Momentum Pick: 95% returns in 1 year, Mrs Bectors shares poised for another 10-27% upside

Despite underperformance of the benchmark indices over the past 12 months, Mrs Bectors Food Specialities Limited (MBFSL) has given over 90% returns during this period. The stock has the potential to give returns between 10% and 27% in the positional to long term period. The stock is likely to be propelled by a host of technical and fundamental factors.

Mrs Bectors shares today ended at Rs 591.25 on the NSE and were up by Rs 4.45 or 0.76% from the Tuesday closing price.

MBFSL manufactures and markets a wide range of biscuits, such as cookies, creams, crackers, digestives and glucose under flagship brand ‘Mrs. Bector’s Cremica’ and has strong players in northern parts of India. Its products are manufactured and marketed under the brand name ‘English Oven’.

Technical View by Nilesh Jain of Centrum Broking:

Buy | Target Rs 650 | Stop Loss: Rs 560 | Upside: 10%
Mrs Bectors Food is in a strong uptrend and looks good for a price target of Rs 620 and Rs 650, Nilesh Jain, Assistant Vice President (AVP), Equity Research Technical and Derivatives at Centrum Broking said.

The current momentum indicators suggest that the stock is in a buying zone, Jain said. He sees support in Mrs Bectors at Rs 560.

The counter has outperformed the Nifty50 by over 95% and given returns of 98% during a 1-year period, Trendlyne data showed.

Momentum indicator RSI is at 64 which suggests a likelihood of uptick in this stock. A number below 30 suggests that the stock is trading in an oversold zone while above 70 means that it is in the overbought territory.

The stock has been relatively less volatile than the overall market and traded with a 1-year beta of 0.75.

Fundamental View by Sharekhan:

Buy at Rs 584 | Upside potential: 27% | View: 12 Months
Sharekhan has initiated a coverage on Mrs Bectors Food estimating an upside of 27% over Rs 584 which is the price at which the stock was recommended. "MBFSL is focusing on transforming itself into a pan-India biscuit and bakery player in the coming years. This will help the company’s earnings to grow at a CAGR of 35% over FY2022-25E," a Sharekhan report said.

"Strong earnings growth coupled with stable working capital management will help its return profile to improve substantially in the coming years," the report said.

Valuation



"MBFSL stock price is trading at 31X/24X its FY2024E/25E earnings. Consistent double-digit earnings growth will act as key trigger for valuation uptick in the coming years," the Sharekhan report said.


Key Risks

-- Stiffer competition from top players or new entrant in the space and significant rise in the raw material prices would act as a key risk to MBFSL earnings estimates in the coming years, the Sharkhan report said.

-- Revenue growth may get impacted if the company fails to ramp-up distributions as per the plans, the report warns.

-- Any inflationary environment might lead to slowdown in demand or downtrading to low price products which will impact the sales volume of MBFSL, the report further said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)