Tag: Initial Public Offer

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Editorial

Barbeque Nation IPO: All You Need to Know

Barbeque Nation is one of the most well-known restaurants in India. If you have visited their outlet you would be aware of the free birthday cake they serve you! It is a restaurant with great cuisines with a lot of variety. But why suddenly are we talking about delicious food? Well, Barbeque Nation has decided to take the public route and their IPO will hit the market on 24th March 2021. Let’s see in-depth how great the company is and if you should invest in this IPO or not. Ultimately, visiting a restaurant to have food and investing your money is a completely different ballgame.

Company Profile – Barbeque Nation

Barbeque Nation Restaurants was incorporated in 2006 and the first Barbeque Nation Restaurant was established in 2008. Since then, it has developed into one of the leading casual dining restaurant chains in India. Barbeque Nation has a unique concept where they allow guests to grill their own barbecue’s right at their tables. They offer various types of cuisines which attract customers of all ages. They are known for their delightful food, lovely ambience and satisfying service.

The number of Barbeque Nation Restaurants has grown steadily over the years. In 2013, they had 32 restaurants which increased to 79 by 2017. Currently, they are present in 77 cities in India and in 3 other countries. They own and operate 138 outlets in India, 5 outlets in UAE, 1 outlet in Malaysia and 1 outlet in Oman. Barbeque Nation has diversified into another brand which is called “Red Apple.” This brand operates 10 Italian restaurants in 2 cities of India (Bengaluru and Chennai).

Barbeque Nation has 70% of its outlet in metro cities. The rest 30% of the outlets are present in Tier-1 or Tier-2 cities. According to CEO Rahul Agrawal, the company would prefer to expand further keeping this ratio more or less constant. Jubilant FoodWorks is one of the financial investors in Barbeque Nation. They reportedly acquired around 10% of the total stake in Barbeque Nation very recently. Not only Jubilant FoodWorks, but Rakesh Jhunjhunwala is also one of Barbeque Nation’s financial investors. His investment firm Alchemy Capital holds close to a 2% stake or 575,000 shares in Barbeque Nation Hospitality.

About the IPO

Barbeque Nation Hospitality’s IPO will open on 24th March 2021 and will close on 26th March 2021. The total issue size of the IPO is Rs 452.87 crore. The total issue comprises of two parts: A Fresh Issue and an Offer for Sale. The fresh issue and the Offer for sale aggregate up to Rs 180 crore and Rs 272.87 crore respectively. The price band of the IPO is Rs 498 – Rs 500 per equity share. The allotment date and listing date for the IPO are 1st April 2021 and 7th April 2021 respectively. 

An investor has to apply for a minimum of one lot which is equal to 30 shares. The maximum number of lots an investor can apply for is 13 or 390 shares. If the issue is oversubscribed, the maximum number of lots you will get is one. The minimum investment required by an investor is Rs 15,000. The maximum investment one can make is Rs 1,95,000. 

Sayaji Hotels Limited, Sayaji Housekeeping Services Limited, Kayum Dhanani, Raoof Dhanani, and Suchitra Dhanani are the promoters of Barbeque Nation Hospitality Limited. Currently, the promoters of the company have 60.21% of the total holdings. The company plans to use the net proceeds from the IPO in two ways. Their first objective is to make prepayment or repayment of all or a part of the company’s outstanding borrowings. The remaining sum of the money will be used to meet general corporate purposes.

Financial Overview

*30 Nov 2020 31 March 2020 (FY20)
31 March 2019 (FY19)31 March 2018 (FY18)
Total Assets908.58955.45819.08723.16
Total Revenue236.60850.79742.54590.44
Profit/Loss After Tax-100.64-32.92-38.38-5.8
(Values in Rs crore)

Barbeque Nations is a popular name as mentioned earlier but is still making a lot of losses. Their revenue has zoomed up from FY18 to FY20 but so have been their losses. This clearly shows that the revenue the company is generating is not enough to cut off the cost they are incurring. This fiscal year, their revenue collection has also decreased massively.

