Mrs Bectors share sale fully subscribed on first day2 min read . Updated: 16 Dec 2020, 07:29 AM IST
- Mrs Bectors Food’s share sale received bids for 49.25 million shares against the issue size of 13.24 million shares
Mrs Bectors Food Specialities Ltd saw a strong opening to its initial public offering (IPO) on Tuesday as continued buoyant mood among retail investors led the share sale to be subscribed 3.7 times. This follows closely on the heels of the robust response to Burger King India’s public offer.
Mrs Bectors Food’s share sale received bids for 49.25 million shares against the issue size of 13.24 million shares. The company is offering shares in the price band of ₹286-288 apiece. The IPO will close Thursday. The retail investor portion was subscribed nearly 6.83 times, exchange data showed. The portion of the share sale reserved for institutional investors was subscribed just 2%, while that for high net worth individuals was subscribed 1.37 times. 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%.
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Retail investors have participated heavily in IPOs this year, amid strong recovery in the equities markets after the covid lows of March. IPOs of Burger King India, Happiest Mind Technologies, Rossari Biotech Ltd, Route Mobile, Computer Age Management Services, Chemcon Speciality Chemicals and Mazagon Dock Shipbuilders saw their retail segments subscribed 46 to 157 times.
The share sale of Mrs Bectors Food 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, totalling ₹541 crore.
Promoters held a 52.39% stake in the company prior to the issue, which will fall to 48.87% after the issue.
The proceeds of the share sale will be used to finance the expansion of the company’s factory in Rajpura, Punjab by setting up a new production line for biscuits, according to the draft red herring prospectus filed by the company. 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.
Analysts expect that at the upper end of the price band, the shares are offered at 28.1x trailing 12 month (TTM) earnings. Further, listed peers such as DFM Foods and ADF Foods are trading at 50.5x and 24.9x, respectively of TTM earnings.
“We believe that there is a good possibility of this listing gains given lower valuations as compared to other peers. Considering attractive valuation and strong growth prospects in packaged biscuits, we recommend a “Subscribe" rating to this IPO for the long term", said Anand Rathi Research in 14 December note. ICICI Securities Ltd, SBI Capital Markets Ltd and IIFL Securities Ltd are managing the share sale.