Mrs. Bectors Food Specialities Ltd. - IPO Information Note

Mrs. Bectors Food Specialities Ltd. - IPO Information Note
IPO
by Nikita Bhoota 15/12/2020

Mrs. Bectors Food Specialities Ltd. IPO

This document summarizes a few key points related to the issue and should not be treated as a comprehensive summary. Investors are requested to refer the Red Herring Prospectus for further details regarding the issue, the issuer company and the risk factors before taking any investment decision. Please note that investment in securities is subject to risks including loss of principal amount and past performance is not indicative of future performance. Nothing herein constitutes an offer of securities for sale in any jurisdiction where it is unlawful to do so. This document is not intended to be an advertisement and does not constitute an invitation or form any part of any issue for sale or solicitation of an offer to subscribe for or purchase any securities and neither this document nor anything contained herein shall form the basis for any contract or commitment whatsoever.

 

 

 

Issue Opens- December 15, 2020
Issue Closes- December 17, 2020
Price Band- ? 286- 288
Face Value: ? 10
Public issue: Primary Issue & OFS Aggregating up to 1.86cr shares
Issue Size- ~?541cr
Bid Lot- 50 equity shares
Issue Type: 100% Book building
Post money Market cap of   ? 1,692r - at upper price band #at upper price band
 

 

 

 

 

% Shareholding

Pre IPO

Promoter

52.4

Public

47.6

Source: RHP


Company Background

Mrs. Bectors Food Specialities Limited (MBFSL) is one of the leading companies in the premium and mid-premium biscuits segment and the premium bakery companies in the North Indian (Source: Technopak Report). It manufactures and markets its premium and mid-premium biscuits under its flagship brand ‘Mrs. Bector’s Cremica’ and its bakery products in savory and sweet categories under its brand ‘English Oven’. It caters to retail clients in 26 states within India, as well as to reputed institutional customers with Pan-India presence and to 64 countries across six continents (in FY20). Its products are manufactured at six in-house manufacturing facilities which are strategically located in proximity to its target markets. It has a robust distribution network in India and globally through general trade and the modern trade. During H1FY21, they distributed biscuits across 23 states in India through a widespread distribution network of 196 super-stockists, 748 distributors and supplied to its retail customers through 458,000 retail outlets (Source: Technopak Report) and 4,422 preferred outlets for biscuits segment. They sold their bakery products through 191 distributors and over 14,000 retail outlets for bakery products.

Object of the Offer

The offer comprises of a Fresh Issue (?40.5 cr) and an Offer for Sale (?500cr) aggregating to ?541cr. Proceeds from the fresh issue are proposed to be utilized for financing the project cost towards expansion of the Rajpura Manufacturing Facility in Punjab by establishing a new production line for biscuits.

 

 

Financials

 

 

(? cr, except percentages)

FY18

FY19

FY20

H1FY20

H1FY21

Revenue from operations

694

784

762

365

431

EBITDA

85

96

93

39

72

EBITDA Margins (%)

12.3

12.3

12.2

10.7

16.7

Net Profit

36

33

30

10

39

Diluted EPS

6.26

5.78

5.30

1.77

6.78

ROE (%)

14.30

11.81

9.90

6.68^

21.72^

ROCE (%)

18.00

15.90

12.68

9.33^

24.22^

Operating Cash Flow

47

54

110

38

68

EBITDA to OCF (%)

183.88

178.10

84.81

103.99

106.25

Working capital cycle*

33

35

33

43

25

Source: RHP, ^on annualized basis, * number of days

For additional information and risk factors please refer to the Red Herring Prospectus. Please note that this document is for information purpose only

Key Positives

 

 

