Mumbai: Mrs Bectors Food Specialties Ltd, a premium bakery and biscuit company in North India, became the most successful initial public offering (IPO) of 2020, attracting offers for almost 199.41 times the number of shares on offer, they showed the stock market data.
Ms Bector’s underwriting figures outperformed Mazagon Dock Shipbuilders Ltd and Burger King India, the other IPOs that attracted large underwriting numbers this year, earning nearly 157 times each subscription.
This also places it among the top three largest underwritten IPOs in a decade. The two companies with the best attractions are Salasar Techno Engineering Ltd, which was subscribed more than 270 times in July 2017; and Astron Paper and Board Mill Ltd, which topped 240 times in December of that year, according to Prime Database. To be sure, while Ms Bectors was raising Rs541 crore from her IPO, the other two IPOs, despite main board IPOs, were considerably smaller at Rs35.95 crore and Rs69.83 crore, respectively.
As of 5 p.m., on the last day of the three-day offering, the IPO attracted offers for more than 2.62 billion shares compared to an issue size of 13.24 million shares. At the top end of the ₹288 for issuance, the IPO attracted bids worth approximately ₹75,486.02 crore
The category of qualified institutional investor was subscribed 178.08 times, receiving offers for 667.86 million shares, the non-institutional category made up of high net worth individuals was subscribed 625.20 times.
Demand from individual retail investors, whose investments cannot exceed ₹2 lakh in an initial public offering stood at 29.53 times the 193.83 million shares on the data exchange offering shown.
The company had offered shares in the price band of ₹286-288 one piece.
According to analysts, the gray market premium for the shares was almost 80% or Rs225-230 on the last day of subscription. The award for the IPO will likely be announced on December 22 and the listing is likely to take place on December 28.
Mrs Bectors Food’s IPO includes a new number of ₹40.50 crore and an offer to sell ₹500 crore by Linus Pvt Ltd., Mabel Pvt Ltd, GW Crown Pte Ltd and GW confectionary Pte Ltd, adding to ₹541 million rupees.
The promoters owned a 52.39% stake in Mrs. Bectors before the issue, and after the issue it will be reduced to 48.87%.
Proceeds from the new issuance will be used to finance the cost of the project towards expanding the Rajpura manufacturing plant in Punjab by establishing a new biscuit production line, according to the draft herring prospectus submitted by the company.
Mrs Bectors is one of the leading companies in the premium and mid premium biscuit segment in North India with a 4.5% market share.
Currently, the company is operating at a capacity utilization of 72% per year and the company has plans to expand its production capacity to produce an additional 14,400 tons of cookies by fiscal year 22.
With improved pricing realization and asset turnover, the additional capacity has the potential to grow the top line at a 15-18% CAGR over the next 2-3 years, brokerage KR Choksey said at a note from December 14th.
“In the upper band of the issue price, Ms Bector will trade at a Price / EPS multiple of 28x of her annualized revenue for the first half of fiscal year 21, which is discounted to her listed peers such as Britannia Industries Ltd ( 50.5 x), and a premium to ITC (18.9 x) and Anmol (7.7 x). We believe that the current price band is undervalued, considering the growth potential of the company. We anticipate trading gains and grant a rating of ‘SUBSCRIBE’ to Mrs. Bectors’ initial public offering, “the note added.
In the semester ended September 30, Ms. Bectors Food reported income of ₹430.99 million rupees, 18.2% more than the previous year. Net income increased 282% to ₹38.88 crore from ₹10.17 million rupees a year earlier. The profit margin during the period grew to 9% from 2.8% a year ago. Net debt also fell from ₹121.77 crore in FY18 a ₹Rs 74.80 crore in the first half of FY 21, lowering its debt equity ratio to 0.21 times.
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