Mrs.

Bectors Food Specialities Limited December 14, 2020

SMC Ranking
(4/5)

Issue Highlights About the Company

Incorporated in 1995, Mrs. Bectors Food Specialities Ltd is one of the leading companies in
Industry FMCG
the premium bakery segment and premium and mid-premium biscuit segment in North
Total Issue (Shares) - Offer for sale 17,361,111
India. The company's product portfolio mainly consists of two categories of products;
Total Issue (Shares) - Fresh Issue 1,407,639 Biscuits (cookies, creams, crackers, digestive, etc.) and Bakery products (bread, buns,
Net Offer to the Public 18,768,750 pizza bases, cakes, etc.). Mrs. Bectors manufactures and sells biscuits under its brand
Issue Size (Rs. Cr.) 540-537 name "Mrs. Bector's Cremica" whereas bakery products are manufactured under the
Price Band (Rs.) 286-288 brand name of "English Oven" and offered in the premium market segments such as Delhi
Offer Date 15-Dec-20 NCR, Mumbai, and Bengaluru. As of June 30, 2020, its bakery segment has a total of 96
Close Date 17-Dec-20 products and the Biscuits segment has a total of 384 items. The company has a very strong
distribution network of 154 super-stockists and 644 distributors supplying products through
Face Value 10
458,000 retail outlets and 3,594 preferred outlets. It sells its products to 23 states in India
Lot Size 50
and also exports its products under its own brand name and third-party private labels to 64
countries all over the world.

Issue Composition In shares

Strength
Total Issue for Sale 18,768,750
QIB 9,384,375 One of the leading brands in biscuits and bakery businesses in North India with an
ability to establish brands: Mrs. Bectors Food is one of the leading companies in the
NIB 2,815,313
premium and mid-premium biscuits segment in North India and sell its products under its
Retail 6,569,063
flagship brand ‘Mrs. Bector’s Cremica’. The company is among the top 2 Indian biscuit
manufacturers in the premium and mid-premium biscuits segment in Punjab, Himachal
Pradesh, Ladakh and Jammu and Kashmir. In the Financial Year 2020, it had a market
Shareholding Pattern (%)
share of 4.5% of the premium and mid-premium biscuits market in North India.
Particulars Pre-issue Post-issue
A leading exporter of biscuits: Mrs. Bectors Food is one of the leading exporter of
Promoters & promoters group 52.39% 51.13%
biscuits from India, with approximately 12% share of the Indian biscuit export market in
QIB 47.61% 32.89% calendar year 2019 and they contribute more than 50% by value of biscuit exports from
NIB 0.00% 4.79% India to countries like South Africa and Uganda and more than 25% by value of biscuit
Retail 0.00% 11.18% exports from India to Canada. During the Financial Year ended March 31, 2020, they
Total 100.00% 100.00% exported biscuits to 64 countries, across Central and South America, Europe, North
*calculated on the upper price band America, East and South Africa, Australasia, the MENA region and Asia to various retailers,
distributors and buying houses such as Monteagle International (UK) Ltd, Lulu
Hypermarket Trading Co, E-Mart Inc., Atlas Global (HK) Ltd, Omni Trade Services Ltd,
Objects of the Issue
Universal Trade Ltd, and World Wide Imports (2008) Ltd. The company has received
The company proposes to utilise the Net Proceeds towards several quality certifications from including certificate of registration from the U.S. Food
funding the following objects: and Drug Administration, the British Retail Consortium (BRC) food certification, Sedex
1. To finance the cost of Rajpura Expansion Project. Members Ethical Trade Audit (SMETA), Food Safety System certification 22000 and Halal
certification for manufacturing biscuits, which helps in the acceptability of its products in
2. To meet the general corporate purposes
developed and quality conscious export markets. Revenue from the export of biscuits
accounted for ₹ 167.70 crore, ₹ 105.62 crore and ₹ 76.09 crore constituting 22%, 24.51%
and 20.87% of the revenue from operations for the Financial Year 2020, the period April 1,
2020 to September 30, 2020, and the period April 1, 2019 to September 30, 2019,
respectively, which has grown by 38.82% from September 30, 2019 to September 30,
Book Running Lead Manager
2020. Its price realisation per kilogram from sales of its biscuits (exports) in this period was
Ÿ SBI Capital Markets Limited ₹ 94.29, ₹ 87.33, ₹ 81.04, ₹ 101.63 and ₹ 95.31, respectively and has grown at the CAGR of
Ÿ ICICI Securities Limited 7.87% during Financial Years 2018 to 2020.
Ÿ IIFL Securities Limited
Established presence in retail and institutional bakery business: ‘English Oven’ is one of
the fastest growing largescale premium bakery brand in India. The company markets and
Name of the registrar
sells its premium bakery products in savoury and sweet categories in Delhi NCR, Mumbai and
Ÿ Link Intime India Private Limited
Bengaluru supplying approximately an average of 178,564, 218,674 and 168,022 packs of

