Another mega IPO, Mrs Bectors Food subscribed 198 times

The so-called high networth individual portion saw 620x more demand than shares on offer.

The initial public offering (IPO) of Mrs Bectors Food Specialities garnered 198x subscription and generated bids of more than Rs 40,000 crore.

For IPOs of more than Rs 200 crore in size, this is the highest-ever subscription.

Previously, only three tiny issues have garnered more than 200x subscription.

The huge oversubscription for the IPO of Mrs Bectors — a biscuit and bread manufacturer — comes close on heels of the successful debut of Burger King India, whose stock tripled on listing.

Eyeing similar listing gains, wealthy investors have mounted bets worth Rs 33,800 crore on the Mrs Bector IPO.

The so-called high networth individual (HNI) portion saw 620x more demand than shares on offer.

The qualified institutional buyer (QIB) portion was subscribed 177x, while the retail category saw nearly 30x subscription.

Investors are betting on Mrs Bector being able to capitalise on the growth in the packaged food industry, given its brand positioning in Northern India and wide distribution network.

Analysts said the domestic biscuit and bakery market is expected to grow 9 per cent in the next few years, because of urbanisation and increase in disposable income.

The institutional Indian bakery industry is expected to grow 20 per cent due to increasing market share of QSR chains.

Further, the attractive valuation relative to its peers helped attract investors towards the IPO.

In a note, Angel Broking said peers such as Britannia, Nestlé India and Prataap Snacks are trading at trailing price-to-earnings multiples of 50.2, 85.6, and 57.1.

On the other hand, Mrs Bector is priced at a trailing P/E of 27.9x.

“Given the significant discount compared to listed peers, there is comfort on the valuation," the brokerage said.

Mrs Bectors had priced its IPO at Rs 286-288 a share.

The issue comprised Rs 40 crore in fresh capital raise and Rs 500 crore in a secondary share sale by four existing shareholders.

At the top end, it will command a market cap of Rs 1,700 crore on a post-diluted basis.

Mrs Bector will use the proceeds for setting up a new production line for biscuits.

The firm manufactures and markets cookies, creams, crackers, digestives and glucose under its brand ‘Mrs. Bector’s Cremica’.

They also manufacture and market bakery products in savoury and sweet categories under its brand 'English Oven'.

Bector Food is the largest supplier of buns in India to QSR chains such as Burger King India.

As of June 30, 2020, its bakery segment has a total of 96 products, and the biscuits segment has a total of 384 items.

Photograph: Courtesy, Cremica