  1. Established presence in Institutional bakery business

    MBFSL also manufactures and sells a variety of bakery and frozen products such as buns, kulchas, pizzas, and cakes to institutional clients like QSRs with pan India presence, cloud kitchens, multiplexes, as well as certain hotels, restaurants and cafés. Its list of clients includes McDonald’s (Connaught Plaza Restaurants Pvt. Ltd. & Hardcastle Restaurants Pvt. Ltd.), Burger King India, PVR, Rebel Foods Private Limited, Yum! Restaurants (India) Private Limited, etc. It is sole supplier of burger buns and pan muffins to Connaught Plaza Restaurants, preferred supplier to Hardcastle Restaurants, one of the main supplier of burger buns to Burger King since 2014, leading supplier to PVR since the last 10 years and MBFSL believes that it benefits from our strong association with these customers, including in terms of adoption of stringent quality controls and industry best practices such as use of premium quality raw materials.




  2.  
  3.  
  4. Wide spread and established sales and distribution network

    The company distributes biscuits across 23 states in India, through its widespread network of super stockists and distributors. During H1FY21, its distribution network for sale of biscuits comprised of 196 super stockists and 748 distributors supplying to wide range of customers through 458,000 retail outlets (Source: Technopak Report). It also has a network of 4,422 preferred retail outlets, who through arrangements with MBFSL ensure enhanced brand visibility and presence in their shops by displayed MBFSL products more prominently in their shelves. Apart from traditional retail outlets, the company also operates through modern trade. According to the Technopak Report, MBFSL is the largest suppliers of biscuits to CSD and an approved and listed supplier for Indian Railways having strong presence across Railway Station Canteens and their Stores in North India.

    MBFSL’s distribution network is managed by an in- house sales team of over 403 personnel, as on September 30, 2020, who work closely with super stockists and distributors to understand consumer preferences, receive feedback on its products and that of MBFSL’s competition. This along with their in-house developed automation tool “Peri” enables MBFSL to improve productivity levels of its super stockists and distributors and formulate an effective strategy for sales, marketing and pricing. Moreover, this input is used for new product development and expansion of its product portfolio. The company seeks to increase its distribution through modern trade channels in other regions in India by introducing premium products in biscuits and bakery segments in these new regions. The company believes that it can establish its presence in other regions by leveraging existing business in modern trade channels where they enjoy strong business relations and by collaborating with certain regional players.

 


Key Risk

 

 

 

 

 

  • The continuing impacts of COVID-19 are highly uncertain and unpredictable thus impacting the business performance. Although the sales to retail customers was not impacted significantly during the initial lockdown, the sales to QSR customers, CSDs and Indian Railway canteens and stores were significantly impacted due to COVID-19 pandemic. Possibility of another lockdown may have an adverse effect on its business, results of operations and financial condition.




  •  
  •  
  • Inability to anticipate, respond to and meet tastes, preferences or consistent quality requirements of customers or their inability to accurately predict and successfully adapt to changes in market demand or customer preferences.


Watch this video to know more about Mrs. Bectors Food IPO


 

 

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NSE is Launching F&O On Nifty Financial Services Index

NSE is Launching F&O On "Nifty Financial Services Index"
by Mrinmai Shinde 18/12/2020

If you are trading in Nifty and Bank Nifty, then this is for you. You now have one more derivative instrument to try your hands on. National Stock Exchange of India (NSE) is now introducing a new derivative Index for Financial Services. 

As the financial stocks hold the major sectoral weight in the domestic stock markets, the NSE has now decided to launch seven serial weekly futures and options contracts on the NSE Financial Services Index from 11th January 2021. This would be done in addition to monthly c contracts. 

With this move, market participants like domestic institutions, trader, retail investors and FIIs will be able to bed or hedge on weekly index futures in the exchanges for the first time. 

Where on the index front, at present, the investors can trade on weekly options and monthly index futures and options on Bank Nifty and Nifty; they will now have the same option along with an added option of seven weekly index futures and options contracts on NSE Financial Services Index. This new index is anticipated to become as popular as Bank Nifty owing to the high interest in financial stocks. 

