Anand Rathi Initiates Coverage on Mrs Bector Food, Sets Target Price at Rs 250
Mrs. Bector Foods' Q4FY26 Results Disappoint Amid Elevated Input Costs
Mrs. Bector Foods' fourth quarter (Q4) fiscal year 2026 (FY26) results were slightly below estimates due to muted demand and elevated input costs. The company's revenue growth stood at 9% year-over-year (y/y), compared to the street estimate of 10%. Additionally, the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) margin came in at 12.7%, which is lower than the estimated 12.9%.
The domestic biscuits business was impacted by the Goods and Services Tax (GST) transition and increased competition in FY26. The international biscuit business was also affected by uncertainty surrounding US tariffs and conflicts in West Asia. However, the management expects the biscuits business to improve in FY27, driven by the normalization of competition in the domestic market, diversification of markets and vendors, and a lower base in international markets.
The bakery category, which includes English Oven, is expected to maintain mid-to-high teens growth in FY27. This growth is attributed to the company's entry into newer markets, premiumization, and new product launches. The management is optimistic about achieving an EBITDA margin of 14% in FY27e through pricing actions and cost savings initiatives.
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In light of the weaker quarterly performance and margin headwinds, we have trimmed our earnings per share (EPS) estimate by approximately 15% for FY27 and FY28e.
| Actual vs. Estimate | Q4FY26 |
|---|---|
| Revenue Growth (y/y) | 9% |
| EBITDA Margin | 12.7% |
| Street Estimate | 10% |
Despite the disappointing Q4FY26 results, we maintain a BUY rating on the stock with a target price (TP) of Rs250, valuing it at 35x FY28e EPS. This valuation is reasonable, considering the company's improving performance and the current market conditions.
| Previous vs. Current | Target Price |
|---|---|
| Previous TP | Rs320 |
| Current TP | Rs250 |
| Valuation Multiple | 42x |
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The company's improving performance and reasonable valuation make it an attractive investment opportunity.
Investor Takeaway
Investors should consider Mrs Bector Food's potential for growth in FY27, driven by improved competition and diversification.
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