Mrs Bectors subscribed 198 times, highest ever for a Rs 200-cr plus IPO

Generated bids worth over Rs 40,000 cr. Previously, only three tiny issues have garnered more than 200x subscription

The initial public offering (IPO) of Mrs Bectors Food Specialities garnered 198 times subscription and generated bids worth more than Rs 40,000 crore. For IPOs of more than Rs 200 crore in size, this is the highest-ever subscription. Previously, only three tiny issues have garnered more than 200 times subscription.

The huge oversubscription for the IPO of Mrs Bectors—a biscuit and bread manufacturer—comes close on heels of the successful debut of Burger King India, whose stock tripled on listing.

Eyeing similar listing gains, wealthy investors have mounted bets worth Rs 33,800 crore on the Mrs Bector IPO. The so-called high networth individual (HNI) portion saw 620 times more demand than shares on offer. The qualified institutional buyer (QIB) portion was subscribed 177 times and retail category saw nearly 30 times subscription.

Investors are betting that Mrs Bector will be able to capitalize on the growth in the packaged food industry given its brand positioning in Northern India and wide distribution network.

Analysts said the domestic biscuit and bakery market is expected to grow by 9 per cent in the next few years due to urbanisation and increase in disposable income. The institutional Indian bakery industry is expected to grow by 20 per cent due to increasing market share of QSR chains.

 

Also, the attractive valuation relative to its peers helped draw investors towards the IPO.

In a note, Angel Broking said peers such as Britannia, Nestle India and Prataap Snacks are trading at trailing price-to-earnings multiples of 50.2, 85.6, and 57.1 times. On the other hand, Mrs Bector is priced at trailing P/E of 27.9 times.

“Given the significant discount compared to listed peers, there is comfort on the valuation," the brokerage said.

Mrs Bectors had priced their IPO between Rs 286-Rs 288 per share. The issue comprised of Rs 40 crore of fresh capital raise and Rs 500 crore of a secondary share sale by four existing shareholders.

At the top end, the company will have a market capitalization of nearly Rs 1,700 crore on a post-diluted basis.  Mrs Bector will use the issue proceeds for setting up of a new production line for biscuits.

The company manufactures and markets cookies, creams, crackers, digestives and glucose under its brand 'Mrs. Bector's Cremica'. They also manufacture and market bakery products in savoury and sweet categories under its brand 'English Oven'. Bector Food is the largest supplier of buns in India to QSR chains such as Burger King India. As of June 30, 2020, its bakery segment has a total of 96 products, and the biscuits segment has a total of 384 items.