Mrs Bectors shares are down 32% from the peak post listing — analysts say it is still 'overpriced'
- Since the listing, the stock has fallen nearly 32% and wiped out over 1,000 crore of investor wealth until today.
- Analysts say despite the correction so far the stock is still overpriced, and there is still some room left for correction.
- The $73 million IPO of the biscuit and bakery products maker was a hit — subscribed over 198 times; it was the top IPO by subscription in 2020.
- According to Axis Securities, the company holds a mere 1% of the market share in the branded biscuit segment, whereas its other listed peer Britannia has about 28% share of the pie.
AdvertisementThe Mrs Bectors IPO investors who cheered the whopping 74% gains on the listing are now in a dilemma of what to do with their stock. Since the listing, the stock has fallen nearly 32% — and wiped out over ₹1,000 crore of investor wealth, till today.
Business Insider asked a couple of analysts questions to the same effect. Analysts say despite the correction so far the stock is still overpriced, and there is still some room left for correction.
|Stock||Post listing peak||Current price||Fall from peak|
|Mrs Bector's Food||₹624||₹401||32%|
What led to a 32% fall?
The $73 million IPO of the biscuit and bakery products maker was a hit — subscribed over 198 times; it was the top IPO by subscription in 2020. An analyst of a top broking firm who didn’t want to be named because of compliance reasons said they asked their clients to subscribe because the shares at the time of issue were priced at “20-30% discount to its peers.”
But on listing day, the IPO nearly doubled the investor wealth and started trading at a premium valuation compared to much larger industry leaders such as Britannia Industries. Keshav Lahoti, the equity strategist at Angel Broking, told Business Insider that the euphoria which took it to the level above Britannia “was not sustainable.”
"Mrs Bector's correcting post listings is in line with our expectation. We think there is still some room left for correction," said Lahoti.
According to the Axis Securities IPO note released in December, the company holds mere 1% of the market share in the branded biscuit segment, whereas its other listed peer Britannia has about 28% share of the pie.
Kranthi Bathini, the equity strategist at WealthMills Securities, said he also expects some more "softness" in the share price. "If I can predict, another 10-15% downside is still left," he added.
According to Bathini, it's just not Mrs Bectors nearly all the IPO saw "exuberance" during their listing and fell by a thud due to "profit booking." "All of the recent listings if you see including Burger King, Happiest Minds all of them are listing at a great premium and then we are witnessing profit booking leading to some amount of softening of the stock price and similar scenario has been with Mrs Bectors share price," Bathini said.
AdvertisementHold positions or buy stocks?
According to analysts, It is not the right time to jump in to buy stocks. Lahoti advised investors to “make a fresh position in the stock only once the stock price consolidates, and don’t jump in the stock when it is in correction mode.”
Bathini reckoned the same thoughts and said the investor should wait for 10-15% more correction and then enter the stock in a “staggered” manner.
“There is ample headroom for the food industry to emerge in India — the prospects look good but investors need to enter these kinds of stocks in a very staggered manner. They should enter at gibs and they should make portfolios for these kinds of stocks,” he added.
According to analysts, the current investors should hold the positions, and these are key guidance that may trigger the stock in the near future:
- Upcoming quarterly results will be a key factor.
- Business expansion plans
- Increasing market share
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