Mrs. Bectors Food Specialities rallies 10%; stock surges 30% over QIP price

Shares of Mrs. Bectors Food Specialities hit a record high of Rs 2,009, as they rallied 10 per cent on the BSE in Thursday’s intra-day trade.

The stock of the fast moving consumer goods company that majorly manufactures biscuits has surged 30 per cent over its qualified institutional placement (QIP) price of Rs 1,550 per share. Meanwhile, in the past five weeks, the stock has zoomed 50 per cent.

Mrs. Bectors Food on Tuesday, September 10, informed that the company has allotted 2.58 million equity shares to eligible qualified institutional buyers (QIBs) at a price of Rs 1,550 per share.

The company has raised Rs 400 crore via a QIP issue. The company allotted shares to the Government of Singapore, SBI Multipcap Fund, Axis Mutual Fund, The Prudential Assurance Company and Arisaig Asia Fund, among others.

 

The company proposed to utilise the net proceeds from the fundraise for "repayment and/or pre-payment, in full or in part, of certain outstanding borrowings availed by the company; investment in the company’s subsidiary, Bakebest Foods Private Limited for financing the project cost towards expansion of the facility at Khopoli, Maharashtra (Khopoli Expansion Project); financing the project cost towards setting up a new facility at Dhar, Madhya Pradesh (Madhya Pradesh Project); and general corporate purposes."

Mrs. Bectors Food Specialities is one of the leading manufacturers of premium and mid-premium biscuits in North India, under the brand ‘Cremica’. The company also manufactures and markets bakery products in savoury and sweet categories, which include breads, buns, kulchas, rusk, pizza bases and cakes under the brand ‘English Oven.

The company is a supplier of buns in India to reputed quick service restaurant (QSR) chains such as Hardcastle Restaurants and Yum! Restaurants (India), among others.

According to analysts, the company’s healthy revenue growth momentum is expected to continue over the medium term aided by ramp-up of new capacities. Furthermore, the operating margin improved to 15.1 per cent in fiscal 2024 from 13.4 per cent in fiscal 2023, driven by product premiumisation, softening of key raw material prices and increasing share of export revenue.

The operating margin is expected to sustain at 14-15 per cent over the medium-term, supported by various cost rationalisation initiatives and gradual absorption of fixed costs with improved utilisation of incremental capacity, said CRISIL Ratings.

According to the rating agency, the business risk profile of the company is expected to improve in the near- to medium-term, with sustenance of healthy margins, strong brand presence in biscuit and bakery segments, improving geographical diversity and established relationship with large institutional clients.

Meanwhile, at Rs 57,000 crore, the Indian retail biscuit and bakery market is projected to grow at a compound annual growth rate (CAGR) of approximately 10.5 per cent over the next three years, reaching an approximate size of Rs 77,000 crore by FY2026.

Fuelled by structural demand factors, the market has expanded during the past three years at a CAGR of 8.2 per cent.

Around 90 per cent of the market is made up of biscuits and other bakery snacks, including rusks, wafers and tea cakes, which together account for over Rs 51,300 crore.

Bread products, such as buns, pizza bases and loaves, account for Rs 5,700 crore of the remaining 10 per cent of the market, the company said in its FY24 annual report.

With nearly 95 per cent of the Indian biscuit market comprising of branded players, coupled with rising consumer preference for such products and increasing disposable incomes, branded cookies will become more and more common.

Small bakery businesses, cottage industries and household-style manufacturing facilities dominate the non-branded biscuit market, the company said.