Rakesh Bansal suggests Rs 2,400 crore dark horse for your portfolio
He said Mrs Bectors Food Specialities is trading at a significant discount to Britannia.
Chartist Rakesh Bansal believes that Mrs Bectors Food Specialities may emerge as a dark horse in the smallcap space. In an interaction with Money9, he said that there is a tremendous possibility for the company to reach the size of competitors. At present, the market valuations of the company are hovering at around Rs 2,400. Bansal has a ‘Buy’ call on Mrs Bectors Food with a target price of Rs 500-515. At present, shares of the company are hovering at around Rs 410 on the BSE.
The market watcher added that Mrs Bectors Food Specialities is famous for Cremica biscuits and English oven is the best selling brand in NCR region. Also, it is the sole supplier of buns to QSRs like McDonald’s, KFC and PVR.
“The company is also a beneficiary of unlocking as any increase in tourism will surely increase sales of QSRs,” he said, adding this should be noted that there are not many smallcap companies in the FMCG space.
He further highlighted that Mrs Bectors Food Specialities is trading at a significant discount to Britannia.
In addition to that, Britannia is trading at 7.4 times market cap-to-sales, while Bectors is just at 2.6x. “Both the businesses enjoy a similar margin of 15-16%,” said Bansal.
Of late, Mrs Bectors Food Specialities reported a QoQ and YoY revenue growth of 1.1% and 11.6%, respectively, to Rs 226 crore in Q1FY22. Revenue has improved sequentially owing to the benefit of escalation in volumes of biscuits, and the revenue from this grew at a QoQ and YoY rate of 5.1% and 2.1%. The revenue from the bread and bakery business dipped slightly by -8% QoQ and grew by 38% YoY. Q1FY22 revenues were impacted due to the second Covid wave and subsequent lockdowns announced in the second phase.