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ICICI SecuritiesTarget: ₹380
CMP: ₹347.30
Mrs. Bectors Foods Specialities reported a good revenue performance (+17 per cent y-o-y) with strong recovery in the institutional bakery (QSR) segment, breads business growing on the back of distribution expansion and good momentum in the biscuits business (both retail and exports). RM inflation continued to impact margin print.
EBITDA margin recovery was good with the print (12.6 per cent) below the aspiration for this year (14-15 per cent).
We believe the expansion of domestic biscuits and branded breads business into new regions driven by sales initiatives would likely be a key driver for growth. Further, focus on premiumisation within existing product segments and providing differential offerings to customers may drive margin expansion.
We cut our FY23 earnings estimates by about 13 per cent; modelling revenue/EBITDA/PAT CAGR of 14/20/20 per cent over FY22-24. Maintain Add with a DCF-based revised target price of ₹380 (₹430 earlier).
Key downside risks are delays or failures distribution expansion or steep rise in competitive intensity.
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