely to continue in the near term.

The global biscuit market currently valued at ₹ 6,129 billion is expected to grow at CAGR of 5.00% over the next five years. Easy availability of labour combined with lower costs of processing and packaging food in India offers a massive window of opportunity to well-established companies in the biscuit segment like Mrs. Bectors Food Specialities.

Key challenges to consider while investing in Mrs. Bectors Food Specialities IPO

Mrs. Bectors Food Specialities operates in a segment where there is intense competition from domestic as well as international biscuit and bakery brands. With their substantially greater financial resources, wider distribution tie-ups and more extensive product portfolio, major players such as Britannia, Parle and ITC in the biscuit segment and Britannia, Modern and Harvest Gold in the bread and bakery segment offer severe competition to Mrs. Bectors Food Specialities.

In its Red Herring Prospectus, the company has stated that it does not have any long term supply agreements with any of their QSR customers and there is no assurance that the company will receive repeat orders from our QSR customers in the future. The company’s business may also be significantly affected if there are any temporary or permanent closure of operations of its QSR clients in India. In December 2017, a temporary one-month suspension of operations by a leading QSR chain across North and Eastern parts of India had adversely impacted the company’s business.

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Read more:  How Long-term investing helps create life-changing wealth – TOI

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