Amid strong momentum in the primary market space when markets are at record high, there is another IPO opening up on December 15, 2020 of Mrs. Bectors Food i.e. one of the leading North Indian bakery entity.
Here are the details on whether should you bet on this another issue which opens after Burger King that saw record interest from retail as well as HNI investor class.
Rs. 540 crore IPO size
Issue price - Rs. 288
Issue closing date- December 17, 2020
Investors can bid for a minimum of 50 shares with a capital of over Rs. 14400.
Objective of the issue:
The issue comprises both fresh issuance as well as offer for sale and the proceeds from the issuance shall be put for expanding the company's facility.
Grey market premium:
The grey market premium which is suggestive of the likely prospect of the issue was a good 64% higher than the issue price as on Friday at Rs. 473 per share.
Positives of the company
Strong distribution network
Good quality products under the brand English Oven
Margins of the company have been the highest at 44 percent
Negatives are the operational weakness
Experts view on Mrs Bectors IPO:
Given the cheap valuation of the IPO in comparison to listed peers such as Britannia, Parle, ITC etc. and the growth prospects going forward, Manthan Mehta, Head Unlisted & Private Equity Rurash Financial Services Pvt Ltd suggested a subscribe on the issue for at least 40% gains on listing and holding for a long term view.
At the upper price band, the company's PE ratio comes at 21 of the FY21E EPS.
In the first two-quarters of FY21, the company showed positive growth. Highly competitive industry and poor growth will stand against the company in the longer-term. Hence, investors might want to look at booking some listing gains," said Gaurav Garg, Head Research, CapitaVia Global Research Limited.
Besides another expert suggest that after posting static performance over the last 3 years and super performance in H1Fy21, there remains a worry of stiff competition with large listed players in the segment. Based on FY20 earnings, the issue is priced around 56 P/E while on the basis of FY21 H1 annualized data, P/E is around 22. Thus if we exclude H1 FY 21 super performance, the issue appears fully priced. Since BFSL is in the top few players in the FMCG segment, investors may consider an investment with a medium to long term perspective.