The Nifty Financial Services index has a correlation of 98% with the Nifty Bank index and a correlation of 94% with the Nifty 50 Index. The beta value of this index is 1.2 with Nifty 50 Index and it has delivered annualized returns of 14.99% over the last 5 years.

The Financial Services Index comprises 20 stocks from the NBFC, asset management, banking, HFC, holding companies, insurance, and other financial services spaces; unlike the Bank Nifty that has 12 banking stocks. 

This Financial Service Index include HDFC Bank, SBI, ICICI Bank, Axis Bank, Kotak Bank, Bajaj Finserv, M&M Financial Services, REC, PFC, ICICI Prudential Life Insurance Company, etc.

The financial services sector assumes significance as the sector accounts for 33.5% of the Nifty 500 index. A recent investment data of Foreign Portfolio Investors (FPIs) indicates, 48% of new investment flows were channelized into the financial services sector. The sector accounted for 35% of the assets under the custody of FPIs. Further, many of the asset management companies have mutual fund schemes on the financial sector theme. 
 

Top constituents by Weightage

Company’s Name

Weight (%)

HDFC Bank Ltd.

27.13

Housing Development Finance Corporation

17.51

ICICI Bank Ltd.

14.14

Kotak Mahindra Bank Ltd.

12.10

Axis Bank Ltd.

6.46

Bajaj Finance Ltd.

5.64

State Bank of India

4.06

Bajaj Finserv Ltd.

2.29

HDFC Life Insurance Company Ltd.

2.21

SBI Life Insurance Company Ltd.

1.43

Source: NSE India

Next Article

What to consider before investing in an IPO?

What to consider before investing in an IPO?
by Nikita Bhoota 22/12/2020
There is a lot of buzz in the primary market after remaining muted for the most of the year 2020.  Many private companies have decided to go public by making its shares available to investors in the stock market. This process is popularly known as Initial Public Offer (IPO)

Selecting an IPO for an investment purpose is not an easy task. Therefore, 5 paisa team has come up with the points to look for before selecting an IPO. An investor must understand the basics and financials of the company before applying for an IPO. The information about the company is available in draft red herring prospectus (DRHP). In simple words, a DRHP or offer document provides detailed information about the business operations and financials of the company. The Securities and Exchange Board of India (SEBI), has made it mandatory for companies to file a DRHP before going for an IPO. 

However, going through a huge document may be a tedious task. So, investors can focus only on some of the essential parts of the document, which will be good enough to understand the business and its prospects.

Below, are the key points one must look at the DRHP and in general before applying for an IPO

Management Team and Promoters Background:
Promoters and top management are the key assets of the company. Take a close look at promotes and managers who are usually going to take all the decisions of the business. The investors should check on experience, salary paid and the average number of years spent by the top management in the company. They should also check, there is no corporate governance issue in the company because any negative news could be a red flag and adversely affect the future performance of the company.

Strength and Financial Performance of the Company:
The investor should also take note of the company’s strength and its positioning in the industry. Studying about the positioning and strategies will help to visualise the future prospects of the company. Similarly, going through the historical financial numbers is also important. It is essential to check if there is a sudden spike or fall in financial performance in the past one year or few quarters just before an IPO.

Understand the objective of the issue and shareholding of the promoters:
It is important to check the promoter shareholding before and after the IPO. A higher promoter shareholding in the company is always better for minority shareholders. It is also important to understand the utilization of funds raised through the IPO. If the funds will be utilized in the existing business or for an expansion, it will be a good sign of future prosperity.

Check the Valuations:
This seems tricky for retail investors but it is an important aspect that shouldn’t be ignored. To begin with, see how the valuation of the company fares as compared to existing companies in the same industry. Relative valuation techniques like Price to earnings ratio, price to book ratio and return on equity, return on capital employed can be used to conclude whether the IPO is available at a discounted price or is expensive as compared to its competitor in the market.

