Mrs. Bectors Food Specialities share price: LKP Securities Initiate Coverage with a BUY and a target price of Rs 627

Mrs. Bectors Food Specialities Ltd is a specialist in manufacturing premium & mid-premium biscuits and breads having a strong market footprint in the North India Region. Over the years, the company has diversified its product portfolio to include all kinds of biscuits & cookies suitable for domestic as well as exports markets and forayed into different types of breads & bakery products. Mrs. Bectors Food is also the sole supplier to some of the major QSR players having pan India presence. The company has set up state of the art manufacturing facilities that manufacture 100% of its products in-house providing the company effective quality control over the production process ensuring consistent quality of products. Mrs. Bectors Food Specialities share price closed at Rs 352.4, down Rs 10.55 or 2.9%.

Mrs. Bectors Food has shown a robust improvement in its financials over the last three years on various parameters such as margins, cash flows, working capital and borrowings. The company has improved its EBIDTA margins from c.12% in FY18 to c.17% in 9MFY21 with overall improvement in the gross margins by 400bps over the same period. PAT margins further witnessed incremental expansion owing to lower finance costs. The company has turned Free cash flow (FCF) positive in H1FY21. We expect the improvement to continue going forward resulting in better returns and growth. LKP Securities Initiate Coverage on Mrs. Bector’s Food Specialities Ltd with a BUY and a target price of Rs 627.

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Leading Player in Biscuits & Bakery Business in North India:

Mrs. Bectors Food is one of the leading players in the premium and mid-premium biscuits segment in the North India having a market share of c.4.5%. In the breads segment as well the company commands a market leadership in the branded breads segment having a market share of c.5% in India. The company has created two major brands ‘Mrs. Bector’s Cremica’ and ‘English Oven’ in biscuits and breads business respectively.

The company is also the market leader in supplying breads to major QSR, Cloud Kitchens and Multiplexes across India with a market share of 11% in semi processed and dough based offerings players having pan India presence. In the exports market as well, the company accounts for major share of biscuits exports from India accounting for 12% share of the total biscuit export contribution in FY19. With the growing demand for premium products and expansion of the brands into newer geographies, the company is well poised to create and maintain its market position in the existing as well as new markets.