Shares of Mrs. Bectors Food Specialties made a strong debut on the exchanges on Thursday with the biscuit and bread maker’s shares trading at Rs 501, a 74 percent premium against its issue price of Rs 288 per share on the market. BSE on Thursday. A minute after the debut, the shares rose to their upper limit of 20 percent at Rs 601.20, more than doubling the issue price on the BSE.
At closing, Ms Bectors Food Specialties was trading at Rs 595.5 apiece, a 106 percent gain from the issue price. It touched an intraday high of Rs 600 after debut.
Mrs Bectors Food Specialties Initial Public Offering (IPO) received a great response with a public issue winning 198 times underwriting and generating offers worth more than Rs 40,000 crore. The so-called high individual net worth (HNI) portion was 620 times more in demand than the shares on offer. The Qualified Institutional Buyer (QIB) portion subscribed 177 times and the Retail category saw almost 30 times the subscription.
The company manufactures and markets cookies, creams, crackers, digestives and glucose under its’ Mrs. Bector’s Cream ‘. They also manufacture and market bakery products in the savory and sweet categories under their ‘English Oven’ brand. Bector Food is the largest supplier of buns in India to Quick Service Restaurant (QSR) chains like Burger King India.
The company has reported strong margin expansion in the first half of the current fiscal year (H1FY21) that analysts say appears unsustainable. That said, the recovery in institutional business will provide reasonable earnings growth in fiscal 22.
The brokerage firm Prabhudas Lilladher believes that the Bread and Institutional Buns business is a ray of light for Ms. Bectors given the strong participation and credibility it brings to the system and processes of being a supplier to McDonald’s, KFC, Burger King and Rebel Foods. “We believe that MBF is well positioned to grow in the bread and rolls business, but needs to scale in the biscuit business, given a smaller size than Britannia, Parle and Sunfeast,” the brokerage firm said in an IPO note.
Over the next several years, Angel Broking analysts expect the domestic cookie and bakery market to grow 9 percent due to urbanization, rising disposable income, and favorable government policy. On the other hand, the Indian institutional bakery industry is expected to grow 20 percent due to the growing market share of the QSR chain.
“We believe that the company should be able to grow in line with the industry managed by developers with more than 25 years of knowledge of the sector. The company’s results were better than the industry in the first half of fiscal year 2021,” said the house bag on a note.
Should I reserve earnings?
After an excellent stock market debut for Ms Bectors, analysts advise taking some earnings off the table in the short term as the stock has doubled from its issue price and they believe there are better opportunities available in the market. consumer goods space.
“A short-term investor can take a profit off the table as their money has almost doubled. As far as long-term investors are concerned, even they can reserve half of their profits because there are better options available in the trading space. consumer goods than Ms. Bectors in these valuations, “said Keshav Lahoti, associate equity analyst at Angel Broking.
Gaurang Shah, Chief Investment Strategist at Geojit Financial Services also believes that investors with a short-term vision, who have a low-risk appetite and those who invested from a trading earnings point of view can make a profit in Mrs Bectors .
However, Shah believes that from a long-term point of view, the QSR segment could be an outperforming sector in improving earnings, and therefore investors with a long-term investment horizon should continue to invest in the company.
The brokerage in its IPO note had said it sees healthy future growth prospects in the packaged biscuit and QSR segment.
Meanwhile, AK Prabhakar, head of research at IDBI Capital, said listing gains are the best thing about an IPO. It suggests that investors can wait a few days for stocks to give direction before booking profits. “From a financial point of view, Ms. Bectors is better placed than Burger King,” Prabhakar said.
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