Read the Research Notes and Risk associated with the business
The retail investor should consider the views provided by various brokerages in their IPO research notes, which are publicly available. 
Secondly, companies need to mention all major risk factors related to the business in its prospectus. Reading the risk factors is very important. At times there are certain litigations and liabilities, which can be a threat to the company’s future business prospects.

Conclusion:
The decision to go for an IPO must depend on your investment objectives, how much risk are you willing to take, and whether you believe in the growth potential of the company. Don’t make decisions based on the publicity or peer pressure or recommendations. Be wise and take informed decisions. Good IPOs can give magnificent returns in the long-run.
Next Article

What people and sectors are expecting from Budget 2021?

What people and sectors are expecting from Budget 2021?
by Nikita Bhoota 25/01/2021
The coronavirus pandemic has severely impacted lives across the world in many ways. Many people have witnessed financial setbacks in the country during the pandemic. The way people spend or save their money has drastically changed due to economic uncertainties. Work from home has become a 'new trend for salaried employees. Buying an insurance product, especially health insurance has gained much more importance over luxury products. 

Finance minister Nirmala Sitharaman is going to present the Union Budget on 1 February, 2021. To boost the economy, the Budget must focus on pushing consumption which means putting more money in the hands of people.
From tax relief to more exemptions, here's what Indian salaried individuals and others expects from Budget 2021

Increase the upper limit of Section 80C
Under Section 80C, an individual is eligible to claim tax deductions of up to ?1.5 lakh on various payments including life insurance premiums, principal payment of home loan, fixed deposits, provident funds etc. Considering the inflation in the recent past, the government may increase this upper limit to up to ?2.5-3 lakh. The rise in the exemption limit will inspire people to spend more on tax-saving instruments backed by the government. The increase in the deduction limit under Section 80C was last increased in 2014.

Hike tax rebate on housing loans
To boost spending and to support the real estate industry, the Union Budget 2021 should introduce more tax exemptions for the homebuyers. Currently, an individual gets ?1.5 lakh exemptions under Section 80C and ?2 lakh under 24B for home loan. The tax rebate on housing loan interest rates under Section 24 should be increased to at least ?5 lakh to generate healthier housing demand.

Increase the upper cap on health insurance premium
The global pandemic has showed us that health insurance is a necessity, not an option anymore. Therefore, the government may increase the upper limit on health insurance premiums under Section 80D.

As per the provisions of section 80D, an individual can claim an exemption of up to ?25,000 (?50,000 or ?75,000 or ?1 lakh if bought for parents) on the premiums paid for the medical insurance of self and family.

Exempt long term capital gain tax:
The government should exempt long-term capital gains on the sale of Indian-listed equity shares. This measure will help the Indian capital markets grow exponentially and also encourage Indian resident investors to invest in the equity market. 


Work from home expenses:
Work from home has become a new trend now. It is expected that the government may provide some relief to taxpayers to compensate for the higher cost incurred while working from home; perhaps some deductions for expenses such as electricity etc or some kind of fixed deduction.

Now let’s talk about what industry expects from the budget:

Aviation and Real Estate:
The sector hopes for a reduction in high taxes and levies as airlines as the sector is highly impacted by Covid19.

Several policy steps have been taken to boost real estate in pandemic-hit 2020. The sector is now expecting the government to expand its affordable housing scheme and give more tax benefits to potential homebuyers.

Automobile, Defence and FMCG:
The auto sector has strongly recovered from the economic shock caused on account of Covid19. Automakers now expect more demand-creating measures in the budget for faster sales recovery.

The government is likely to announce higher budget allocation for the defence sector, with focus on indigenous procurement and R&D.

Like automobiles, the FMCG sector also expects more demand-boosting measures to sustain recovery momentum.

Healthcare:
After the pandemic-hit year, India’s healthcare sector is looking for reforms like reduction in taxes on healthcare and treatment besides higher budgetary allocation. Better allocation for pharma research is also on the cards.

Consumer durables/Electronics and Education:
Businesses engaged in selling consumer durables hopes for a reduction in component prices besides a demand push to boost sales.

