Mrs Bectors Food Speciality Ltd - IPO Review - ICICI Direct

Mrs Bectors Food Specialty (MBFS) is one of the leading companies in the premium, mid-premium biscuits segment and the premium bakery segment in North India. The company manufactures and markets a range of biscuits like cookies, creams, crackers, digestives and glucose under the flagship brand 'Mrs Bector's Cremica'. MBFS also manufactures and markets bakery products in savoury & sweet categories including breads, buns, pizza bases and cakes under brand 'English Oven'. The company is the largest supplier of buns in India to reputed QSR chains like Burger King India, Connaught Plaza Restaurants, Hardcastle Restaurants and Yum! Restaurants (India).

Investment Rationale

Leading brand of biscuits, bakery products 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'. It is among the top two Indian biscuit manufacturers in the premium and mid-premium biscuits segment in Punjab, Himachal Pradesh, Ladakh and Jammu & Kashmir. In FY20, it had a market share of 4.5% of the premium and mid premium biscuits market in North India. Its customers associate the brand 'Mrs Bector's Cremica' with high quality premium and mid-premium biscuits that incorporates quality, taste and value. The brand recall is enhanced through arrangements with certain preferred retail outlets by displaying products prominently in their shelves. In H1FY21, the company had a network of 4,422 preferred outlets.

Strong distribution network

The company's extensive sales and distribution network allows it to reach a wide range of consumers and ensures effective penetration of its products. Its sales & distribution network is strategically spread across different states in North India and has a strong outreach in certain urban and semi urban markets. MBFS distributes biscuits across 23 states in India, through a widespread network of super stockists and distributors. Its distribution network comprises 196 super stockists and 748 distributors supplying to a wide range of customers through 458,000 retail outlets. The bakery products for retail customers are sold through 191 distributors and over 14,000 retail outlets situated in the Delhi NCR region, Mumbai, Pune and Bengaluru through direct sales to supermarkets, departmental stores and distributors.

Priced at PE of 55x FY20 (post issue) on upper band

The company reported sales growth of 4.8% CAGR in FY18-20E with EBITDA margins of 12.2-12.3% in the same period. RoE, RoCE for the company is 9.9%, 12.7%, respectively, in FY20. The stock is trading at 55.5x FY20 price to earnings & 2.3x FY20 EV/sales.

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Source : Equity Bulls

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