1
Please refer to important disclosures at the end of this report
1
1
Mrs. Bector Food Specialities are one of the leading companies in the premium
and mid-premium biscuits segment and the premium bakery segment in North
India. Company manufacture and market a range of the biscuits such as cookies,
creams, crackers, digestives and glucose under our flagship brand ‘Mrs. Bector’s
Cremica’. Company also manufacture and market bakery products in savoury
and sweet categories which include breads, buns, pizza bases and cakes under
their brand ‘English Oven’.
Positives: (1) One of the leading brands in biscuits and bakery businesses in the
North India (2) Leading exporter of biscuits (3) Established presence in retail and
institutional bakery business (4) Modern and automated production processes
with a focus on quality control (5) Wide spread and established sales and
distribution network.
Investment concerns: (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
Outlook & Valuation: 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.
We think 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. 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.
Key Financials
FY18
FY19
FY20
694.0
783.7
762.1
-
12.9
-2.8
35.9
33.2
30.4
-
-7.5
-8.5
12.3
12.3
12.2
6.3
5.8
5.3
45.9
49.6
54.3
10.8
9.8
9.0
13.5
11.3
9.5
15.2
14.6
12.8
20.6
18.5
18.6
2.5
2.3
2.3
Source: Company, Angel Research (Valuation at upper price band)
SUBSCRIBE
Issue Open: December 15, 2020
Issue Close: December 17, 2020
QIBs 50% of issue
Non-Institutional 15% of issue
Retail 35% of issue
Promoters
51%
Others
49%
Fresh issue: `40.5 cr
Present Eq. Paid up Capital: `57.3 cr
Offer for Sale: 1.74 cr Shares
Post Issue Shareholding Pattern
Post Eq. Paid up Capital: `58.7 cr
Issue size (amt): `540.5cr
Price Band: `286-288
Post-issue implied mkt. cap: *`1,680cr -
**`1,692cr
Promoters holding Pre-Issue: 52.4%
Promoters holding Post-Issue: 51.1%
*Calculated on lower price band
** Calculated on upper price band
Book Building
Lot Size: 50 shares and in multiple
thereafter
Keshav Lahoti
+022 39357600, Extn: 6363
keshav.laho[email protected]elbroking.com
Mrs. Bectors Food Specialities Ltd
IPO Note | FMCG
December 14, 2020
2
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Mrs. Bectors Food Specialities| IPO Note
December 14, 2020
2
Company background
Company was incorporated on September 15, 1995. Company’s all products are
manufactured in-house at their 6 manufacturing facilities located in Phillaur and
Rajpura, Tahliwal, Greater Noida, Khopoli and Bengaluru. Company supply their
products to retail consumers in 26 states within India, as well as to reputed
institutional customers with pan-India presence and to 64 countries across six
continents during the financial year ended March 31, 2020.
According to Technopak Report, ‘Mrs. Bector’s Cremica is one of the leading
biscuit brands in the premium and mid-premium segment in Punjab, Himachal
Pradesh, Jammu and Kashmir and Ladakh and ‘English Oven is the one of the
largest selling brand in the premium bakery segment in Delhi NCR, Mumbai and
Bengaluru. They are the largest supplier of buns in India to reputed QSR chains
such as Burger King India Limited, Connaught Plaza Restaurants Private Limited,
Hardcastle Restaurants Private Limited, and Yum! Restaurants (India) Private
Limited.
Issue Details
Company is raising `40.5cr through fresh issue and `500cr through offer for sale
comprising an offer for sale up to `245cr by Linus Private Ltd, up to `38.5cr by
Mabel Private Ltd, up to `186cr by GW Crown Pte. Ltd and up to `30.5 cr by GW
Confectionary Pte. Ltd.
Pre & Post IPO Shareholding
No of shares
(Pre-issue)
%
(Post-issue)
%
Promoter
30,038,754
52.4
30,038,754
51.1
Public
27,299,168
47.6
28,716,650
48.9
Total
57,337,922
100.0
58,755,404
100.0
Source: Company, Angel Research (RHP)
Calculated at higher price band
Objects of the offer
Financing the project cost towards expansion of the Rajpura Manufacturing
Facility by establishing a new production line for biscuits.
General corporate purpose.