1
branded breads and bakery products per day for the Financial Year ended March 31, 2020, the period
April 1, 2020 to September 30, 2020, and the period April 1, 2019 to September 30, 2019 respectively.
The company is the sole supplier of burger buns and pan muffins to Connaught Plaza Restaurants Pvt.
Ltd. since 1995, preferred supplier of burger buns and pan muffins to Hardcastle Restaurants Pvt. Ltd. for
approximately 13 years. The company is one of the main supplier of burger buns to Burger King India Ltd
since 2014, and to Yum! Restaurants (India) Pvt. Ltd. since 2013. The Greater Noida Manufacturing
Facility, Khopoli Manufacturing Facility and Bengaluru Manufacturing Facility have dedicated lines for
manufacturing buns to serve its quick service restaurant (QSR) customers.
Modern and automated production processes with a focus on quality control: The company’s
production facilities are strategically located in proximity to its target markets. It currently manufactures
biscuits in its Phillaur Manufacturing Facility, Rajpura Manufacturing Facility and Tahliwal Manufacturing
Facility. It currently manufactures its breads and other bakery products including buns and frozen
products offered to retail consumers as well as its institutional clients, in its Greater Noida Manufacturing
Facility, Khopoli Manufacturing Facility and Bengaluru Manufacturing Facility.
Wide spread and established sales and distribution network: The company distributes its
biscuits across 23 states in India, through its widespread network of super stockists and distributors.
For the period between April 1, 2020 to September 30 2020, it has a distribution network comprising of
154 super stockists and 644 distributors supplying to wide range of customers through 458,000 retail
outlets. Its distribution channels include traditional retail, which they define as small, privately-owned
independent stores, typically at a single location. For the period between April 1, 2020 to September
30, 2020, they have a network of 4,422 preferred retail outlets. Its distribution network is managed by
their in- house sales team of over 403 personnel, as on September 30, 2020. For the period between
April 1, 2020 to September 30, 2020, its bakery products for retail customers were sold through 191
distributors and over 14,000 retail outlets situated in Delhi NCR region, Mumbai, Pune and Bengaluru
through direct sales to supermarkets, departmental stores and distributors.

Strength
Focusing on growth in premium biscuits and bakery segment to improve margin: The
company intends to continue to expand its product portfolio within the existing product segments,
focusing on increasing sales realization and volumes, striving to provide differentiated offerings to its
consumers and developing new products to capitalize on emerging trends. To cater to the growing
needs of its millennial customers, the company intends to expand its product offerings to include
niche biscuit and bakery products such as a more nutritious range of biscuits including digestive
biscuits, honey oatmeal biscuits, premium rich cookies, premium flaky crackers, and soda crackers,
which will help them realise higher margins. The company has also installed dedicated lines at its
Rajpura (Punjab) Facility in 2018 to cater to production of high margin premium products. The
company has also installing a dedicated line at its Greater Noida Facility to cater to production of high
margin products including desserts and frozen products such as frozen pizzas, sandwiches, and
cakes, which they aim to cater to its institutional customers such as multiplexes, cloud kitchens,
hotels restaurants and cafés as well as retail customers. It also intends to dedicate their Khopoli
Facility for manufacturing premium bakery products such as pizza puffs, sub breads, footlong breads,
croissants and other premium breads with automated machinery.
Focus on product development in biscuits and bakery segments: The company has an
experienced in-house research and development team that works on its new product development
processes through innovations, trials, regulatory approvals and driving market acceptance and cost
alignments along with its marketing and supply chain management teams. The company also seeks
to increase the capacities of its manufacturing facilities by installing new, automated and product
specific equipment such as installation of cookies manufacturing line sourced from Denmark. The
company is looking to expand its premium biscuits production in its Rajpura (Punjab) Manufacturing
Facility by procuring automated equipment from Italy. Further it has also commissioned a sheeting
line capable of producing ‘Focaccia Breads’, ‘Panini Breads’, ‘Ciabatta Breads’, at its Greater Noida
Manufacturing Facility..
Expand the product reach in India and globally: The company intends to leverage its institutional

