Thread by @pro_nirmiti

A thread on India's growing premium biscuit & bakery brand -
Mrs Bectors Food Specialities
Cmp - 552 Rs
Mcap - 3248 Cr
1 yr fwd PE - 28x

𝙒𝙚𝙡𝙡 𝙥𝙤𝙨𝙞𝙩𝙞𝙤𝙣𝙚𝙙 𝙩𝙤 𝙘𝙖𝙥𝙩𝙪𝙧𝙚 𝙜𝙧𝙤𝙬𝙩𝙝 𝙞𝙣 𝙁𝙈𝘾𝙂 𝙨𝙥𝙖𝙘𝙚

#bector_food

💠 About Company -

- Incorporated in 1978, Mrs. Bector Food Specialities Ltd (MBFSL) is one of the fastest-growing companies in the premium biscuits and bakery segment in India.

- It markets its products in 26 states in India and exports to over 64 countries.

#bector_foods

🔸Bector Foods is one of the leading biscuit brands in North India under the name “Mrs. Bector Cremica” in the premium & mid-premium segment.

- It includes various categories of biscuits like Digestives, Crackers, Cookies, Cream, Marie.

- Market share of 4.5% in North India.

🔹With 5% market share in Bread, “English Oven” is one of the largest selling brands in premium bakery segment in Delhi, Mumbai & Bengaluru

- Branded Breads business has grown at CAGR of 30% in the last 3 years

- It also does contract manufacturing of Oreo biscuits for Cadbury.

🔸Mrs. Bector food has 11% market share in semi processed and dough-based offerings.

⭐️It is sole supplier of buns to McDonald's India.

🔰Let's understand the Journey of Mrs. Bector Food Specialities ⤵️

💠It has 6 manufacturing units located in
- Phillaur & Rajpure (Punjab), Tahliwal (Himachal Pradesh), Greater Noida (UP), Mumbai & Bengaluru with a capacity utilisation of 80%.

- It has invested Rs. 374 Cr between FY18-FY22 to build capacities with superior capabilities.

🔹Revenue Breakup :

- Biscuit segment - Both domestic and export contributed 60% to its sales.

- Bread and Bakery segment contributes 34.2%.

- Company also generates 5.8% of its sales by way of contract manufacturing.

⚡️Strengths -

✅Pan India Presence - 26 States & 3 Union territories.
✅Best in class equipment from Denmark, Germany, US and Italy.
✅~45% Export under own brand
✅900+ Distributors
✅550k+ Retail outlets
✅200k+ Direct Reach
✅220+ Super Stockists
✅17 Depots & 5,000+ CPOs

🚨Key Risk ⤵️

▶️Bector Food Product portfolio vs Peer comparison -

✳️Growth Triggers

- The company operates in the premium and mid-premium biscuit and bakery segment. This allows the company to maintain stable margins and compete in less intense segments of the market.

- It has now shifted its focus to expand into newer geographical areas

- MBFSL is expanding its capacity in Dhar (Madhya Pradesh) to cater to newer regions. This facility will have both biscuits & bakery lines.

- The company is witnessing 25%+ growth in the bakery segment in Mumbai, Pune & Delhi regions.

⭐️EBITDA margins for bakeries are higher than biscuits.

- To cater to this increased demand, Company is expanding capacity by incurring capex of Rs. 73 Cr in Khopoli (Maharashtra) & Rs. 22 Cr in Bhiwadi (Rajasthan)

-Historically, the company has had net asset turnover of ~ 3x

👥It has appointed Manu Talwar as CEO and Apoorva Singh Bais as Chief Marketing Officer.

- Manu Talwar has rich industry experience in consumer centric business and was previously associated with Coca-Cola, Luxor Writing.

- Apoorva Singh Bais has previously worked with Dabur.

💫Current geopolitical & inflationary environment won’t impact the business much.

- When inflation cools down, these companies typically do not pass on the entire raw material price reduction benefit to end customers & try to build up their gross margins.

📊Financials -
- Over last 5 years, Sales grew by 9.35% CAGR with stable EBITDA margin of 12%

- However, due to change in product mix & operational efficiency, a 200 bps uptick in EBITDA margins can be expected.

- For Q3FY23, Revenue growth of 40% while 30% was volume growth.

💵Free Cashflow Analysis

- With minimum equity dilution & strong re-investment of cashflows it has built incremental capacities over past decades.

- EBITDA margins maintained in a tough inflationary period.

- Efficient use of Working capital despite higher sales.

❇️ Conclusion

- Bector Foods is expanding into new territories with increased focus towards value added higher margin products.

- The Company is expanding its capacity by building new facilities in Dhar (MP), Khopoli (MH), Bhiwadi (Rajasthan).

⭐️Inflation is expected to cool down in key commodities like wheat (~30% of RM cost) & palm oil which are used as inputs by the company.

- In the IPO, selling shareholders were PE firms & the promoter group did not sell a single share (we consider this as very positive).

🎯Valuations-

At cmp of 552 rs, Bector Foods trades at 1 year forward PE of 28x its FY24 earnings which is very cheap for a FMCG company which is focused on premiumization & distribution to achieve high-teens growth & plans to double direct reach outlets to 3.20 lakhs by 2024.

👉Do you know ?

- In 1978, Mrs. Rajni Bector started the enterprise by manufacturing ice creams, bread, and biscuits.

- In 2021, Mrs. Rajni Bector was conferred with Padma Shri for her contribution to trade and industry.

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▪️ Disclaimer -
This is not a stock recommendation. Investments in securities market are subjected to market risks. Do consult your financial advisor. Nirmiti Investment Advisors may have holding in the above-mentioned securities which is the subject matter of advice.