Till 30th November 2020, Barbeque Nations generated revenue worth Rs 236.60 crore which is one-fourth of what they collected in FY20. The major reason behind this is the lockdown due to Covid-19 which forced the restaurants to shut down completely. This has forced their losses to increase to Rs 100 crore by November 2020. Not a great sight at all!

As the company is a loss-making company, its net profit margin of -42% does not surprise me at all. Also, their debt-to-equity ratio is also 14%, which is considered to be very high. To sum up, Barbeque Nation looks very weak financially and their short-term future, amidst Covid-19, also does not look promising.

Risk Factors

  • Covid-19 has had a damning effect on Barbeque Nation. The lockdown induced by the national government forced their restaurants to shut down completely. Even after the lockdown, the restaurants were told to operate at 50% capacity. This has decreased revenue collection massively.
  • Barbeque Nation depends on third party delivery aggregators for a huge portion of their food delivery services. Any deterioration of their relationship with these third party companies can affect them immensely.
  • Being in the food business, the company has to continuously focus on people’s changing taste and preferences. Any failure to judge what their customers want can negatively impact their financials.
  • Barbeque is not exactly a premium restaurant but its prices are still on a higher side. Thus, at this price, they won’t be able to attract customers from small cities.
  • Due to the pandemic, the company’s expansion plans have taken a huge hit. The opening up of new restaurants was paused but they are hopeful of gathering the pace up again.

IPO Details in a Nutshell

IPO DateMarch 24, 2021 – March 26, 2021
Issue TypeBook Built Issue IPO
Face ValueRs 5 per equity share
IPO PriceRs 498 to Rs 505 per equity share
Lot Size30 Shares
Issue SizeAggregating up to Rs 452.87 crore
Fresh Issue (goes to the company)Aggregating up to Rs 180 crore
Offer for Sale (goes to promoters)Aggregating up to Rs 272.87 crore
Allotment DateApril 1, 2021
Listing AtBSE, NSE
Listing DateApril 7, 2021

Conclusion

Till now, Barbeque has been a service-oriented business. They just started to explore the delivery business and still need to do a lot more to reap benefits. Rahul Agrawal has stated that even though they are predominantly in a casual dining business, they are focussing a lot more on the delivery space. The company is backed by some strong investors which give great positive signals to the investors before the IPO. But, we can’t forget the financial performance of the company and risk factors associated with their business in the current situation.

The huge losses incurred by the company is worrying. The surge in Covid-19 cases in a few states also adds to my worry. This demotivates me from thinking of this IPO as a perfect investment. But the current IPO frenzy is helping many investors to record profits. Being a popular brand name is always great for a company. Can this factor aid this IPO to be oversubscribed? We will find it out very soon!

IIFL Securities Ltd., Axis Capital Ltd., Ambit Capital Pvt. and SBI Capital Markets Ltd. are the book-running lead managers to the issue. I will wait till the end of 24th March and see how much the IPO is subscribed to. Do your own analysis about the company and let us know in the comments section if you find any other interesting information. You can find Barbeque Nation red herring prospectus here.

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Editorial

Anupam Rasayan India IPO: All you need to know

It seems that the companies are in a race to launch their IPOs this year. Without wasting any time, let’s jump into the analysis of another IPO which is going to hit on 12th March 2021. That too, another speciality chemicals company.

About the company

Anupam Rasayan India Limited was incorporated in 1984. It deals in the custom synthesis and manufacturing of speciality chemicals in India. They have two business verticals. Firstly, speciality chemicals related to life science. 

These products belong to the agrochemicals, personal care and pharmaceuticals domain. 95% of its revenues come from these three sectors. Mr Anand S Desai, Dr Kiran C Patel, Ms Mona A Desai, Kiran Pallavi Investments LLC and Rehash Industrial and Resins Chemicals Private Limited are the promoters of the company. 

Currently, Anupam Rasayan holds six manufacturing units. Four of the units are based at sites Sachin, Surat and two of the units are in Jhagadia, Gujarat. The total capacity of the six manufacturing sites is 23,438 MT. They have a diversified customer base across countries like the United States, Europe, Japan, and India. Their long-term vision is to develop into a globally reputed chemical manufacturing company. 

