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Capacity Expansion Enhances Growth Visibility

Mrs. Bectors Food Specialities Ltd. (MBFSL) manufactures and markets biscuits under the Cremica brand and premium bakery products under English Oven. It is a leading supplier to QSR chains, cloud kitchens, and multiplexes in India, with a strong export and private-label manufacturing presence across the U.S, Africa, and South America.

* Revenue grew 16% YoY, marking the strongest growth in seven quarters, with broadbased contributions from the biscuits, bakery, and exports segments rather than being driven by a single business line.

* Biscuits (59% of sales) grew 15.7% YoY to Rs. 325cr, while Bakery revenue grew 17.5% YoY to Rs.215cr, aided by a return to double-digit growth in the QSR(B2B) business.

* Gross margin expanded by 160bps YoY to 47.2%, aided by 2-2.5% consumer price hikes and Project IMPACT savings. EBITDA grew 23.8% YoY, with margin improving 80 bps YoY to 13.1% despite higher freight, fuel, and brand spending leading to a 24% YoY rise in other expenses. PAT increased 25.5% YoY aided by higher other income.

* Exports delivered high double-digit, volume-led growth without restocking benefits, while the US business returned to growth despite June shipment disruptions, aided by the launch of a peanut butter cracker SKU at Walmart .

* Quick commerce grew 58% YoY, while Naturbaked, the company’s clean-label bakery brand, crossed a Rs.1 cr monthly revenue run rate. Meanwhile, the Kolkata and Khopoli facilities are strengthening the company’s presence in East India and supporting operational expansion.

Outlook & Valuation

MBFSL has undertaken a significant capacity expansion to strengthen its presence in South and West India, where Cremica and English Oven remain underpenetrated. The company is well positioned to benefit from bakery-led growth, a recovery in the QSR business and sustained export momentum driven by customer additions, SKU expansion and deeper retailer engagement. Existing and ongoing capacities provide a visible growth runway, with management indicating revenue potential of ~Rs.3,400-3,500cr from the current network. While input cost inflation may weigh on near-term margins, pricing actions, Project IMPACT savings and operating leverage should support gradual margin expansion. The ramp-up of Kolkata and Khopoli facilities, along with the planned Bengaluru unit, is expected to accelerate penetration in under-served markets and support margin-accretive growth. We value the stock at 44x on FY28 EPS (3-yr avg. 44x) to arrive at a target price of Rs.290 and reiterate BUY.

Key Highlights...

* Domestic biscuits delivered high single-digit growth, while exports recorded healthy double-digit expansion despite logistics challenges.

* Bakery growth remained strong, supported by English Oven and premium products, and institutional bakery demand rebounded on improved QSR offtake, with momentum expected to continue.

* Exports remain well diversified, with the US, Africa, and South America each contributing ~20-25% of export revenues. Growth is primarily driven by SKU expansion among existing customers, while FTAs support volume growth despite ongoing freight cost inflation and shipping constraints.

* Input cost inflation of ~1.5% in Q1 was largely offset; however, with commodity, packaging, and fuel cost increases materializing toward the quarter-end, margin pressure is expected in Q2 before full cost recovery is achieved in Q3. Management does not anticipate a significant sequential margin improvement in Q2.

* Price hikes of 2–3% were implemented across the portfolio, with only partial Q1 benefits due to the mid-quarter timing. Institutional bakery and exports remain largely pass-through businesses.

* Biscuit capacity utilization remains comfortable at 60% average and 69% peak levels, while bakery capacity is operating at a higher 75% average and 82% peak utilization, necessitating capacity expansions at Khopoli, Kolkata, and the planned Bengaluru facility to support future growth.

* Management guides for low-teens growth in biscuits and bakery, and near mid-teens growth in exports.

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