Mrs Bectors Food Specialities Ltd Q3 FY2025 Concall Summary

Key Takeaways

• Margin hit absorbed, recovery promised: Input cost inflation and export logistics squeezed margins, but management expects a return to the 14–15% range by Q1 FY26, with Q4 already better than Q3.
• Domestic Biscuits volume turns the corner: After four quarters of flat growth driven by hyper-competition, domestic Biscuits volume grew in Q3, and the trend is expected to continue into Q4.
• Bakery pricing agility protects the business: Short shelf-life Bakery passed through price increases quickly and fully covered cost inflation in Q3, while Biscuits pricing actions spill into Q4 and Q1.
• Quick commerce is a material, growing channel: English Oven Bakery now draws 23–24% of revenue from quick commerce, and the company is aggressively pursuing the channel with new-age offerings.
• What to watch next quarter: Whether the Dhar plant commissions on time in April, the pace of domestic Biscuits volume recovery, and any actual moderation in palm oil and maida prices.

Margin Walk & Recovery

• Input cost escalation: Prices of key commodities (palm oil, maida, cocoa) saw significant escalation and remained elevated through the quarter.
• Export logistics hit: Other expenses rose ~20%, largely from higher freight and forwarding costs on exports, including a Red Sea impact that has now persisted for 9–10 months. Power and fuel savings partially offset the increase.
• Bakery vs Biscuits pricing speed: Bakery, with shorter shelf life and fewer raw materials, executed price rises faster and fully covered cost increases in Q3. Biscuits, with more SKUs and market stocks, started price correction in Q2 FY25; actions spill into Q4, with full impact arriving in Q1 FY26.
• B2B margin stability: B2B Bakery margins held stable due to an annual hedging policy that blocks commodities for a year, with price revisions around April/May. B2C suffered a higher margin loss than the overall reduction.
• Cost efficiency program: A project covering manufacturing, supply chain and other areas targets an annualized margin impact of close to half a percent over the next 12 months. Most projects conclude by March, with some continuing into next financial year.
• Recovery path: Management expects Q4 margins to improve sequentially and a return to the 14–15% range by Q1 FY26.

Manu Talwar: "we expect by quarter one, we should be back in the range of 14, 15, which has been our guidance and which has been what we haven't delivered."

Domestic Biscuits: Volume Recovery & Competition

• The drag: Domestic Biscuits had been under growth pressure since Q3 FY24 due to hyper-competition, with leaders dipping pricing and offering extra grammage.
• The turn: Volume growth returned in Q3 FY25 (single digits), led by general trade and the CPO outlet strategy. Management expects the trend to continue in Q4.
• Distribution muscle: Biscuits build outlets grew from 280,000 to 330,000 year-on-year. Cremica preferred outlets grew over 22%, with premiumization reaching 57–58% and contributing more to sales.
• Pricing catch-up: By March 2025, all pricing actions to neutralize raw material cost increases will be taken; full impact flows through in Q1 FY26.

Manu Talwar: "From Quarter 3 of this financial year, we have seen for us the revenue growth, the volume growth has started looking up and we expect a similar trend to continue in the Quarter 4 of the financial year."

Bakery: Channel & Product Expansion

• Quick commerce leadership: English Oven Bakery took an early lead on quick commerce, winning Blinkit's "#1 FMCG Award" two years ago. The channel now contributes over 23–24% of Bakery revenue, and the company is aggressively pursuing it with new-age offerings.
• Distribution push: North India Bakery routes rose ~7–8% over two years, outlets jumped close to 20% over two years and more than 11% over the last year. Expansion work now targets Bombay/Maharashtra and the South from January to September, with upper North (Punjab) in focus next financial year.
• B2B Bakery momentum: Despite a slow QSR segment, the frozen range investment delivered quarter-over-quarter growth for the last 4–6 quarters, with Q3 showing a "very, very good, impressive run" in B2B revenue growth versus the prior year.
• Health positioning: A high-impact outdoor campaign pushed the 'No Means No' proposition (no maida, no palm oil, no added colors). New health-side Biscuits products are lined up for the next few months.
• Frozen B2C entry: By Q1 FY26, the company plans to introduce frozen product lines in the B2C segment under English Oven, covering both sweet and savory ranges.

Exports & International Build-out

• Export growth moderating: Exports have grown extremely well over the last two years but now sit on a very high base. Growth is expected to mellow down but continue in the mid-teens.
• Global brand ambition: The company aims to position the Cremica brand worldwide, pursuing a dual-focused approach on white label and branded business simultaneously.
• International offices: A Middle East office opened with two people based in Dubai, and one person is now based in Ghana covering West Africa, focused on building brand and distribution.
• Key retail partnerships: The company has been supplying Walmart for two years and Lulu for five years, continuing to build relationships and add new SKUs, with a goal to enter Walmart's everyday category within this year.
• Dhar facility pipeline: The upcoming Dhar Biscuits facility, commissioning in April 2025, carries an exciting export product portfolio aimed at participating in newer segments over the next few quarters.

Capacity Expansion & Capex

• Dhar Biscuits facility: Commissioning scheduled for April 2025, with a 30–40 day spillover window normal for a large project (mid-March to mid-April).
• Kolkata plant: Set to commence operations in the first fortnight of May, in Q1 FY26.
• Khopoli Bakery facility: Shifted from Q1 end to Q2 FY26 due to imported machine timelines.
• Rajpura lines: Fully commissioned in the first two quarters as planned.
• Noida improvements: Improvement projects implemented on time.

Innovation & Sub-brand Strategy

• Sub-brand focus: The company is pursuing a sub-brand strategy aiming to establish sub-brands as drivers of sustainable and profitable growth.
• Recent launches: Bite-sized snacks under non-stop mini crackers (baked, not fried, in nitrogen-flushed pouch packaging) launched two months ago with no breakage complaints so far. Gourmet Burger Buns launched under English Oven.
• Festive season entry: The company participated in the Christmas and New Year season for the first time with Danish Butter Cookies and Sugar Sprinkle Crackers.
• Innovation as differentiator: Management stated a clear strategy to be innovative and different, giving consumers experiences across health, snacking, taste and cream ranges. Some Biscuits-side products are lined up but undisclosed.
• Bakewalk evaluation: The company is evaluating how to take the Bakewalk brand forward; a decision on expansion or discontinuation is expected in 3–4 months, with an update promised in the next investor call.

Anoop Bector: "our strategy for Mrs. Bector is very clear that we want to be innovative, we want to be different, we want to give consumer experiences."

Guidance & Commitments

Key Metrics