2
relationships to further increase its product offerings and sales volume to these institutional
customers and their affiliates in India and globally. The company plans to increase its penetration in
select export markets, such as South, Central and North America, the MENA region and Australasia.
The company is also in the process of setting-up a new office in Dubai and participates in trade fairs in
these export markets extensively to strengthen its presence in these markets.
Expansion of the distribution network through diversification: The company has a strong
distribution network in North India and focuses to establish a pan India presence for its biscuits and
bakery segments by diversifying its distribution network in other regions of India. The company has
increased its distribution through the modern trade channels such as Walmart India Pvt. Ltd. The
company is also collaborating with various e-commerce platforms for sale of its biscuits and bakery
products, multiplex chains such as PVR Ltd and cloud kitchens such as Rebel Foods Pvt. Ltd. to sell
its bakery products on a pan India level.
Focus on increasing the brand awareness: The company seeks to continuously allocate
significant resources to strengthen ‘Mrs. Bector’s Cremica’ and ‘English Oven’ as one of India’s
leading biscuit and bakery brands, respectively. Its marketing plan comprises advertising in print
media, digital, television, radio and outdoor promotional campaigns, and sponsorship of prominent
sporting and cultural events in India. The company plans to also focus more on digital marketing
initiatives such as social media integration, influencer marketing and content marketing.

Risk
• Its inability to anticipate, respond to and meet the tastes, preferences or consistent quality
requirements of its consumers or its inability to accurately predict and successfully adapt to
changes in market demand or consumer preference could reduce demand for its products, affect
its brand loyalty and impact its sales.
• The company has experienced negative cash flows (from investing activities and financing activities)
in the past and may continue to have negative cash flows in the future. Any such negative cash flows
in the future may adversely affect its business, financial condition and results of operations.
• The company incurred indebtedness and may incur additional debt in the future, which may
expose it to interest rate fluctuations, and restrict its operational flexibility in certain ways.
• The company currently avail benefits under certain export promotion schemes. Any failure in
meeting the obligations under such schemes, may result in adversely affecting our business
operations and its financial condition.

Peer comparison
Company Net Sales (TTM) PAT (TTM) EPS P/E P/BV BV FV Price Mcap

DFM Foods 500.56 20.34 4.05 97.56 11.97 32.99 2.00 395.10 1986.20

Prataap Snacks 1191.15 27.76 11.84 56.96 2.59 260.09 5.00 674.35 1581.56

Mrs. Bector Food specialities Ltd 762.12 30.40 6.62 43.51 4.25 67.82 10.00 288.00 1691.87

Valuation
Considering the P/E valuation, on the upper end of the price band of Rs. 288, the stock is priced at pre
issue P/E of 54.31x on its FY20 EPS of Rs. 5.30. Post issue, the stock is priced at a P/E of 43.51x on
its EPS of Rs. 6.62. Looking at the P/B ratio at Rs. 288 the stock is priced at P/B ratio of 5.17x on the
pre issue book value of Rs.55.69 (FY20) and on the post issue book value of Rs. 67.82 the P/B comes
out to 4.25x.
On the lower end of the price band of Rs.286 the stock is priced at pre issue P/E of 53.94x on its
annualised FY20 EPS of Rs. 5.30.Post issue, the stock is priced at a P/E of 43.21x on its EPS of Rs.
6.62. Looking at the P/B ratio at Rs.286, the stock is priced at P/B ratio of 5.14x on the pre issue book
value of Rs. 55.69 and on the post issue book value of Rs. 67.82, the P/B comes out to 4.22x.

3
Industry overview
The Indian biscuits and bakery retail market is valued at ₹ 450.00 billion and is expected to grow at a
CAGR of ~9% over the next five years. Biscuits and other snacking bakery products such as rusks,
wafers and tea cakes contribute almost ₹ 400.00 billion or 89% to the total market. The balance 11% is
contributed by breads including loaves, buns, pizza bases which together account for ₹ 50.00 billion.
Global market biscuit market is estimated to be worth ₹ 7,839.00 billion in 2020 projected to grow at a
CAGR of 6% over next five years. It is driven by rising urbanisation, increasing disposable incomes
and demand for convenience foods. Consumers prefer to consume biscuits with tea or coffee. The
Indian biscuit market size is estimated to be ₹ 400.00 billion in 2020 representing ~5% of the global
market. Indian market is expected to grow at a CAGR of 9% till 2025 and reach ₹ 620.00 billion. This
growth will increase India’s share in the global market to ~6% by 2025. Indian biscuit market is
dominated by lead brands like Britannia, Parle and ITC which has 65% of market share. While Parle
drives a large portion of its revenues from mass product Parle-G, the company has the largest market
share by volume on back of Parle-G brand. Britannia’s revenue is driven by Mid-Premium and
Premium products.

