How good is Bectors Foods IPO?

bector ipo 2 How good is Bectors Foods IPO?

Those of you who just witnessed the phenomenal subscription received by the Burger King IPO would be interested to know that the biggest supplier of buns to Burger King is an Indian company called Mrs Bectors Foods. Interestingly, just a few days following the Burger King IPO, the Bectors Foods IPO is also hitting the market.  Mrs Bectors was incorporated in 1995 and is a major player in India in the bakery products segment. Of course, this segment is still largely in the unorganized sector but the introduction of GST is gradually leading to the consolidation and the corporatization of most businesses and the bakery business may soon see a similar trend. Bectors Foods will be a big beneficiary of that trend.

A quick look at the IPO details of Mrs Bectors Foods

The table below captures the gist of the IPO details with all that investors and IPO applicants in Bectors Foods need to know to make a choice on whether to apply for the IPO or not.

IPO DetailsTime LinesListing DetailsTime Lines
IPO Opens on15 December 2020Basis of Allotment22 December 2020
IPO Closes on17 December 2020Initiation of Refunds23 December 2020
Issue TypeBook Building IssueCredit to Demat A/C24 December 2020
Total Issue SizeRs.540.54 croreIPO Listing Date28 December 2020
Of which Fresh IssueRs.40.54 crorePre Issue Promoter52.45%
And Offer for SaleRs.500.00 crorePost Issue Promoter51.00%
IPO Price BandRs.286 – Rs.288  
Market Lot (1)50 shares  
Max Shares Retail13 lots (650 shares)  

Data Source: SEBI Filings

In a nutshell the entire IPO process including the listing would be completed before the end of the current year. Before looking at the strengths of the company, let us quickly look at the background of the company and the business model of Mrs Bectors Foods.

What exactly does Mrs Bectors Foods do?

Mrs. Bectors Food Specialities Ltd has a pedigreed of over 25 years, having been established in the year 1995. Today, Bectors Foods is one of the leading companies in the premium bakery segment and premium and mid-premium biscuit segment with a focus that is predominantly in the region of North India.

Bectors Foods has a wide array of products under its brands and sold under two distinct product categories sold under two different brands; both equally popular.

  • The first big product category is Biscuits. Bectors Foods currently sells a wide range of biscuits including cookies, creams, crackers and even digestives. Bectors manufactures and sells biscuits under the brand name of Mrs Bectors Cremica, and it is quite popular in the mid-premium and the premium segments predominantly in North India. In the biscuits segment, Bectors Foods sells a total of 384 different items.
  • The second major product of the company is Bakery products, which predominantly consists of bread, buns, pizza bases and cakes. Most bakery products are manufactured under the brand name of English Oven and it largely caters to the premium segment only. It sells in the premium market segments of Delhi NCR, Mumbai, and Bengaluru. Bectors Foods has a total of 96 products under the bakery category.

How does the company handle quality and distribution?

One of the most important aspects of this business is handling quality and distribution. To begin with, the company manufactures all its products in-house only. This manufacturing activity is spread across 6 manufacturing units spread across Maharashtra, Karnataka, UP, Himachal Pradesh and Punjab; designed to cater to its principal markets in the best possible way.

Bectors Foods markets its products through a strong distribution channel network consisting of 154 super-stockists and 644 distributors. In terms of coverage, this network enables them to supply products through as many as 458,000 retail outlets and an additional 3,594 preferred outlets for very premium products. In terms catering to markets, Bectors Foods currently sells in 23 states in India. In addition, the company also exports to over 64 different countries; where it is sold under its own brand name as well as through white labelled third-party private labels.

What to consider when investing in the Bectors Foods IPO?

Here are some key factors you must keep in mind when making a decision on whether to invest in the IPO or not.

  1. Bectors is a leader in biscuits and bakery segments with a focus on North India having a diversified food portfolio and a reach spread across India and abroad.
  2. The products manufactured by the company are food certified by leading agencies like the BRC, USFDA and FSSC. It is able to better regulate quality due to its focus on modernized processes and a focus on in-house manufacturing.
  3. The company is a profit making company. For the Sep-20 quarter, the company reported total revenues of Rs.439 crore and profits of Rs.39 crore, despite being a quarter that was exceptional challenging due to COVID-19.
  4. Lastly, the strong distribution is also a major strength. The company could also benefit in the future by the increased organization and professionalization of the food segment in India.

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