The government is expected to allocate more funds towards strengthening technological capacities for improving online education in smaller cities, towns and rural areas. 

Agriculture and Railways
The government may increase its overall agriculture expenditure to pacify farmers protesting against its farm laws. 

Privatisation of trains and infrastructure development remains major priorities for the Indian Railways. Measures may be announced for better public-private partnership (PPP) in passenger train operations.
Next Article

Aditya Birla Sun Life AMC IPO Subscription Day 2

Aditya Birla Sun Life AMC IPO subscription Day 2
IPO
by 5paisa Research Team 29/01/2021

The Rs.2,768.26 crore IPO of Aditya Birla Sun Life AMC Ltd, consisting entirely of an offer for sale (OFS) of Rs.2,768.26 crore, was just about fully subscribed on Day-2. As per the combined bid details put out by the BSE, Aditya Birla Sun Life AMC Ltd IPO was subscribed 1.07X overall, with bulk of the demand coming from the retail segment. The issue closes on Friday, 01st October.

As of close of 30th September, out of the 277.99 lakh shares on offer in the IPO, Aditya Birla Sun Life AMC Ltd saw bids for 298.73 lakh shares. This implies an overall subscription of 1.07X. The granular break-up of subscriptions were tilted in favour of retail investors but HNI and QIB bids typically come in only on the last day of the IPO.

Aditya Birla Sun Life AMC Ltd IPO Subscription Day-2

 

Category

Subscription Status
Qualified Institutional (QIB) 0.06 Times
Non-Institutional (NII) 0.40 Times
Retail Individual 2.00 Times
Others 0.67 Times
Total 1.07 Times

 

QIB Portion

On 28 September, Aditya Birla Sun Life AMC Ltd did an anchor placement of 110.81 lakh shares at the upper end of the price band of Rs.712, raising Rs.789 crore. The list of QIB investors included a number of FPI names like HSBC, IMF, ADIA, Morgan Stanley, Societe Generale etc. It included domestic institutions like ICICI Pru MF, HDFC MF, SBI MF, Axis MF, SBI Life, HDFC Life, Kotak MF, IIFL Special Opportunities Fund and Abakkus Growth Fund. 

The QIB subscription continued to see negligible subscription at the end of Day-2. The QIB portion (net of anchor allocation of 110.81 lakh shares as above) had a quota of 73.87 lakh shares of which it has got bids for just 4.53 lakh shares, implying a subscription of 0.06X by QIBs at the end of Day-1. QIB bids typically get bunched on the last day, although the anchor response does indicate strong interest in the issue from institutional investors.

HNI Portion

The HNI portion got subscribed 0.40X (getting applications for 22.06 lakh shares against the quota of 55.40 lakh shares). This is an OK response on Day-2 for the HNI segment and could be due to the large size of the IPO. Bulk of the funded applications and corporate applications, come in on the last day, so the actual picture should only get better. 

Retail Individuals

The retail portion was fully subscribed 2.00X at the end of Day-2, showing strong retail appetite. For retail investors; out of the 129.28 lakh shares on offer, valid bids were received for 259.04 lakh shares, which included bids for 201.60 lakh shares at the cut-off price. The IPO is priced in the band of (Rs.695-Rs712) and will close for subscription on 01st October.
 

Also Read:-

Aditya Birla Sun Life AMC IPO : 7 Things to Know About

Upcoming IPOs in 2021

List of Upcoming IPOs in October 2021

Next Article

ETF - Types & Performance in Indian Market in India

ETF - Types & Performance in Indian Market
by Mrinmai Shinde 12/02/2021

ETFs has been in the financially world only since the past 25 years, however it has captured the likes of institutional and retail investors round the world. In the beginning, they were promoted as an inexpensive, index-investing option vis-à-vis mutual funds. 