Revenue Mix: Product Wise
Category
Brand
Revenue Mix (FY20)
Products
Biscuits - Domestic
Cremica
37%
Crackers, Cookies, Creams,
Marie, Digestive
Biscuits - Exports
Cremica
22%
Crackers, Cookies, Creams,
Marie, Digestive
Branded Breads & Bakery Products
English Oven
17%
White, Brown, Speciality, Indian
Institutional Bakery
Manufacturing for leading QSRs,
Multiplexes, Cloud Kitchens
17%
Buns, Frozen Products
Contract manufacturing (Biscuits)
Mondelez International, Oreo
6%
Oreo, Cookies
Source: Company, Angel Research
Source: Company, Angel Research
694
784
762
431
0
100
200
300
400
500
600
700
800
900
FY18
FY19
FY20
H1FY21
Revenue (in ` cr)
3
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Mrs. Bectors Food Specialities| IPO Note
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Key Management Personnel
Mr. Subhash Agarwal is the Chairman and Independent Director of the company.
He holds a bachelor’s degree in commerce from Shri Ram College of Commerce,
Delhi University, a bachelor’s degree in law from Punjab University, Chandigarh
and post graduate certificate in business administration from Scottish College of
Commerce. He is a practising advocate with an experience of 60 years. He was
appointed as the Chairman on the Board on July 10, 2018. He has been on the
board since February 10, 2017.
Mr. Anoop Bector is the Managing Director of the company. He holds a bachelor’s
degree in commerce from Satish Chander Dhawan Government College, Panjab
University. He has completed a training programme on international supply chain
management conducted by McDonalds in Singapore in 2001. He was also
awarded the ‘Business Knight of Punjab’ by the Economic Times in 2015. He has
been on the board since the incorporation of the company and has an experience
of 25 years with the company.
Mr. Ishaan Bector is a Whole-time Director of the company. He holds a bachelor’s
degree in arts from Michigan State University and attended a management
programme for family business from the Indian School of Business. He is currently
the Director breads heading the breads and bakery business of the company. He
has been on our Board since February 15, 2016.
Strong H1FY21 Performance
Revenue breakup
H1 FY20 (` cr)
H1 FY21 (` cr)
Growth
Domestic Biscuits
143
189
32%
Export Biscuits
76
106
39%
Branded Breads
59
88
51%
Institutional Bakery*
63
24
-61%
Others ( Incl. Contract Manufacturing)
24
24
0%
Revenue from Operations
365
431
18%
Source: Company, Angel Research
*Majorly impacted due to shutdown of QSRs
Strong Relationship with QSR, Multiplexes:
Chain/ Company
Relationship
Years
Connaught Plaza Restaurants
Sole supplier of burger buns and pan muffins
25+
Hardcastle Restaurants
Preferred supplier of burger buns and pan muffins
13+
Burger King India
Main supplier of burger buns
6+
Yum! Restaurants
Main supplier of burger buns
7+
PVR
Supplier of frozen burger buns, panini, garlic breads
10+
Rebel, Faasos
Supply of bakery products
5+
Source: Company, Angel Research
Source: Company, Angel Research
81.0
87.3
94.3
101.6
70.0
75.0
80.0
85.0
90.0
95.0
100.0
105.0
FY18
FY19
FY20
H1FY21
Export Realization/kg (in `)
4
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Consolidated Profit & Loss Statement
Y/E March (` cr)
FY18
FY19
FY20
H1FY20
H1FY21
Total operating income
694.0
783.7
762.1
364.6
430.9
% chg
-
12.9
-2.8
-
18.2
Total Expenditure
608.6
687.5
669.3
325.5
358.9
Cost of material consumed
382.9
424.0
407.5
193.5
224.8
Excise Duty
3.3
-
-
-
-
Employee benefit expense
91.3
109.7
117.8
57.3
62.1
Other Expenses
131.1
153.8
144.0
74.7
72.0
EBITDA
85.4
96.2
92.8
39.1
72.0
% chg
-
12.7
-3.6
-
84.1
(% of Net Sales)