Most of the business operations of the company are export-oriented. Thus, the proximity of their manufacturing sites to Adani Hazira Port gives them an edge by reducing logistics costs. Almost 70% of the revenue for the company comes from international markets.

About the IPO

The IPO of Anupam Rasayan India Limited will open on 12th March 2021 and will close on 16th March 2021. The total issue size of the IPO is Rs 760 crore. The price band of the IPO is Rs 553 – Rs 555 per equity share. You have to apply for a minimum of 27 Shares which is one lot. 

The upper limit to the number of lots you can apply for is 13, which means, 351 shares. The minimum an investor has to pay for this IPO of Anupam Rasayan is Rs 14,985. Similarly, the maximum one can invest in is Rs 1,94,805. Currently, the promoters of the company have 75.80% of the total holdings. The allotment date and listing date for the IPO are 19th Match 2021 and 24th March 2021 respectively. 

Anupam Rasayan India Limited plans to use the net proceeds from the IPO in two ways. Their main aim behind going public is to repay their debt which comes with a huge interest cost. A large part of the proceeds will be used to pay off Rs 556.20 crore of debt. As of December 20, Anupam Rasayan India had a total debt of Rs 814.48 crore. The remaining sum will be used to meet general corporate purposes.

Financial Overview

*30 December 202031 March 202031 March 201931 March 2018
Total Assets1,919.211,664.061,322.501,001.20
Total Revenue563.16539.38520.96349.18
Profit after Tax48.0952.9750.2040.34
(Values in Rs Crore)

After looking at the table, one can easily see that the company has robust financial books in the previous three years. Total assets, revenues and profits, all three of them have continuously increased over the past three years. And, this pattern looks set to continue for this fiscal year as well. In fact, they have taken only three quarters of this year to beat the total assets and revenue numbers of FY20. The profits numbers are also very close and look almost certain to record better than what was last year.

In FY18, the company had a negative cash flow of Rs 20 crore but next year it jumped to the positive Rs 38 crore. In FY20, it skyrocketed to Rs 94 crore. From FY18 to FY20, the EBITDA margin of the company has shown a significant increase from 21% to 25%. One thing to notice is their falling return to equity (ROE). In FY18, FY19 and FY20, Anupam Rasayan recorded an ROE of 11.78%, 10.21% and 9.62% respectively. A falling ROE is a worrying sign for every investor.

Risk Factors

  • Anupam Rasayan has a diverse range of multinational companies. Any inability to maintain the relationships with these MNCs could have an adverse effect on their business. By the end of September 2020, they manufactured products for over 45 companies out of which 15 were MNCs. 
  • Any disruption caused to their manufacturing plants will severely affect their operations and delay the making and delivery of their products.
  • Some of the raw materials used by the company are corrosive and flammable. They require special storage and handling. Any error in this part can increase their cost which will eventually hurt the bottom line of the financial books.
  • Revenues generated from sales to their top 10 customers accounted for 86.65% which is very high. A loss of one or more such customers can lead to huge losses for the company. 
  • Anupam Rasayan doesn’t have long-term agreements with its suppliers. Thus, an increase in raw material due to any reason can severely hamper companies operations.

IPO Details in a Nutshell

IPO DateMarch 12, 2021 – March 16, 2021
Issue TypeBook Built Issue IPO
Face ValueRs 10 per equity share
IPO PriceRs 553 to Rs 555 per equity share
Lot Size27 Shares
Issue SizeRs 760 crore
Listing AtBSE, NSE
IPO Listing DateMarch 24, 2021

Conclusion

In the current market, almost every IPO is proving to be a jackpot for investors. Almost every IPO is providing a few lucky ones with bumper listing gains. Anupam Rasayan might follow the same trend. Though, should you hold it for the long term? I would say it will be better to analyse how the company performs in the next few quarters. 

