The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that

Bector Food Specialities IPO– Mrs. Bector’s Food is one of the leading companies in the premium and mid-premium biscuits segment and the premium bakery segment. Company is largest supplier of buns for QSR restaurants in India.

Business — Sells Biscuits, Bakery products, Frozen Products. And a contract Manufacturer for Oreo and Bournvita biscuits

Offer purpose — Offer for sale (540cr) including fresh issue of 40 cr. for expansion and general purposes

Key Service domains – Biscuits domestic 43% of total sales, 24% exports of total sales.

Key export regions are Africa and North America. Total 64 countries where export is done

Risks —

There are cases of non-compliance against certain legislations in the past by group company and some disciplinary actions as well

Highly competitive industry with company having only 1% market share. Margins can reman depressed for quite long time putting strain on cash flows

Low shelf life of certain products

Company do not have any long term supply agreements with any of their QSR customers is a strange thing and deals on day to day basis requirement for bns, bakery and frozen products

One of the lowest risk but having high business impact is focus on nutritional value of products which can hamper sales in future

Strength

A leader in biscuits and bakery segments in North India with well-diversified product portfolio.

Major food certifications i.e. BRC, USFDA, and FSSC.

Modern production process, Strong sales and distribution network.

Strategically located in proximity to target markets which minimizes freight and logistics related expense and time

Future

QSR is thriving industry and consumption food business will gain. QSR CAGR expected to grow >20% for next 4-5 yrs

Proxy play to QSR story, so should do well in coming years

Valuations

Profit making company but PAT going down from last three years

Focusing on growth in premium biscuits and bakery segment to improve margin having high competition

As compared to peers, valuations looks ok but needs consistent review

Should we apply?

People can subscribe looking at growth prospects

Listing day may see good gains. Recommended to sell if getting 10-30% gains on listing day

One can also hold long and review holdings with each quarter earnings

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