Mrs. Bectors Food Specialities Ltd - IPO Note - Angel Broking

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.

Source : Equity Bulls

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