Their performance will tell us more if we should be a long-term investor or not. As this IPO gives you four days to apply, you should be patient to see how much attraction it is getting in those days. Once you see it being oversubscribed, quickly apply for one lot and hope to get a bumper listing.

Do your own analysis about the company and let us know in the comments section if you find any other interesting information. Anupam Rasayan filed its draft papers last December. You can find it here. Will you be applying for this IPO? Tell us in the comments section below!

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Editorial

Top 5 IPOs of 2020 Revisited

The year 2020 is concluded and it’s the right to look back how it panned out for the IPOs. The Indian stock market touched the rock bottom due to the lockdown announcement in various countries in March. Since then, it has been on a serious uptrend. If there has to be a year where IPO should not perform well, it has to be this year. But, surprisingly, IPOs have generated huge demand this year. In fact, 2020 has been an amazing year for most of the companies who opted to take public routes this year. Out of the 16 companies which launched their IPO in 2020, only four of them gave listing day losses to the investors.

Let’s have a look at the top 5 IPOs of 2020 with the most listing gain percentage.

#5 Rossari Biotech – 74.67%

Mumbai-based Rossari Biotech is a textiles speciality chemicals manufacturer. They provide customized solutions to specific industrial and production requirements. The IPO hit the market from 13th July 2020 to 15th July 2020. The issue price band decided for the IPO was Rs 423-Rs 425 equity per share. Rossari Biotech’s decision to take the public route became an instant hit. It was subscribed 79.37x times on July 15, 2020.

It was subscribed 239.83x times in the NII category. Followed by 85.26x times in the QIB category and 7.23x times in the retail category. We believe that one of the strongest reasons for this success is the wide portfolio under which the company operates. They operate in 18 countries and in several sectors like apparel, animal & poultry feed, and FMCG industries, home & personal care and performance chemicals. Their shares get listed at a price of Rs 670 per share. This was 57% higher than the issue price. On its listing day, their price closed at Rs 742.35 which was 74.67% higher than the issue price. Thus, taking the 5th position on this list.

#4 Route Mobile – 86.02%

Route Mobile Limited is a 16-year old company and is one of the leading Cloud Communication Platform providers. They offer their services to many enterprises, over-the-top (OTT) players and mobile network operators (MNO). Mainly they offer smart solutions in Messaging, Voice, Email, and SMS Filtering, Analytics & Monetization.

Route Mobile raised Rs 600 crore from its IPO which was subscribed by 73.30x times on September 11, 2020. The price band was set at Rs 345 to Rs 350 per share. The issue was subscribed 192.81x in the NII category, 89.76x in the QIB category and 12.67x in the retail category. Their shares get listed at a price of Rs 708 per share which is more than double of its issue price. The stock closed its listing day at Rs 651.10. Thus, giving a massive listing gain of 86.02% to the investors.

#3 Mrs Bectors Food – 106.79%

One of the most recent IPOs to hit the market was that of Mrs Bectors Food. And, it was a grand success for the companies and the people who were allotted the shares. Mrs Bectors Food caters in two categories which are biscuits and bakery products. They operate in the biscuit segment as “Mrs Bector’s Cremica” and in the bakery segment as “English Oven” brand. They possess 96 products and 384 products in its bakery segment and biscuits segment respectively.

Mrs Bectors has a huge presence in north India but they still have the opportunity to explore other locations of the country. According to us, Mrs Bectors Food’s IPO was a hit because of its robust in-house operations. They wholly manufacture and sell their products on their own. Currently, the company has 6 manufacturing units in India. To support the manufacturing domain, they have an exemplary distribution network.

The company raised more than Rs 540 crore via its IPO to expand in other districts. This will help them to spread their brand in other parts of the country, thus boosting their revenues. The price band for this IPO was Rs 286 to Rs 288 per share but due to huge oversubscription, it got listed at Rs 501. The IPO was subscribed by 198.02x times. Their successful run didn’t stop there as the stock closed at Rs 595.55. Thus, giving an astounding 106.79% listing gain to the investors. 

