Mrs Bectors Food - Short-term headwinds; long term growth intact- Company Update

Mrs Bectors reported a largely in-line Q4FY26 performance. The quarter was impacted by near-term weakness in the biscuits segment, led by GST 2.0-related pricing reset, delayed industry transition and elevated competitive intensity. Bakery also witnessed some moderation due to seasonal timing shift, as Navratri moved entirely into March, impacting end-period demand. Looking ahead, GST-led price rationalization is likely to support demand recovery in biscuits, while export normalization remains an important medium-term growth driver. Capacity expansion is progressing well, with the Kolkata plant commissioned to strengthen East India penetration, while the Mumbai facility continues to ramp up. The company is also expanding English Oven into Hyderabad and Chennai, further strengthening its presence in key growth markets. With most of the capex cycle now complete and plants largely operational, Mrs Bectors is well positioned to benefit from operating leverage, improving asset turns and gradual margin recovery from FY27E onwards. We maintain BUY rating with TP of Rs 265.

Largely in line quarter:

Mrs. Bectors reported revenue grew 8.9% YoY to Rs 4,859 mn (MNCL EST- Rs 4,888 mn) in Q4FY26, broadly in line with expectations. The biscuits segment (~60.4% of sales) grew 8.2% YoY, with domestic sales growing in high single digits while exports grew in low single digits. The biscuit segment remained impacted by the GST 2.0-led pricing reset, delayed industry transition and elevated tariffs.  The bakery segment (~39.6% of sales) delivered a subdued 8.9% YoY growth, impacted by the complete shift of the Navratri season into March, which tempered closing month performance.

Margins to improve:

The company reported gross margin of 46.2%, expanding by 190bps YoY (MNCL Est 44.1%), driven by favourable input costs, improved product mix and inventory-related benefits. However, despite healthy gross margin expansion, EBITDA margin remained flat YoY and QoQ at 12.7% (MNCL Est 12.2%) due to higher employee expenses (+130bps YoY) and increase in other expenses (+30bps YoY). Consequently, EBITDA grew 11.1% YoY to Rs 617mn (MNCL Est. Rs 599mn), while PAT increased 3.3% YoY to Rs 354mn (MNCL Est. Rs 336mn). Management reiterated near-term EBITDA margin guidance of 14%, expecting sequential improvement driven by stronger domestic biscuit momentum supported by GST rationalization, export stabilizing, stable RMAT prices, increasing traction in premium SKUs, and continued benefits from cost-efficiency initiatives.

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We believe the company is building a strong multi-year growth runway. With major capex nearing completion and new facilities stabilizing, Mrs. Bectors is set for deeper pan-India penetration. The bakery division (39.6% of sales)—driven by English Oven’s double-digit growth—remains a key growth, new launches and strong traction in quick commerce and modern trade. Expansion into East and South India, along with aggressive scaling in Mumbai and Maharashtra, is further aiding growth. This is supported by the commissioning of the Kolkata plant in January, marking entry into East India with servicing across general trade, modern trade and institutional channels. The English Oven brand has also been expanded into Hyderabad, strengthening presence in key growth markets, while the Mumbai plant, commissioned in Q4 FY26, is in ramp-up phase and expected to scale gradually over the coming quarters. Collectively, these initiatives are expected to enhance the bakery footprint, improve supply chain efficiency and support sustained growth through deeper regional penetration. The biscuits business (60.4% of sales) is recovering, with domestic growth expected to return to low- to mid-double digits by FY27 as consumption improves post GST rationalization, while export growth is expected to benefit from recent tariff reductions. Overall, with expanding distribution, a stronger product mix and a supportive raw material environment, the company is well positioned for sustained double-digit growth and margin improvement through FY27–28E.

Valuation & Key risks:

We are factoring in Revenue/EBITDA/PAT CAGR of 14.6%/20.7%/27.8% over FY26–28E, supported by export normalisation from Q1FY27E onwards, benefits of GST reforms, capacity ramp-up across key facilities and improving operating leverage. However, we lower our earnings estimates by 8.6%/6.8% for FY27E/FY28E, respectively, to factor in slower-than-anticipated margin recovery. We maintain our BUY rating on the stock and value it at 40x FY28E EPS of ~Rs 7.5, arriving at a revised target price of Rs 265 (earlier Rs 275). With the capex cycle nearing completion and most plants becoming operational, the company remains well positioned to benefit from improving growth visibility, better asset turns and margin recovery over the medium term. Key risks include intensifying domestic competition, increase in commodity prices and slowdown in export markets.

Company website: https://www.bectorfoods.com/

*CMP is as per report published date

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Analyst:

• Rahul Dani - Research Analyst, Institutional Equities (NISM-201500034725)
• Aachal Pal- Research Associate, Institutional Equities (NISM-202300215737)

Mrs Bectors - Frequently Asked Questions (FAQ)

Here are quick answers to common investor questions on the Mrs Bectors investment opportunity, including levels, outlook and risk factors.

1. What impacted Mrs Bectors' Q4FY26 performance?

The quarter was affected by GST-led pricing adjustments in biscuits, elevated competition and seasonal demand moderation in the bakery segment due to festival timing shifts.

2. What are the major growth drivers for Mrs Bectors?

Key growth drivers include export normalization, bakery expansion, new manufacturing facilities, wider distribution reach, premium product offerings and increasing penetration across new markets.

3. How is the bakery business performing?

The bakery segment continues to benefit from strong demand for the English Oven brand, geographic expansion and growing traction in modern trade and quick-commerce channels.

4. How will new manufacturing plants support growth?

The Kolkata and Mumbai facilities are expected to improve supply chain efficiency, strengthen regional presence and support higher capacity utilization and operating leverage.

5. What are the key risks for Mrs Bectors?

Major risks include rising commodity costs, increased competitive intensity, slower export recovery and weaker-than-expected consumer demand.

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