Mrs Bector Food Specialties sees bakery-led growth as margins recover from input inflation

Investment View and Valuation

In its November 9, 2026 result update, Anand Rathi Research maintained its BUY rating on Mrs Bector Food Specialties after an in-line Q2FY27 performance and an improved growth outlook. The broker considers earnings visibility healthy and valuation reasonable. It raised its target price to Rs275 from Rs250, based on a 35 times multiple of September 2028E EPS, compared with its earlier valuation basis of 35 times FY28E EPS.

At the report CMP of Rs210, the stock traded at 37 times, 29 times and 25 times FY27E, FY28E and FY29E EPS, respectively.

Q2FY27 Financial Performance

Mrs Bector Food Specialties reported record Q2FY27 consolidated revenue of Rs6,305 million, up 14.3 per cent YoY. EBITDA increased 19.1 per cent YoY to Rs825 million, while PAT rose 25.1 per cent YoY to about Rs458 million. EBITDA margin expanded 50 basis points YoY to 13.1 per cent and was stable QoQ, broadly in line with the street expectation of 13 per cent despite higher input costs.

Bakery revenue growth was supported by English Oven's mid-teens volume growth and high-teens value growth, as well as recovering institutional bakery demand from QSR customers. Domestic biscuit volumes grew 4 to 5 per cent, while around 3 per cent QoQ pricing supported value growth.

Cost Pressures and Pricing Actions

The broker noted that weak rural demand following a below-normal monsoon and West Asia-related shipping disruption constrained the biscuit and export businesses. Higher edible oil, sugar and packaging costs caused a sequential gross-margin decline because price recovery lagged inflation. Management said that pricing actions and Project IMPACT savings offset most, but not all, of the cost pressure.

The company took about 3 per cent price hikes in Q2FY27 and implemented further hikes in October 2026, with additional action expected in November 2026. Management expects cumulative FY27 pricing of around 5 to 6 per cent, largely through grammage reductions in Rs5 and Rs10 packs.

Growth Outlook and Earnings Estimates

Management expects mid-teen revenue growth in FY27 and mid-to-high-teen growth in H2FY27, aided by festive demand, pricing, distribution expansion, premiumisation, sustained bakery momentum and recovery of deferred export orders.

It expects inflation to peak in Q3FY27 and EBITDA margin to hold at around 13.1 per cent before improving to 13.5 to 14 per cent in Q4FY27. Management retains its 14 to 15 per cent medium-term margin target. Anand Rathi expects EBITDA margin to rise by 180 basis points from FY26 to FY29E to 14.4 per cent, supported by pricing, a richer product mix and cost savings.

At the report CMP of Rs210, the stock traded at the following earnings multiples:

Distribution and Capacity Expansion

Distribution is a central driver of the outlook. The company added more than 30,000 direct outlets in H1FY27 against a 40,000 annual target, taking direct reach to around 345,000 outlets. It also increased distributor additions by 10 to 15 per cent.

Total biscuit numeric reach is around 700,000 outlets, with a target of 900,000 to 1 million by FY30E. English Oven added 12,000 to 13,000 outlets over the past year.

Quick Commerce contributes around 22 per cent of B2C revenue and offers better bakery margins than general trade, although it requires higher marketing investment. New Kolkata and Khopoli facilities are scaling up, and management sees scope for around 20 per cent bakery growth through in-house expansion and third-party manufacturing.

Key Risks

• Failure of new launches.
• A sharp increase in key input prices.
• Price-based competition.
• Prolonged geopolitical conflict affecting exports.