#2 Happiest Minds Technologies – 123.49%

The IT sector is destined for a big future. This pandemic reminded us of how important a role these IT companies play in our life. Bangalore based Happiest Minds is an IT service provider company with a global presence in countries like US, UK, Australia and Canada. They are one of the strong brands which offer Digital IT services. It didn’t take long for people to realise that this surely will be a hugely profitable opportunity for them if they are allotted the company’s shares. 

Happiest Minds raised Rs 700 crore through their IPO. The price band was set at Rs 165 to Rs 166 equity share and the IPO was subscribed 150.98x times. Thus, the stocks get listed at Rs 351, that is, more than double the issue price. It went even higher and got closed at Rs 371. Thus, giving investors a magical 123.49% listing gain.

#1 Burger King – 130.67%

Who other than the great Burger King? As soon as Burger King announced their intentions to go public, the market knew it would be big. The only question was, how big? Currently, Burger King is India’s one of the fastest-growing quick-service restaurant chains. The youth of India, who is a major part of the population, are well aware of Burger King as a brand. People expect the FMCG industry, especially these QSRs to do well in the future as they expand their Indian portfolio. Thus, many considered Burger King to be a good option for long-term investment. 

Burger King raised Rs 810 crore via the public route. The price band for the IPO was Rs 59-60 per share. The company stated that the proceeds from the IPO will be used to open at least 700 restaurants by December 31, 2025. This showed that the American multinational chain has no intentions in slowing down their growth in India. Burger King got listed at Rs 115.35 in comparison to their issue price of Rs 60. It was oversubscribed by 156.65 times.

The stock closed at Rs 138.40 on the day of its debut on the market. That is a mighty 130.67% listing gain! That means, if you had invested Rs 15,000 in its IPO, it would value Rs 34,600 after just one trading day. Not only this, Burger King hit the upper circuit three continuous days which showed how much people were interested in buying the stock. After three trading days, Burger King touched Rs 219 which means a gain of 265.25% over its issue price. To make it simple, your initial investment of Rs 15,000 would value to be Rs 54,787 after just four days!

The Way Forward 

It was a rock-solid year for IPO in India. Who could have imagined that only 4 out of the possible 16 IPOs will fail to give listing day profits in 2020? It seems like people are more aware of the pros of an initial public offer and they are ready to invest in future. If you missed out an opportunity to get profits via IPO in 2020, do not worry! New year comes with new opportunities and that’s what 2021 will be offering you. Zomato Ltd, Aditya Birla Sun Mutual Fund Ltd, Grofers, Kalyan Jewellers are few of the probable companies which might come with an IPO this year. marketfeed will bring you a thorough analysis before any IPO hits the market so that you can know all the positives and negatives of the company. Hoping 2021 comes with a jackpot for all of us! Until, next time.

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Antony Waste Handling IPO: All You Need to Know

Antony Waste Handling Cell Limited has decided to take the public route and it will hit the market on 21st December 2020. Probably, this should be the last Initial Public Offer (IPO) of 2020. Let’s dig deeper and understand what it is all about.

About the Company

Antony Waste Handling Cell Limited was incorporated in 2001. They are one of the top five companies in the Indian municipal solid waste management industry. Jose Jacob Kallarakal, one of the founders, is the current Chairman and Managing Director of the company. They offer a range of services like solid waste collection, transportation, landfill construction, processing and disposal services nationwide. Currently, Antony Waste Handling Cell has 23 ongoing projects and 1,089 vehicles.

These are 17 MSW C&T (Municipal Solid Waste Collection & Transportation), 2 MSW processing and 4 mechanized sweeping projects. MSW C&T projects include walking door-to-door and collecting waste from households, commercial establishments and other community bins. MSW processing projects include sorting and segregation waste which is collected through MSW C&T. The segregated waste is further processed by composting, shredding, recycling and turned into refuse-derived fuel.

Antony Waste serves some of India’s biggest municipal corporations like Municipal Corporation of Delhi, Kalyan-Dombivali Municipal Corporation and Jaypee International Sports. Many of their projects are running already at Navi Mumbai Municipal Corporation (NMMC), Thane Municipal Corporation (TMC), Greater Noida Industrial Development Authority (GNIDA) and more.

