Mrs Bectors IPO subscribed 199.4 times on final day

Mumbai: Mrs Bectors Food Specialities Ltd, a premium biscuit and bakery firm in north India, became the most successful initial public offering (IPO) of 2020 attracting bids for nearly 199.41 times the number of shares on offer, stock exchange data showed.

Mrs Bectors subscription figures beat Mazagon Dock Shipbuilders Ltd and Burger King India, the other IPOs that drew big subscription numbers this year, getting nearly 157 times each subscription.

This also puts it among the three biggest subscribed IPOs in a decade. The two companies that got better attractions are Salasar Techno Engineering Ltd, which subscribed over 270 times in July 2017; and Astron Paper and Board Mill Ltd, which got over 240 times in December that year, according to Prime Database. To be sure, while Mrs Bectors was raising Rs541 crore from its IPO, the other two IPOs, even though main board IPOs, were considerably smaller at Rs35.95 crore and Rs69.83 crore, respectively.

Till 5pm, on the last day of the three-day offering, the IPO attracted bids for more than 2.62 billion shares compared with an issue size of 13.24 million shares. At the upper end of the ₹288 price band for the issue, the IPO drew bids worth roughly ₹75,486.02 crore

The qualified institutional investor category was subscribed 178.08 times, receiving bids for 667.86 million shares, the non institutional category comprising high net worth individuals was subscribed 625.20 times.

Demand from retail individual investors, whose investments can not exceed ₹2 lakh in an IPO stood at 29.53 times the 193.83 million shares on offer exchange data showed.

The company had offered shares in the price band of ₹286-288 a piece.

According to analysts, grey market premium for the shares was nearly 80% or Rs225-230 on the final day of subscription. The allotment for the IPO will be likely announced on 22 December and listing is likely to happen on 28 December.

Mrs Bectors Food IPO comprises a fresh issue of ₹40.50 crore and an offer for sale of ₹500 crore by Linus Pvt Ltd., Mabel Pvt Ltd, GW Crown Pte Ltd and GW confectionary Pte Ltd , aggregating to ₹541 crore.

Promoters owned a 52.39% stake in Mrs. Bectors before the issue, and post issue it will come down to 48.87%.

The proceeds from the fresh issue will be used for financing the project cost towards expansion of the Rajpura Manufacturing Facility in Punjab by establishing a new production line for biscuits, according to draft red herring prospectus filed by the company.

Mrs Bectors is one of the leading companies in the premium and mid premium biscuits segment in North India with a market share of 4.5%.

Currently, the company is operating at a capacity utilization of 72% per annum and the company has plans to expand its production capacity to produce additional 14,400 tons of biscuits by FY22.

With improving price realization and asset turnover, the additional capacity has the potential to grow the top line at a CAGR of 15-18% in next 2-3 years, said brokerage KR Choksey in a 14 December note.

"At the upper band of issue price, Mrs. Bector will trade at a Price/EPS multiple of 28x of its annualized first half FY21 revenue, which is at a discount to its listed peer like Britannia Industries Ltd (50.5 x), and at a premium to ITC (18.9 x) and Anmol (7.7 x). We believe that the current price band is undervalued, looking at the growth potential in the company. We anticipate listing gains and give a ‘SUBSCRIBE’ rating to Mrs. Bectors IPO,” the note added.

In the six months ended 30 September, Mrs Bectors Food posted a revenue of ₹430.99 crore, up 18.2% from the year earlier. Net profit surged 282% to ₹38.88 crore from ₹10.17 crore a year earlier. Profit margin during the period grew to 9% from 2.8% a year ago. Net debt also reduced from ₹121.77 crore in FY18 to ₹74.80 crore in first half of FY21, bringing down its debt equity ratio to 0.21 times.