Outlook
The company is one of the leading players in biscuits and bakery product segments. It supplied its
products under two brands "CREMICA" and "ENGLISH OVEN". It has a strong distribution network
in India and globally in the general trade and the modern trade segment. As per the management,
with more capacity expansions underway, the company is confident of maintaining growth in top and
bottom lines going forward. However, its inability to anticipate, respond to and meet the tastes,
preferences or consistent quality requirements of its consumers or its inability to accurately predict
and successfully adapt to changes in market demand or consumer preference could reduce demand
for its products, affect its brand loyalty and impact its sales.

An Indicative timetable in respect of the Issue is set out below:

EVENT INDICATIVE DATE

(On or about)
Bid/Offer Opens Date December 15, 2020
Bid/Offer Closing Date December 17, 2020
Finalisation of Basis of Allotment with the Designated Stock December 22, 2020
Exchange
Initiation of refunds (if any, for Anchor Investors)/unblocking December 23, 2020
of funds from ASBA Account
Credit of Equity Shares to depository accounts of Allottees December 24, 2020
Commencement of trading of the Equity Shares on the Stock December 28, 2020
Exchanges

4
Annexure

Consolidated Financials

Profit & Loss Rs. in Cr.

Particulars Period ended Period ended Period ended
30-Sept-20 (6 Months) 31-Mar-20 (12 Months) 31-Mar-19 (12 Months)

Total Operating Income 430.99 762.12 783.67

Total expenditure 358.86 669.31 687.58

Operating Profit 72.14 92.82 96.08

OPM% 16.74 12.18 12.26

Other Income 7.56 2.85 2.36

PBDIT 79.70 95.67 98.45

Depreciation 22.16 41.49 35.18

PBIT 57.53 54.18 63.26

Interest 5.48 15.04 12.68

PBT before Share of net profit 52.06 39.14 50.59

of associate accounted for using
the equity method (net of tax)

Share of net profit of associate 0.09 0.04 0.07

accounted for using the equity
method (net of tax)

PBT 52.14 39.18 50.66

Tax 13.26 8.78 17.51

Profit After Tax 38.88 30.40 33.15

Balance sheet is on next page

5
Balance Sheet Rs. in Cr.

Particulars As on 30-Sept-20 As on 31-Mar-20 As on 31-Mar-19

Non-current assets
Property, plant and equipment 326.97 337.57 344.27
Capital work-in-progress 28.89 6.66 15.56
Right of Use Assets 14.51 15.14 16.75
Goodwill 0.40 0.40 0.40
Other intangible assets 0.32 0.61 1.20
Equity accounted investment 3.91 3.83 3.79
Financial assets
Loans 3.47 3.53 3.70
Other financial assets 0.12 0.03 0.04
Income tax assets (net) 3.08 4.26 4.18
Other non-current assets 22.34 17.43 4.07
Total Non- Current Assets 404.00 389.44 393.94
Current assets
Inventories 54.45 43.37 35.28
Financial assets
Investments 0.00 0.00 0.00
Trade and other receivables 72.91 75.02 100.33
Cash and Bank balances 17.24 20.70 5.53
Bank Balances other than cash and cash 30.42 9.55 6.50
equivalents
Loans 0.00 0.36 0.00
Other financial assets 20.89 17.94 15.48
Other current assets 8.11 9.33 19.98
Assets classified as held for sale 0.71 0.00 0.00
Total current assets 204.72 176.28 183.10
Total Assets 608.73 565.72 577.04
Liabilities
Non-current liabilities
Financial liabilities
Borrowings 101.20 85.65 107.21
Lease liabilities 1.17 1.54 2.68
Provisions 7.522 6.122 4.186
Deferred tax liabilities (net) 8.798 7.876 12.212
Other non-current liabilities 11.67 13.14 14.87
Total non-current liabilities 130.36 114.33 141.16

Current liabilities
Borrowings 0 18.051 32.71
Lease liabilities 0.71 1.14 1.53
Trade payables
Total outstanding dues of micro enterprises 7.54 5.92 6.74
and small enterprises
Total outstanding dues of creditors other than 54.08 41.11 42.08
micro enterprises and small enterprises
Other financial liabilities 29.60 34.47 29.74
Other current liabilities 18.57 13.83 12.88
Provisions 3.87 15.69 14.20
Current tax liabilities (net) 6.22 1.87 1.26
Total current liabilities 120.59 132.09 141.13
Total liabilities 250.95 246.42 282.29
357.77 319.30 294.75
Net worth represented by:
Equity share capital 57.27 57.27 57.27
Other equity 300.50 262.03 237.48
Total Equity 357.77 319.30 294.75

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