Release Date: August 02, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Mrs Bectors Food Specialities Ltd (BOM:543253, Financial) reported a 17% increase in revenue from operations, marking the highest ever quarterly revenues.
- The company achieved a robust gross margin of 48%, indicating strong profitability.
- Both business segments, biscuits and bakery, continue to exhibit strong growth trajectories.
- The company has expanded its international footprint, reaching over 70 countries with its Cremica brand.
- New product launches, such as the English Oven zero maida bread and Cremica non-stop crackers, have been well received by consumers.
Negative Points
- Despite the revenue growth, the net profit growth was less than 10%, indicating higher costs or lower margins in some areas.
- The company faces increased competition, particularly in the biscuit segment, which has led to higher promotional expenses.
- Extreme weather conditions and the Lok Sabha elections impacted consumption patterns, leading to cautious consumer behavior.
- The company has significant capital expenditure plans, with INR350 crores allocated for new plants, which may strain financial resources.
- The bakery segment's growth was slower at 14%, partly due to the impact of extreme summer conditions in North India and slower growth in the QSR sector.
Q & A Highlights
Q: Can you give us a breakup of this year's INR350 crores CapEx in terms of locations as well as whether it is bakery or biscuit?
A: This year, CapEx is primarily focused on two specific plants: the MP plant for biscuits in Indore and the Khopoli plant in Maharashtra. These two plants will account for approximately INR270 crores to INR280 crores out of the INR350 crores total CapEx.
Q: What is the expected turnover from the INR350 crores CapEx when fully utilized?
A: On 100% utilization, the new capacities, along with existing ones, can generate a turnover close to INR2,800 crores to INR2,900 crores.
Q: What are the reasons for the slower growth in the bread segment this quarter?
A: The slower growth in the bread segment was primarily due to Navaratri falling in April and the extreme summer in North India, which is a significant market for us. Additionally, the QSR business has been slower, but our frozen range has shown good growth.
Q: Can you provide more details on the growth drivers for the export segment?
A: Growth in the export segment is coming from multiple geographies, including North America, South America, and the Middle East. We are building our presence with retailers worldwide who appreciate our product quality and customization capabilities.
Q: What kind of demand are you seeing from the Q-commerce space for products like garlic bread, burger buns, and pizza base?
A: Demand in the Q-commerce space has been robust, especially for pizza bases and burger buns, where we hold a market leadership position. We have also seen exceptional response for our healthier products like the zero maida bread.
Q: What is the outlook for EBITDA margins going forward?
A: We expect to maintain our EBITDA margins within the range of 14% to 15% over the next few quarters. After that, we aim to move towards higher margins.
Q: How is the competitive intensity affecting the biscuit segment, and what are your strategies to cope with it?
A: The competitive intensity has increased, especially with market leaders taking aggressive stances on consumer promotions. We have matched these promotions to retain our market share and have also rescheduled our marketing budget to focus more on consumer promotions.
Q: What are the growth prospects for the frozen dessert category?
A: The frozen dessert category opens up new channels like HoReCa for us. We see significant potential in this category and are focusing on products like muffins, cookies, cakes, and specialty items like millet cookies and cheesecakes.
Q: What is the status of the Cremica bakery brand acquisition?
A: The acquisition process is still ongoing and is currently with the legal team. We expect it to be completed in the next two to three months.
Q: What are your plans for expanding your direct and indirect reach in the coming years?
A: Our next target is to reach 1 million outlets from the current 700,000 over the next few years. This expansion will be a significant focus for us.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
