MrsBectors Food Specialities Ltd has made the headlines for the good reasons, becoming the most successful IPO of 2020 attracting bids for nearly 199.41 times the number of shares offered. The company’s subscription figures surpassed Mazagon Dock Shipbuilders Ltd and Burger King India, despite the IPOs drawing big subscription numbers earlier in the year, with about 157 times each subscription.
The recent feat also puts the IPO among the three biggest subscribed IPOs in ten years, with Salasar Techno Engineering Ltd and Astron Paper and Board Mill Ltd being the only two companies that got better attractions, according to Prime Database.
The three-day offering had attracted bids for more than 2.62 billion shares compared with an issue size of 13.24 million shares as at the last day. The qualified institutional investor category was reportedly subscribed 178.08 times, receiving bids for 667.86 million shares. On the other hand, the non-institutional category that comprises high net worth individuals was subscribed 625.20 times.
According to analysts, grey market premium for the shares was about 80%, equivalent to Rs225-230 on the final day of subscription. MrsBectors Food IPO comprises a fresh issue of ₹40.50 crore and an offer for sale of ₹500 crore by Linus Pvt Ltd., Mabel Pvt Ltd, GW Crown Pte Ltd and GW confectionary Pte Ltd, aggregating to ₹541 crore.
According to draft red herring prospectus filed by the company, the proceeds from the fresh issue will be used to finance the expansion project of the Rajpura Manufacturing Facility in Punjab by establishing a new production line for biscuits. The company is currently operating at a capacity utilization of 72% annually, with plans to expand its production capacity to additional 14,400 tons of biscuits by 2022.
“At the upper band of issue price, Mrs. Bector will trade at a Price/EPS multiple of 28x of its annualized first half FY21 revenue, which is at a discount to its listed peer like Britannia Industries Ltd (50.5 x), and at a premium to ITC (18.9 x) and Anmol (7.7 x). We believe that the current price band is undervalued, looking at the growth potential in the company. We anticipate listing gains and give a ‘SUBSCRIBE’ rating to Mrs. Bectors IPO,” the note added.
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