Mrs. Bectors IPO: Here’s All You Need To Know

Mrs. Bectors Food Specialities Ltd. will launch its three-day Rs 541-crore initial public offering on Tuesday as the biscuit and bread maker aims to raise funds to expand its production capacity and investors seek a partial exit.

The maiden offer comprises a fresh equity issue worth Rs 40.5 crore and a Rs 500-crore offer-for-sale by Linus Pvt. Ltd., Mabel Pvt. Ltd., GW Crown Pte. Ltd. and GW confectionary Pte. Ltd. The price band for selling shares has been fixed at Rs 286-288 apiece, according to its red herring prospectus. The average cost of acquisition for the selling shareholders is around Rs 175 apiece.

The shares on offer would be between 1.89 crore and 1.87 crore, giving the company an implied market capitalisation of Rs 1,680-1,692 crore, according to BloombergQuint’s calculation based on the price band.

• Issue opens: Dec. 15
• Issue close: Dec. 17
• Face value: Rs 10 apiece
• Minimum Bid: 50 shares

Mrs. Bectors plans to use the proceeds to expand its biscuit factory at Rajpura, Punjab, Managing Director Anoop Bector had told BloombergQuint last week, as the company strengthens its presence in northern India.

ICICI Securities Ltd., SBI Capital Markets Ltd. and IIFL Securities Ltd. are the book-running lead managers to the issue.

Shareholding

Promoters owned a 52.39% stake in Mrs. Bectors before the issue, and the rest was held by the public. The public shareholding, however, will go up to 48.87% after the IPO.

Business

Mrs. Bectors is one of the leading makers of premium and mid-premium biscuits and premium bakery products in Punjab, Himachal Pradesh, Jammu and Kashmir and Ladakh. The company manufactures and markets cookies, creams, crackers, digestives and glucose under its flagship brand ‘Mrs. Bector’s Cremica’, according to its red herring prospectus.

It also manufactures and markets savoury and sweet products, including breads, buns, pizza bases and cakes, under ‘English Oven’—one of the largest selling brands in the premium bakery segment in Delhi-National Capital Region, Mumbai and Bengaluru.

Mrs. Bectors is one of the largest suppliers of biscuits to Canteen Stores Department of Government of India, spanning across 33 locations. It, too, is an approved and listed supplier for Indian Railways with a strong presence across Railway Station Canteens and their stores in north India.

The company is the largest supplier of buns to quick-service restaurant chains, including Burger King India, McDonalds, and Yum! Restaurants, which runs KFC and Pizza Hut, in the country. It manufactures Oreo and Chocobakes cookies on contract for Mondelez India Foods Pvt.

All of the company’s products are manufactured in-house at its six manufacturing facilities located in Phillaur and Rajpura in Punjab, Tahliwal in Himachal Pradesh, Greater Noida in Uttar Pradesh, Khopoli in Maharashtra and Bengaluru in Karnataka.

Peer Comparison

The Rs 38,000-crore Indian biscuit space is dominated by Britannia Industries Ltd., Parle Products Ltd. and ITC Ltd., which collectively own 65% of the market. Mrs. Bectors own 1% of the biscuit segment. Parle derives a large portion of its revenue from mass product Parle-G, while Britannia’s top line is led by its mid-premium and premium products.

Key Risks

• The continuing effect of the Covid-19 pandemic
• Inability to anticipate, respond to and meet the tastes, preferences or consistent quality requirements of consumers or inability to accurately predict and successfully adapt to changes in market demand or consumer preference
• Restriction on use of the brand name and any negative publicity of products
• The company has incurred indebtedness and may incur additional debt in the future, exposing it to interest rate fluctuations, and restrict its operational flexibility in certain ways
• A disruption or shutdown of manufacturing operations or under-utilisation of its manufacturing facilities or its failure to commission new facilities successfully or a shortage or non-availability of fuel, electricity, or water
• It does not have any long-term contracts with QSR customers and any disruption in its business operations with its QSR customers will adversely affect business, financial condition and results of operations.
• Inability to manage its inventory and foresee accurate demand for products for a future period may adversely affect its reputation, business, results of operation and its financial performance
• May not be able to successfully grow its premium biscuits and bakery segments
• Any contamination or deterioration of its products could result in legal liability, damage its reputation
• Concerns over nutritional values of its products may reduce demand or increase the cost of its products