12.3
12.3
12.2
10.7
16.7
Depreciation& Amortisation
28.3
35.2
41.5
20.7
22.2
EBIT
57.1
61.0
51.3
18.4
49.8
% chg
-
6.9
-15.9
-
170.7
(% of Net Sales)
8.2
7.8
6.7
5.0
11.6
Interest & other Charges
6.1
12.7
15.0
7.9
5.4
Other Income
1.8
2.3
2.8
1.6
7.6
(% of Sales)
0.3
0.3
0.4
0.4
1.8
Recurring PBT
52.8
50.6
39.1
12.1
52.0
% chg
-
-4.1
-22.8
-
329.8
Net profit of associate
0.0
0.1
0.1
0.1
0.1
Tax
16.9
17.5
8.8
2.0
13.2
PAT (reported)
35.9
33.2
30.4
10.2
38.9
% chg
-
-7.5
-8.5
-
281.4
(% of Net Sales)
5.2
4.2
4.0
2.8
9.0
Basic & Fully Diluted EPS (Rs)
6.3
5.8
5.3
1.8
6.8
% chg
-
-7.5
-8.5
-
281.5
Source: Company, Angel Research
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Consolidated Balance Sheet Statement
Y/E March (` cr)
FY18
FY19
FY20
H1FY20
H1FY21
SOURCES OF FUNDS
Equity Share Capital
57.3
57.3
57.3
57.3
57.3
Other equity
209.3
237.5
262.0
247.1
300.5
Shareholders Funds
266.6
294.8
319.3
304.4
357.8
Total Loans
121.0
139.9
103.7
122.5
101.2
Other liabilities
27.7
34.0
28.7
29.5
29.2
Total Liabilities
415.3
468.6
451.7
456.4
488.1
APPLICATION OF FUNDS
Property, plant and equipment
240.6
344.3
337.6
345.1
327.0
Capital work-in-progress
92.1
15.6
6.7
6.6
28.9
Right-of-use Assets
18.4
16.8
15.1
15.9
14.5
Goodwill
0.4
0.4
0.4
0.4
0.4
Intangible assets
1.8
1.2
0.6
0.9
0.3
Equity accounted investment
3.9
3.8
3.8
3.9
3.9
Current Assets
140.1
183.1
176.3
175.8
204.7
Inventories
35.3
35.3
43.4
41.6
54.4
Sundry Debtors
69.4
100.3
75.0
87.7
72.9
Cash &Bank Balance
10.7
12.0
30.2
13.4
47.7
Other Assets
24.6
35.5
27.6
33.2
29.7
Current liabilities
95.8
108.4
114.0
104.2
120.6
Net Current Assets
44.3
74.7
62.2
71.6
84.1
Other Non Current Asset
13.9
12.0
25.2
12.0
29.0
Total Assets
415.3
468.6
451.7
456.4
488.1
Source: Company, Angel Research
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Consolidated Cash Flow Statement
Y/E March (` cr)
FY18
FY19
FY20
H1FY20
H1FY21
Loss before tax
52.8
50.7
39.2
12.1
52.1
Depreciation
28.3
35.2
41.5
20.7
22.2
Change in Working Capital
(25.9)
(33.9)
21.0
0.7
(2.8)
Interest Expense
5.5
12.1
14.2
7.5
4.7
Direct Tax Paid
(15.5)
(14.4)
(12.4)
(7.6)
(6.7)
Others
1.3
4.3
5.9
4.2
(1.6)
Cash Flow from Operations
46.5
54.0
109.5
37.6
68.0
(Inc.)/ Dec. in Fixed Assets
(117.6)
(61.3)
(41.0)
(14.2)
(36.1)
Changes in investment
5.6
0.0
(2.2)
(4.2)
(20.3)
Cash Flow from Investing
(112.0)
(61.3)
(43.2)
(18.3)
(56.5)
Payment of lease liabilities
(1.1)
(1.8)
(1.8)
(0.9)
(0.7)
Changes in Borrowings
68.9
27.1
(29.1)
(13.6)
(8.8)
Security premium
-
0.0
-
-
-
Interest paid
(5.7)
(12.1)
(15.0)
(7.9)
(5.4)
Dividend paid
(4.2)
(6.3)
(5.2)
-
-
Cash Flow from Financing
57.8
6.9
(51.1)
(22.4)
(15.0)
Inc./(Dec.) in Cash
(7.7)
(0.3)
15.2
(3.2)
(3.5)
Opening Cash balances
13.6
5.9
5.5
5.5
20.7
Closing Cash balances
5.9
5.5
20.7
2.3
17.2
Source: Company, Angel Research
Key Ratios
Y/E March
FY18
FY19
FY20
Valuation Ratio (x)
P/E (on FDEPS)
45.9
49.6
54.3
P/CEPS
25.5
22.2
24.3
P/BV
10.8
9.8
9.0
EV/Sales
2.5
2.3
2.3
EV/EBITDA
20.6
18.5
18.6
Per Share Data (Rs)
EPS (Basic)
6.3
5.8
5.3
EPS (fully diluted)
6.3
5.8
5.3
Cash EPS
11.3
12.9
11.8
Book Value
26.7
29.5
31.9
Returns (%)
ROE
13.5
11.3
9.5
ROCE
15.2
14.6
12.8
Angel ROIC (Pre tax)
20.4
15.1
13.4
Turnover ratios (x)
Receivables (days)
36.5
46.7
35.9
Inventory (days)
18.6
16.4
20.8
Payables (days)
37.1
42.0
42.1
Working capital cycle (days)
17.9
21.1
14.6
Source: Company, Angel Research (Valuation done at the upper price band)
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Research Team Tel: 022 - 39357800 E-mail: research@angelbroking.com Website: www.angelbroking.com
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