FMCG company Mrs. Becter’s IPO is set to open for subscription on December 15. The company plans to invest Rs 541 crore in the primary market. Many experts have advised to take up this issue. Experts rely on the company’s good business figures, declining debt and positive cash flow. The company is a big name in the biscuit, bun and bread market. Good valuation is likely to give investors a good return on investment in the issue. The company has kept a price band of Rs 286-288 for the issue. One lot is 50 shares. The company is to issue shares worth Rs 500 in the issue under the offer for sale, while it will also issue fresh shares worth Rs 40.5 crore.
At Rs 288, its valuation is 28 times and EPS is Rs 10.32, which is looking very attractive. The brokerage has shown confidence in its strong network, basic strength and superb impact. Experts say the company had a positive cash flow of Rs 31.5 crore in the first six months of the financial year 2020-21, up from a negative Rs 71.5 crore during the financial year 2017-18. The working hours of the company have also been reduced from 33 days to 25 days and the debt has also come down.
Nirali Shah of Semco Securities said Mrs Bector’s biscuit brand Krimika is one of the well-known brands in North India with a market share of about 4.5 per cent. The grip of its brand English oven is very strong in terms of bread and bun.
The company supplies bread to PVR, Burger King and McDonalds, generating 22 per cent of the revenue. Shah said the company has achieved revenue growth of 12 per cent during FY16-17 to FY 2018-19, while Britania has grown at 10 per cent. The company has performed very well during the epidemic but there are many challenges ahead, due to which it has been defeated. He advised investors to invest only for listing gain. Keshal Lahoti of Angel Broking believes that the biscuit and bakery market in India will grow at 9 per cent in the near future with urbanization, revenue growth and government policies. The institutional bakery industry will grow at a rate of 20 per cent due to growth in the QSR segment. Mrs Bector’s is available at a much lower price compared to companies like Britania, Nestle ‘India, Pratap Snacks, DMF Foods. Despite being a well-known brand in North India, it has only 4.5 per cent market share. Margin area is expected in the current financial year. The company can improve its market share by increasing its distribution.