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A well-positioned player with growth opportunities…. Mrs. Bectors Food Specialities Limited (MBFSL), incorporated in 1995, is one of the leading player in the premium &mid-premium biscuit and premium bakery segment in North India. The company sells biscuits under the brand name "Mrs. Bector's Cremica" whereas bakery products are manufactured under the brand name of "English Oven”. All of its products are manufactured in-house across 6 strategically located manufacturing units in 5 different cities. It is also one of the largest supplier of buns in India to reputed QSR chains such as Burger King India Limited. As of June 30th, 2020, its bakery segment had a total of 96 products and the Biscuits segment had a total of 384 items.

* MBFSL is top 2 in the premium &mid-premium biscuits segment in Punjab, Himachal Pradesh, Ladakh and J&K while ‘English Oven’ is one of the largest selling brand in premium bakery segment in New Delhi, Mumbai &Bengaluru.

* It exports products to 64 countries all over the world with 12% market share in biscuit exports in CY19.

* Has a wide spread and established distribution network with presence in 26 states.

* For FY18-FY20, revenue grew at a CAGR of 5% while PAT de-grew by 8% CAGR. But, financial performance has started to improve in FY21, reporting PAT of Rs. 39cr on a revenue of Rs.431cr in H1FY21, up by 284% on a YoY basis.

* MBFSL has maintained a high average gross margins of 44% for Biscuits which is higher compared to peers owing to its in-house manufacturing and 51% for bakery segment, in the past three and half years.

* Invested Rs.258.5cr between FY18 to Sep 2020 for capacity expansion which has started to yield results and a new production line for biscuits at Rajpura manufacturing facility expected to improve revenue in the future.

* The company plans to increase penetration in select export markets, such as South, Central and North America, the MENA region and Australia.

* The company introduced new products such as sub breads, pizzas, garlic breads, cheese garlic bun fills, frozen cookies to improve sales.

* At the upper price band of Rs.288, MBFSL is available at a P/E of 22x on FY21E EPS (annualized), which looks attractive, given its higher profitability compared to similar sized peers. Considering its future growth prospects in packaged biscuits and QSR segment, we recommend a “Subscribe” rating with a long-term perspective.

Purpose of IPO

To raise funds for Rajpura Manufacturing Facility project to establish new biscuits production line (Rs.40.54cr). Proceeds from OFS will be paid to the selling shareholders and the Company will not receive any such proceeds.

Key Risks

* The company do not have any long-term contracts with its QSR customers.

* Overdependence on biscuits business.

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