Mrs Bectors grey market premium jumps to 70% amid IPO; will it repeat Burger King listing gains?

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Updated: Dec 16, 2020 3:05 PM

Mrs Bectors Food is the largest supplier of buns in India to quick service restaurants (QSR) chains such as Burger King, McDonald’s, KFC, Carl’s Jr, Pizza Hut and Dominos Pizza.

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Mrs Bectors Food Specialities shares were trading strong in the grey market on Wednesday. The Rs 540-crore IPO is witnessing a strong response from the investors, especially retail investors and employees, which subscribed 12.05 times and 11.53 times, respectively, so far on the second day of the bidding process. Today, Mrs Bectors Food Specialities shares were seen trading at Rs 488 apiece, up Rs 200 or 70 per cent from the issue price of Rs 288 apiece.

Mrs Bectors Food is the largest supplier of buns in India to quick service restaurants (QSR) chains such as Burger King, McDonald’s, KFC, Carl’s Jr, Pizza Hut and Dominos Pizza. It also sells a variety of its bakery and frozen products to cloud kitchens such as Rebel Foods and multiplexes such as PVR. The company’s biscuit products are sold under the flagship brand ‘Mrs Bector’s Cremica’, and the premium bakery products under ‘English Oven’.

Will Mrs Bectors Food replicate Burger King listing gains?

This week Burger King India shares were listed on the bourses with 92 per cent premium to its issue price of Rs 60. Since the stock market debut, Burger King India shares have surged 73 per cent, however, from the IPO price, it has soared a massive 232 per cent. Analysts say that even though Mrs Bectors Food is well known for its strong distribution network and robust business especially in north India, their financials especially profit and ROE have been in a downward trend.

“However the current IPO market in India seems to be in a euphoric mood as major indices continue their climb to newer highs,” Abhijeet Ramachandran, Independent Analyst/ Co-Founder and Trainer at Tips2Trade, told Financial Express Online. He further said that it would be difficult for Mrs Bectors to replicate the success of Burger King’s IPO, but still, it should give attractive returns upwards of at least 20-30% at the time of listing.

After the stellar listing of Burger King IPO, there may be a rub-off effect in the IPO of Mrs Bectors Food Specialties too. “Also the overall market as well as the FMCG sector is positive which is working as icing on the cake. These factors should work well for the company and investors on listing as well as short term period,” Abhay Doshi, a Gujarat based independent dealer in unlisted shares, told Financial Express Online. He also said that Mrs Bector Foods may list on similar lines as that of Burger King, giving 75-85 per cent gains on listing. “However, in the long run competition from organised and unorganised sectors may weigh heavily. So, it would be prudent to track the upcoming performance for long-term decisions,” Abhay Doshi added.

Who subscribed how much?

The issue was fully subscribed within two hours on the first day of bidding on Wednesday. The portion set aside for retail investors was subscribed 12.05 times, employee 11.53 times, non-institutional investors 3.51 times and that of qualified institutional investors 41 per cent, so far on day two. The issue has been subscribed nearly 7 times today. Investors can subscribe to Mrs Bectors Food Specialities issue at a price band of Rs 286-288 per share.

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