Bread and biscuits maker Mrs Bectors Food Specialities has launched its initial public offering (IPO) today. The firm, which supplies buns to quick-service restaurant (QSR) chains such as McDonald's, KFC, Burger King and Carl's Jr among others, plans to raise Rs 450-500 crore through the IPO.
Price band for the IPO has been fixed at Rs 286-288 per equity share. Face value of the stock is Rs 10 per share each. The proceeds of the IPO will be used to fund brownfield expansion of Rajpura manufacturing unit in Punjab. The IPO will close on December 17.
The minimum bid lot for the IPO is 50 equity shares and multiples of 50 equity shares thereafter. A retail-individual investor can apply for up to 13 lots (650 shares or Rs 1,87,200).
The IPO will comprise of a fresh issue of equity shares worth Rs 40.54 crore and an offer for sale (OFS) by existing shareholders worth Rs 500 crore. This includes an offer for sale aggregating up to Rs 245 crore by Linus, up to Rs 38.50 crore by Mabel, up to Rs 186 crore by GW Crown PTE. Ltd and up to Rs 30.50 crore by GW Confectionary PTE.
Qualified Institutional Buyers (QIB) will be allocated up to 50 per cent of the issue. Retail investors can subscribe to 35 per cent of the issue and up to 15 per cent will be reserved for non-institutional investors (NIIs). The employee reservation portion would be up to Rs 50 lakh. SBI Capital Markets, ICICI Securities and IIFL Securities are the books running lead managers of the issue.
The company sells biscuits under the ''Cremica'' brand and manufactures and markets a wide range of biscuits such as cookies, creams, crackers, digestive biscuits, and an array of premium breads under the ''English oven'' brand.
Here's what brokerages said about the prospects of the IPO and should one subscribe to the share sale.
LKP Securities: Subscribe
LKP Securities has given a subscribe call to the IPO. In a note the brokerage said, "At the higher price band of Rs 288, the stock is valued at 28x TTM earnings of Rs 10.32, which looks quite attractive considering the brand equity, distribution network, strong fundamentals and robust growth prospects. We recommend investors to SUBSCRIBE for this initial public offering of Bectors Food Specialties Ltd."
At the upper price band of Rs 288, MBFSL is available at a P/E of 22x on FY21E EPS (annualised), which looks attractive, given its higher profitability compared to similar sized peers. Considering its future growth prospects in packaged biscuits and QSR segment, we recommend a "Subscribe" rating with a long-term perspective.
Choice Broking: Subscribe
"With focus on metro cities where premium products are in demand, the company is well placed to benefit from the same. Introduction of innovative products, expansion of the distribution network and operational efficiencies would drive the growth ahead. Thus considering the above observations, we assign a subscribe rating for the issue," said the brokerage.