About the IPO

IPO DateDec 21, 2020 – Dec 23, 2020
Issue TypeBook Built Issue IPO
Face ValueRs 5 per equity share
IPO PriceRs 313 to Rs 315 per equity share
Market Lot 47 Shares
Offer for Sale Up to Rs 215 crore
Fresh IssueUp to Rs 85 crore
Issue SizeUp to Rs 300 crore
Listing AtNSE, BSE

For the second time, Antony Waste Handling Cell will be hitting the market this year. Earlier in March, they came up with a Rs 206 crore issue in the price band of Rs 295-300. But, due to shutdown and dramatic fall in the market due to Covid-19, they failed to generate enough bids. 

This time, the company has come out with a larger issue size and a higher price band. The size of the issue is now Rs 300 crore and the new price band is Rs 313-Rs 315 per share. The issue will open on 21st December and close on 23rd December. The minimum and maximum lot of this IPO is of 47 shares and 611 shares respectively. That means an investor who is looking to invest in this IPO has to at least pay Rs 14,805. The maximum a single investor can invest is Rs 1,92,465, but this is likely not going to happen as the IPO will be oversubscribed. 

This IPO consists of two parts: a fresh issue and an offer for sale (OFS). Tonbridge (Mauritius), Leeds (Mauritius), Cambridge (Mauritius), and Guildford (Mauritius) are selling some of their equity shares. The company has already raised Rs 89.99 crore at a price band of Rs 315 ahead of its IPO. Massachusetts Institute of Technology was the top anchor investor winning 44% of the total anchor allotments. 

Antony Waste Handling Cell has three reasons behind taking going public. Firstly, some parts of the proceeds will be used to finance its waste-to-energy project at Pimpri Chinchwad in Maharashtra. This will be done by investing money in its subsidiaries AG Enviro and ALESPL. The second objective is to infuse debt in AG Enviro to reduce consolidated borrowings of the company. Lastly, some of the proceeds will be used to meet general corporate purposes.

Financial Overview of the Company

30 September 202031 March 202031 March 201931 March 2018
Total Assets707.56672.10512.63428.07
Total Income215.10464.61298.51290.77
Profit after Tax29.0562.0734.6839.88
Values in Rs crores

The company had an amazing FY20 as their profits rose by a massive 79% year-on-year (YoY) to Rs 62 crore. Their top-line (revenue) also showed a jump of 58% from Rs 298 crore to Rs 464 crore. Even after the lockdown due to coronavirus, Antony Waste has accumulated almost Rs 30 crore of profits in the first half of this financial year. With this trend, we can see them surpassing last year’s profits number as well. Thus, the company has done fairly well to manage its bottom line.

The biggest strength is their desire to use the latest technology tools, vehicles, and equipment. They hold a diversified project portfolio, thus, not depending only on one type of projects. A nation-wide reach also helps them to spread their wings and operate in several states. Their consistent track record of MSW projects execution has earned them a leader tag in the MSW management industry. Another big advantage? They don’t have any listed competitors. Thus, investors might look at this IPO as another opportunity to gain.

Risk Factors

  • As you can already interpret from the company’s client list, they are very much dependent on the Municipal Corporations for projects. A major chunk of the revenue is generated from them. These municipalities are themselves dependent on budgets which are allocated by the state or central governments. Any reduction in this budget can massively impact Antony Waste’s business.
  • Even if the projects are rolled out by these municipal corporations, there is no guarantee that Antony Waste will get them. If any other waste handling company satisfies the prequalification requirements of the tender, the project will be handed to that company.
  • Antony Waste Handling Cell requires a high amount of working capital. If they fail to generate money quickly from their projects, their business will be impacted heavily. Over the past three years, their trade receivables have increased consistently. In FY18, they had a trade receivable of Rs 88 crore. This stood at Rs 113 crore in FY20. This is not a good sign for any company which has huge working capital requirements. (Trade receivable is the amount owed to Antony Waste by its customers).

