Mumbai: Ms. Bectors Food Specialties Ltd, a premium biscuit and baked goods company in North India, became the most successful initial public offering (IPO) of 2020, attracting offers for nearly 199.41 times the number of shares on offer, stock data showed.
Mrs Bectors’ subscription data beat Mazagon Dock Shipbuilders Ltd and Burger King India, the other IPOs that have garnered large subscription numbers this year, getting nearly 157 times each subscription.
This also places it among the three largest IPOs signed in a decade. The two companies that have achieved the greatest attractiveness are Salasar Techno Engineering Ltd, which registered over 270 times in July 2017; and Astron Paper and Board Mill Ltd, which scored more than 240 times in December of that year, according to Prime Database. To be sure, while Ms. Bectors was collecting Rs541 crore from her IPO, the other two IPOs, albeit the main board IPOs, were considerably smaller at Rs35.95 crore and Rs69.83 crore, respectively.
Until 5:00 pm, the last day of the three-day offering, the IPO attracted offers for more than 2.62 billion shares compared to an issue size of 13.24 million shares. At the top of the file ₹288 price range for the issue, the IPO obtained offers of approximately value ₹75,486.02 crore
The category of qualified institutional investors was subscribed 178.08 times, receiving offers for 667.86 million shares, the non-institutional category made up of subjects with high net worth was subscribed 625.20 times.
Demand from private retail investors, whose investments cannot exceed ₹2 lakhs in an IPO was 29.53 times the 193.83 million shares on offer on the exchange data shown.
The company had offered shares in the price range of ₹286-288 one piece.
According to analysts, the gray market premium for the shares was nearly 80% or Rs225-230 on the last day of subscription. The IPO assignment will likely be announced on December 22nd and listing is expected to take place on December 28th.
Mrs Bectors Food IPO includes a new issue of ₹40.50 crore and an offer for sale of ₹500 crore from Linus Pvt Ltd., Mabel Pvt Ltd, GW Crown Pte Ltd and GW confectionary Pte Ltd, aggregating a ₹541 crore.
The promoters owned a 52.39% stake in Ms. Bectors before the issue and after the issue it will drop to 48.87%.
The proceeds from the new issue will be used to finance the cost of the project to expand the Rajpura Manufacturing Facility in Punjab by establishing a new production line for biscuits, according to the draft red herring prospectus presented by the company.
Ms. Bectors is one of the leading companies in the premium and mid premium biscuit segment in North India with a market share of 4.5%.
Currently, the company operates with a capacity utilization of 72% per annum and plans to expand its production capacity to produce an additional 14,400 tons of cookies by FY22.
As pricing realization and asset turnover improve, the additional capacity has the potential to grow the line above a 15-18% CAGR over the next 2-3 years, broker KR Choksey said in a statement from December 14.
“At the top of the issue price range, Ms. Bector will trade at a Price / Earnings per share multiple of 28 times her annualized turnover of the first half of FY21, which is discounted to her peer listed as Britannia Industries Ltd ( 50.5x), and a premium to ITC (18.9x) and Anmol (7.7x). We believe the current price range is underestimated considering the company’s growth potential. We expect listing gains and we assign a “SUBSCRIBE” rating to Ms. Bectors IPO, “the note added.
In the six months ending September 30, Ms. Bectors Food posted a turnover of ₹430.99 crore, up 18.2% over the previous year. Net profit rose 282% a ₹38.88 crore from ₹10.17 crore a year earlier. The profit margin during the period grew to 9% from 2.8% a year ago. Net financial debt also decreased from ₹121.77 crore in FY18 a ₹74.80 crore in the first half of FY21, bringing its debt ratio to 0.21 times.