Mrs. Bectors Food Specialities Ltd - Stock Valuation and Financial Performance

Segment Performance:

• Biscuits: Revenue grew by 15% YoY to INR 308 crores.
• Bakery: Revenue increased by 20% YoY to INR 175 crores.

Market Environment & Demand Trends:

• Consumer sentiment saw an uptick due to a buoyant festival season and rising rural demand, while urban demand remained muted.
• Raw material inflation persisted, with higher prices of palm oil, maida, and cocoa impacting costs.
• The company implemented cost-saving measures and strategic price increases, with the full impact expected to be realized by Q1 FY26.

Product & Market Initiatives:

• New Product Launches & Expansion:
  1. Introduced bite-sized "Non-Stop Mini Crackers" (baked, not fried).
  2. Expanded Gourmet Burger Buns under the English Oven brand.
  3. Strengthened the premium biscuits category, especially in crackers and cream biscuits.
• Health-Focused Campaign: "No Means No" campaign promoting products with no maida, no palm oil, and no added colors.
• Export Growth: The company remains a trusted partner for global chains and is expanding in quick commerce and modern retail.

Operational & Capex Developments

• Capacity Expansion:
  • The Dhar (Madhya Pradesh) Biscuits facility is expected to be commissioned by April 2025.
  • The Khopoli (Maharashtra) Bakery facility will be operational in Q2 FY26.
  • The Kolkata plant is set to start operations in Q1 FY26.
• Utilization of QIP Funds: A portion of the proceeds was used for debt repayment, subsidiary investment, and project financing, with the remainder temporarily placed in bank deposits.

Margin & Pricing Strategy

• Price increases of 4-5% in biscuits and 3-4% in bakery products were implemented to counter raw material inflation.
• B2B margins remain stable due to long-term hedging, while B2C margins were impacted due to rising input costs.
• The company aims to restore EBITDA margins to 14-15% by Q1 FY26.
• Retail Expansion & Quick Commerce Focus: Increased direct reach to over 700,000 outlets and continued expansion in Blinkit and other quick commerce platforms.

• The company launched new health products like Bakefit Millet Cookies and Atta Kulcha, along with multigrain bread to aid premiumization
• The company remains on track to achieve direct distribution of over 3 lakh outlets by the end of FY '24.
• Capex-
  • 2 Biscuit Lines have been commissioned in Rajpura in the current year. 2 more lines are being added and estimated to be completed by H1’24-25.
  • The company will be setting up a new bakery unit in Kolkata in FY24-25. 
• The company had its first-ever media plan on top Hindi channels, featuring Kareena Kapoor on Star Plus, Sony Entertainment and Zee. 

Stock pulse is a format where we explore the most important questions to understand the company's performance.

What is the current position of the company?

Mrs. Bectors Food Specialities Ltd was incorporated as Quaker Cremica Foods Private Limited on September 15, 1995. It manufactures biscuits and bakery products in the premium and mid-premium segments that are marketed under Mrs. Bector’s Cremica and Mrs. Bector’s English Oven brands, respectively. Mrs. Rajni Bector started the enterprise in 1978 by manufacturing ice creams, bread, and biscuits. It is promoted by Mr. Anoop Bector who has over 25 years of industry experience. He is also the Managing Director of the Company.

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What is the company's current Business Segment?

Mrs. Bectors Food Specialities Business can be divided into three segment

• Biscuits: The company manufactures and sell biscuits, primarily in the premium and mid-premium segments including a wide variety of cookies, creams, crackers, and digestives. The biscuit segment can be further divided into the Domestic and Export market
  • Domestic : Mrs. Bector has ~5.4 % of the premium and mid-premium biscuits market share in North India as of Q4 FY23.

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• Export : Mrs. Bectors account for ~12% share of the total exports of biscuits from India in CY19. Out of which ~54% export is done under own brand.

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• Bakery Products:
  • Consumer Bakery : Company manufactures and sells various types of premium bakery products in savoury and sweets categories for retail customers such as breads, buns, pizza bases, and cakes under the ‘English Oven’ brand. It has 5% market share in the Branded Breads Segment in India.

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• Institutional bakery : Mrs Bector food is preferred supplier having strong and long relationships with leading international QSRs, multiplex chains, and cloud kitchens for burger buns, muffins, garlic breads and other bakery products. As of FY20, Mrs Bector has 11% market share in semi processed and dough-based offerings.

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• Contract Manufacturing : Company also manufactures ‘Oreo’ biscuits and ‘Chocobakes’ cookies on contract basis for Mondelez India Foods Private Limited.

Source: Company presentation

What is the Capex plan ahead?

Mrs Bectors as on FY23 capacity utilisation stands at 90% and 71% in Biscuit and Bakery segement respectively.

Source: Company presentation

Now Company is planning to do overall capex of around Rs. 350 to Rs. 400 Cr in current and next financial year. Post commissioning company can generate revenue upto Rs. 2,400 Cr at its peak capacity utilisation. 

Source: Earning transcript Q1FY24

What is the catalyst?

India has the lowest per capita biscuit consumption in the world at 2.5-2.6 kg, compared to over 4.25 kg in South East Asian countries like Singapore, Hong Kong, Thailand and Indonesia, and more than 10 kg in the US and Western Europe. 

Source: Company, MoneyWorks4me Research

Growth drivers:

Source: Company, MoneyWorks4me Research

The Indian biscuits and bakery retail market is valued at Rs. 45,000 Cr and is expected to grow at a CAGR of ~9% over the next five years. Biscuits and other snacking bakery products such as rusks, wafers and tea cakes contribute almost Rs 40,000 Cr or 89% to the total market. The balance 11% is contributed by breads including loaves, buns, pizza bases which together account for Rs. 5,000 Cr.

Source: Company, MoneyWorks4me Research

What are the concern areas?

A notable risk lies in the Mrs. Bector geographical concentration (well-established in North India).Efforts are underway to augment capacity in existing as well as new geographical areas. To do this, the company needs to build more places to sell its products and invest in advertising brand awareness which will exert pressure on margins.

The biscuit market in India is very competitive, with big companies, smaller local ones, and others that aren't organized. This competition can make it hard for new companies like Mrs Bector to enter such markets because the big companies already have a strong reputation, widespread sales, and people trust their products a lot.

Strong result. The company's expansion plans encompass the installation of two new biscuit lines in Rajpura (Punjab), an additional bakery plant in the NCR region, a biscuit line in Dhar, and the expansion of the existing bakery plant in Khopoli (Maharashtra).

We issued a buy recommendation for Mrs. Bectors Food at a price of Rs. 312, and since then, the stock price has rallied ~3.7x to Rs. 1146. Our interest in Bectors Food stems from its potential as a proxy play on the Quick Service Restaurant (QSR) sector's growth in India and strong management. In our last MRP Update, we assessed Mrs. Bectors Food's value at Rs. 592. Over the past two quarters, the company has demonstrated an increase in earnings, attributed to the expansion of its distribution network in both existing and new markets. This growth has been widespread, encompassing both the biscuits and bakery segments, surpassing our initial expectations. Factoring in the positives, we expect our MRP to trend upwards of Rs. 750.

Consistently strong performance, maintaining effectiveness across all parameters.