Conclusion

As we mentioned before, Antony Waste Handling Cell Limited is the only entity belonging from MSW industry which will be listed. Thus, investors will be keenly looking at the performance of this IPO. We cannot imagine our lives without the operations of these types of companies. They help us to live in a cleaner society. MSW industry is expected to grow at a CAGR of 5%. In FY18, the MSW market was estimated to worth around Rs 3,000 crore. The company believes that the market will be worth Rs 6,200 crore by the end of FY23. The company is already a market leader. They also depend on recent technologies to carry out their daily operations which aids them in cutting their costs. Can we expect the last IPO of 2020 to be another hit?

With a lot of negative global cues running around, foreign institutions might not fully subscribe to the IPO, and it may become a flop. My opinion is to again wait to see how institutions react to this IPO.

What are your thoughts on the company? Do let us know by commenting below. You can find the company’s red herring prospectus here. 

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Mrs Bectors Food Specialities IPO: Should You Subscribe?

Another week, another IPO. 2020 may have disrupted a lot of businesses worldwide, yet it has failed to demotivate companies to take a public route to raise funds. Mrs Bectors Food Specialities Ltd initial public offer will open on 15th December 2020. Let’s dig deeper and understand more about this IPO.

About the Company

Mrs Bectors Food Specialities Ltd was founded by Mrs Rajni Bector. She built this Indian company in 1978 by unveiling her passion for making ice creams, bread and biscuits. It is one of the few leading companies in the premium bakery segment. It is also present in the premium and mid-premium biscuit segment in North India. Thus, the company caters around two categories which are biscuits and bakery products. Few examples of products are bread, buns, pizza bases, cakes, cookies, creams, crackers, etc. Manufacturing and selling of biscuits take place through the brand “Mrs Bector’s Cremica”. Similarly, bakery products are sold via the “English Oven” brand. 

It has 6 manufacturing units in India. They are present in Rajasthan, Maharashtra, Uttar Pradesh, Karnataka, Punjab and Himachal Pradesh. All of the products are manufactured in-house, thus, saving them from incurring additional cost. As of Q1 FY21, Mrs Bectors has 96 products and 384 products in its bakery segment and biscuits segment respectively. Apart from in-house manufacturing, Mrs Bectors has a strong distribution network as well. They have 154 super-stockists and 644 distributors. These distributors supply products through 458,000 retail outlets and 3,594 preferred outlets. They are also the largest supplier of biscuits to the Canteen Stores Department of Government of India across 33 locations in the country.

Interestingly, Mrs Bectors supplies buns to quick-service restaurant (QSR) chains such as McDonald’s, KFC, Burger King and Carl’s Jr among others.

Mrs Bectors has both, national and international presence. Its products are sold in 23 states around the country and are exported to 64 countries all over the world under its brand name and third-party labels.

About the IPO

The investors are allowed to bid only in multiples of 50 equity shares. The minimum and maximum bid for the IPO will be Rs 14,300 [Rs 286 x 50 shares] and Rs 1,87,200 [Rs 288 x 650 shares].

This IPO consists of two parts: a fresh issue and an offer for sale(OFS). As a part of OFS, which is money going to promoters, shares worth Rs 500 crore will be sold by Linus Private Limited, Mabel Private Limited, GW Crown Pte Ltd and GW Confectionary Pte Ltd. The biggest seller will be Linus Private Limited who is going to sell shares worth Rs 245 crore. All the qualified employees will get a discount of Rs 15 per share. Total shares worth Rs 50 lakh will be kept aside completely for these eligible employees.

India is still in a recovery mode after facing a huge economic contraction in Q1FY21 due to lockdown. Thus, a question arises: why is the company looking to take the public route during this tough period? Just like other companies, Mrs Bectors will use the proceeds to finance their projects related to expansion. The sum acquired will be used to fund its Rajpura expansion project. This project involves opening a completely new production line for biscuits. The money left after financing will be used for general corporate purposes like fulfilling short-term and long-term working capital needs. The equity shares of Mrs Bectors Food will debut on the markets on December 28, 2020. 

