Reviews

In this edition, we have reviewed Mrs. Bectors Food Specialities Ltd. and Nazara Technologies Ltd.. We suggest our reader-investors to HOLD Mrs. Bectors Food Specialities Ltd. and Nazara Technologies Ltd. 

We had recommended Mrs. Bectors Food Specialities Ltd. in Volume 38, Issue No. 25 dated Nov 6, 2023 — Nov 19, 2023, under the ‘Cover Story’ segment. The recommended price for the stock was ₹1,136.05. We had recommended the stock based on a new product launch, focus on business expansion and expanding brand presence. Quaker Cremica Foods Private Limited was incorporated in 1995 and later changed its name to Mrs. Bectors Food Specialities Private Limited. 

It produces biscuits like cookies, creams, crackers, digestives and glucose under its flagship brand ‘Mrs. Bector’s Cremica’ and bakery products under ‘English Oven’. The company supplies its products to retail consumers and institutional customers with a pan-India presence. In Q4FY24, on a consolidated basis, the company’s revenue increased by 17.43 per cent YoY to ₹406.39 crore compared to ₹346.08 crore from the previous year’s same quarter. 

On a sequential basis, its revenue decreased by 5.24 per cent. The PBIDT excluding other income increased by 21.56 per cent to ₹58.64 crore YoY as compared to ₹48.24 crore from the previous year’s same quarter, while sequentially decreasing by 4.17 per cent. Net profit stood at ₹33.58 crore compared to ₹27.64 crore, a YoY increase of 21.53 per cent, while sequentially it decreased by 2.92 per cent from ₹34.59 crore. At TTM the shares of Mrs. Bectors Food Specialities are trading at a PE of 61.7 times, which is higher than its three-year median PE of 41.5 times, whereas the industry PE stands at 34.5 times. If we look at its PBV, it is currently at 13.1 times, which is higher than the industry PBV of 3.48 times. 

The company has a three-year average return on equity (ROE) of 18.4 per cent and a return on capital employed (ROCE) of 20.1 per cent. It is focusing on expanding its business in both domestic and international markets, investing in brand portfolio development, and doubling direct coverage to over 3 lakh outlets in two years. The company is also launching new products, including preservative-free cake and cashew delight cookies, and entering the frozen bakery market. It has initiated Project Impact 1.0 for cost transformation and declared interim and final dividends. It is also expanding its brand presence in North India, the Middle East, and Lulu supermarkets in India and Dubai. Hence, we recommend HOLD. 

We had recommended Nazara Technologies Ltd. in Volume 38, Issue No. 25 dated Nov 6, 2023 — Nov 19, 2023, under the ‘Cover Story’ segment. The recommended price for the stock was ₹802.25. We had recommended the stock based on strategic acquisitions, innovation and technology, and diversified growth channels. Nazara Technologies is a leading Indian gaming and sports media platform, offering a range of interactive gaming, e-sports, and gamified early learning ecosystems. The company aims to cater to billions of mobile internet players in emerging markets who have embraced social multiplayer interactive gaming as the primary form of entertainment. 

Its goal is to provide entertaining, locally relevant products that result in positive engagement and longer retention of users. Nazara Technologies leverages its market-first position in sports simulation and e-sports to grow revenue and profitability simultaneously. The company’s business areas include India, Africa, South East Asia, the Middle East and Latin America. In Q4FY24, on a consolidated basis, its revenue decreased by 7.99 per cent to ₹266.21 crore compared to ₹289.32 crore from the previous year’s same quarter. On a sequential basis, the revenue decreased by 16.91 per cent. 

Net profit stood at ₹19.06 crore compared to ₹11.89 crore, a YoY increase of 60.3 per cent, while sequentially it decreased by 34.37 per cent from ₹29.04 crore. At TTM the shares of Nazara Technologies are trading at a PE of 91.6 times, which is lower than its three-year median PE of 114.8 times, whereas the industry PE stands at 30.8 times. If we look at its PBV, it is currently at 3.10 times, which is lower than the industry PBV of 3.28 times. The company has a three-year average return on equity (ROE) of 3.85 per cent and a return on capital employed (ROCE) of 6.69 per cent. 

This global gaming company is poised for significant growth through a combination of organic and inorganic strategies. The company has strong financial backing, with an equity raise of ₹950 crore and a net cash balance of ₹1,450 crore. Its active merger and acquisition pipeline suggests targeted acquisitions to expand its market presence. Nazara Technologies’ focus on AI for gaming applications is well-positioned to capitalise on the evolving gaming landscape. The company is also focused on profitability, with a profitability reset in the ad technology segment and a target of ₹300 crore by FY27. Hence, we recommend HOLD. 

(Closing price as of June 07, 2024)