Index investment itself is a concept created by John Bogle, the founding father of Vanguard Group that is one of the largest AUM’s in the world with over US$6 trillion in Assets underneath Management.

So what is an ETF and how did they gain popularity in India?

ETFs are funds that track Indices. Hence when once buys units or shares of an ETF, you are purchasing units or shares of a fund that tracks the yield and return of its native index. ETFs do not try to outperform or beat the index instead they mimic the index performance.

Unlike other funds, ETFs trade like any other stock on the exchanges hence their price fluctuate throughout the day.

In India, just like the US, ETFs have gained popularity because the top hedge funds or top AMCs have failed to beat the market benchmark in the past 5 years as per studies. Hence, a “Passive ETFs” is a better bet for investors.

Along with this advantage, ETFs are also cost effect. Typical ETF administrative costs are around or less than 0.2% annually as compared to actively managed funds that charge upto 1% fees.

How do ETFs work?

As mentioned earlier, the ETFs are traded on the exchanges like other stocks. They act like both shares and mutual funds. The price of an ETF depends on the cost of the underlying asset itself. Hence, if the asset’s price goes lower or higher the price of the ETF reacts in direct proportion. 

ETFs are managed both actively and passively. Actively managed ETFs are handled by portfolio managers who try to mitigate the risks and understand the market conditions. While Passively managed ETS follow a certain Indices trend 

Even though these ETFs come with cost advantage there are certain limitations that come with it such as

Brokerage fees: One can either for a fund manager to handle their funds or manage the funds by the themselves by opening a Demat account. If a fund manager is appointed then the investor may incur some commission fee costs.
 
Market Volatility: ETFs heavily depend on the market trends. Hence, in good times the investor may earn handsome profits while in bad market conditions the investor may also incur heavy loses.
 
Diversification:  As per study, most ETFs are passively handled hence majority the stocks chosen for investment would be best performing stocks, often the bluechip stocks whereby ignoring the potential of small cap companies. 

Types of ETFs available:

Equity ETFs: These funds have investments in equity instruments, 

Gold ETFs: Such funds deal in commodity exchanges. These fund include physical gold assets. Purchasing units and shares of these funds makes an investor owner of gold on paper.

Debt ETFs: These funds comprise of debt securities such as debentures, commercial papers, government securities, etc. 

Currency ETFs: These funds purchase currency of different countries and gain profits from the currency fluctuations. These funds are based on future performance of the currency which is predicted with specific calculations. 

ETF Performance in India

Total ETF asset under management stands at Rs 2.07 lakh crore as of August 2020, and Nifty50 focused ETFs made nealy fifty perfect of the whole lot.  The value of AUM in Nifty50 ETFs is now at it’s record high, Rs. 1.02 lakh crore.

According AMFI data it was observed that the domestic ETF AUM linked to equity and debt had grown at a rate of 65 per cent per annum over last 10 years. ETF AUM has increased by more than Rs 60,000 crore this financial year despite disruption caused by the pandemic. One of the reasons behind this success rate could the market creating new highs and giving investors their gains. 

Almost 17 asset management companies introduced ETF schemes based on Nifty 50 till now, and they command 49 per cent market share. While there are 11 ETFs linked to Nifty50 outside India with investments worth around a billion dollars.

There are nine products with focus on BSE Sensex, with AUM at Rs 41,276 crore, according to a BSE spokesperson. The AUM of Sensex ETF grew 50 per cent from Rs 27,556 crore in March 2020.

According to the Icra data, NSE Indices have a 77 per cent market share of ETF market, while BSE indices, holds 22 per cent. In the debt ETF segment, NSE indices enjoy a virtual monopoly, thanks to Bharat Bond ETFs that have got huge inflows. Yet, penetration of ETFs among retail investors still remains low. For example, 88 per cent of equity fund AUM is contributed by individual investors (retail + HNI), but in the case of ETFs, it is only 8 per cent. Moreover, just 1 per cent of retail mutual fund investors’ money is in ETFs.