As mentioned before, Mrs Bectors work closely with Burger King whose IPO hit the market on 2nd December 2020. Burger King’s IPO was a very successful event for the quick-service restaurant (QSR) as it was subscribed 156.65 times. Burger King’s IPO will also debut on the market on December 14, 2020.

Financial Overview of Mrs Bectors Foods

30 September 202031 March 202031 March 201931 March 2018
Total Assets608.73565.72577.04511.06
Total Income438.56764.98786.03695.76
Total Expenses386.50725.83735.44642.93
Profit after Tax38.8830.4033.1535.89
Values in Rs crores

Mrs Bectors Foods’ profits have been declining for the last three years but are looking stable in the last few quarters. The main reason behind this is their intent to expand. Negative profits are very common for the company which is trying to grow. This year seems to be going financially well for the company. Till the end of Q2 FY21, the company has reported a revenue of Rs 438 crore and a profit of Rs 38 crore. Mrs Bectors’ strengths lie in its strong sales and distribution network. Also, their production plants are well-equipped with modern infrastructure which will help them in the long run. To prove how safe their products are, the company has acquired major food certifications of authorities like RC, USFDA, FSSAI and FSSC.

Their biggest competitors amongst the listed companies are Nestle and Britannia. A table below shows a brief comparison between the three companies.

CompanyTotal Income ’20EPSROE
Nestle IndiaRs 11,600 crores21470%
Britannia IndiaRs 12,369 crores71.432%
Mrs Bectors FoodRs 764 crores4.9310%

IPO Details in a Nutshell

IPO DateDec 15, 2020 – Dec 17, 2020
Issue TypeBook Built Issue IPO
Face ValueRs 10 per equity share
IPO PriceRs 286 to Rs 288 per equity share
Lot Size50 shares (Rs 14,400 per lot)
Offer for Sale(goes to promoters)Up to Rs 500 crore
Fresh Issue(goes to company)Up to Rs 40.54 crore
Issue SizeUp to Rs 540.54 crore
Listing AtBSE, NSE

ICICI Securities, SBI Capital Markets and IIFL Securities are the lead managers for the IPO.

Risk Factors for Mrs Bectors Foods

  • Covid-19 forced the Indian government to implement nation-wide lockdown in March. Mrs Bectors closed its manufacturing plants only for 6 days and then reopened them as they service ‘essential goods’. Though their retail sales were not affected, their sales to QSR customers and Indian Railway canteen were affected as they were forced to close due to lockdown.
  • As the company services in the Fast Moving Consumer Goods(FMCG) segment, the companies are required to constantly monitor customer’s changing taste and preferences. If they fail to adapt, customers will move to another brand in no time.
  • The biscuits and bakery industry requires a lot of capital to meet expenditure. Thus, the company might be willing to incur debt in future. Thus, exposing themselves to interest rate fluctuations and other risks.
  • Any adverse change in the macroeconomic policy by the government can cause disruptions in the company’s business. As the company requires a huge number of human resource, any type of strikes by the labours can affect its operations.

Conclusion

The Indian biscuits and bakery retail market is expected to grow at a CAGR of 9% over the next 5 years. The current biscuit market is dominated by Britannia Industries Ltd and Parle Products with a market share of 28% and 27% respectively. Currently, Cremica holds only 1% market share. The main reason behind low market share is that their products are present in only very limited markets. The more they expand, the greater the market share they will be able to capture.

The industry in which Mrs Bectors Food Limited is surely bound to expand in future. Keeping the positive industry outlook and the robust foundation of the company in mind, Mrs Bector Food does look like an exciting prospect. Let’s not forget how amazing returns Burger King was able to deliver. Their shares surged 131% from the issue price on its first day of trading. Can we expect Mrs Bectors Food to take a similar path?

I will be waiting till 2 pm on Thursday and look at how institutions portion is subscribed. Only if institutions are showing heavy interest will I go ahead and apply for a (hopefully) quick listing gain.

You can find the company’s red herring prospectus here. What are your thoughts on this IPO? Do let us know by commenting below.