All you need to know about Mrs Bectors Food Specialities IPO - price band to key strengths

Mrs Bectors Food Specialities Ltd (MBFS) is coming out with an initial public offer (IPO), comprising a fresh issue of equity shares amounting to Rs. 40.5 crore and an offer for sale of Rs. 500 crore. The price band is Rs. 286-288 per share. At the lower and upper price band, the fresh equity issue amounts to 14.1-14.2 lakh shares, while the OFS has a size of around 1.74 crore shares. The issue opens tomorrow on December 15th (Tuesday) and closes on December 17th.  

SBI Capital Market; ICICI Securities & IIFL Securities are the Book running lead managers for the issue. It is Fresh issue of equity shares (14.1-14.2 lakh shares based on price band) and offer for sale (OFS) 1.74 cr shares. Bid lot is of 50 shares and in multiple thereof.

About the company:

Mrs. Bectors Food Specialities Ltd (MBFS) is one of the leading companies in the premium and mid-premium biscuits segments and the premium bakery segment in North India. It has a 4.5% market share, according to the Technopak Report. The company manufactures and markets a range of biscuits such as cookies, creams, crackers, digestives and glucose under flagship brand ‘Mrs. Bector’s Cremica’. Its offerings also include sweet and savoury bakery products such as breads, buns, pizza bases and cakes under the brand ‘English Oven’. MBFS caters to retail consumers in 26 states (through 748 distributors who supply to 458,000 retail outlets and 4,422 preferred outlets) in India, reputed institutional customers with a pan-India presence and to 64 countries across six continents as of FY2020.
‘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 premium bakery brands in Delhi NCR, Mumbai and Bengaluru. The company is 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.

The company also manufactures ‘Oreo’ biscuits and ‘Chocobakes’ cookies on a contract basis for Mondelez India Foods Private Limited. A widespread and established distribution network, strong product portfolio in the biscuits and bakery category and preferred supplier to some of the largest QSR franchisee are some of the key strengths of the company. A key risk would be that the company would be unable to get into a new category under the Cremica brand due to restriction on use of brand name – Mrs. Bector’s Cremica under the Brand Separation MoU signed in November 2013.

Key strengths:

One of the leading brands in biscuits & bakery businesses in North India MBFS is one of the leading companies in the premium and mid-premium biscuits segment in North India and sells products under flagship brand ‘Mrs. Bector’s Cremica’. The company is among the top two Indian biscuit manufacturers in the premium and mid-premium biscuits segment in Punjab, Himachal Pradesh, Ladakh and Jammu and Kashmir. In FY2020, the company had a market share of 4.5% of the premium and mid-premium biscuits market in North India. Brand recall is enhanced through its arrangements with certain preferred retail outlets, which enhance brand visibility and presence in their shops by displaying MBFS products prominently in their shelves.

The company has a network of 4422 preferred outlets. It focuses more on digital marketing initiatives such as social media integration, influencer marketing and content marketing. Started brand promotions in various e-Commerce channels for biscuits and bakery products and are listed with various e- commerce platforms in India. The company’s biscuit business revenues grew at a CAGR of 7.5% over FY 2018-20 to Rs283.5 cr and has gross margins of 46%. MBFS also has developed the brand ‘English Oven’ for 152 bakery products businesses. According to industry reports, ‘English Oven’ is currently one of the fastest growing large-scale bakery brands in India and is one of the largest selling brands in the premium bakery segment in Delhi NCR, Mumbai and Bengaluru. The company’s retail bakery business grew at a CAGR of 29% over FY2018-20 to Rs130.2crore and has gross margins of 53.5%.