Mrs Bectors Food Specialities Ltd Q3 FY2026 Concall Summary

Key Takeaways

• GST 2.0 and tariffs weighed on biscuits: Biscuit growth slowed to 5.7% YoY as the GST transition and U.S. tariff uncertainty disrupted momentum, while bakery held at 13.2% YoY.
• Margins improved despite a policy headwind: EBITDA margin rose 44 bps YoY to 12.9%, even after the suspension of export incentives cost the company roughly 1% of revenue.
• English Oven is the growth engine: The brand grew high teens, expanded into Hyderabad and Calcutta, and management is "very firm" on making it a pan-India brand within two years.
• Export recovery is a bet on trade deals: U.S. tariff reduction from 50% to 18% improves the setup, but clarity on whether food items get 0% is still weeks away; management targets low-double-digit export growth in FY27.
• What to watch next quarter: Whether the 14% margin target materializes in H1 FY27, the pace of domestic biscuit recovery toward low teens, and the final U.S. tariff decision on food items by end-March.

English Oven & Bakery Momentum

• High teens B2C growth: English Oven sustained high-teens growth in Q3, driven by brand pull, health-first initiatives, and distribution excellence.
• B2B pulled the average down: Overall bakery growth of 13% was lower than H1's ~17% because the B2B business grew more slowly; English Oven's B2C continued at high teens.
• Frozen business scaling: The frozen range, built over the last 2-3 years, now contributes ~20% of the B2B bakery business and showed good traction in customer additions.
• Geographic expansion underway: English Oven entered Hyderabad and the Calcutta region in recent months; management expects to add another 1-2 cities in the coming financial year.
• Khopoli plant unlocks Bombay: The Khopoli plant, commissioning in the next few months, will supply bun and bread to Bombay and Maharashtra, supporting what management calls a "huge expansion."
• Bangalore plant investment: An expanded new plant in Bangalore is planned for the coming financial year.

Manu Talwar: "We are very, very firm on becoming a pan-India strong brand over the next 2 years' time."

Domestic Biscuits: A Margin-First Reset

• Profitability correction came first: A commodity spike in palm oil and other prices starting October/November 2024, combined with hyper-competition, put "very large adverse pressure" on domestic biscuit profitability. Management spent 8-9 months correcting margins to a sustainable level before resuming distribution expansion and new product launches.
• Sequential improvement visible: Growth has improved sequentially from last quarter to this quarter, and management expects the next two quarters to march toward low teens.
• Distribution expansion restarting: With margins now corrected, the company is expanding distribution within 400 km of its Punjab and Indore plants.
• Premium and differentiated products only: Management is clear that future launches will be differentiated products, not me-too offerings, citing premium cookies, health varieties, and sourdough launched over the last 8-9 months.
• Brand study in progress: A brand study of both Cremica and English Oven is underway to formulate a go-forward strategy.

Manu Talwar: "We are very clear now that what we will be launching is a differentiated product... because getting into the again me-too kind of product doesn't give you that differentiated strength in a highly competitive business."

Exports: Tariff Relief Meets Policy Drag

• U.S. tariff reduction opens a door: The reduction from 50% to 18% improves the ability to sell, but management does not yet know whether food items will ultimately face 18% or 0%; clarity is expected by end-March.
• Export incentive suspension hurt: Incentives were suspended from August onwards; had they been in place, margins "would have shown a very different sort of numbers." The impact on overall revenue is "almost close to 1%."
• Import strategy as offset: The company has started targeting raw materials for import to offset the incentive loss, though optimization will take 3-6 months.
• U.S. slowdown in Q3: New projects from the U.S. stopped coming in during the tariff uncertainty period; some small discounts were given and "few retailers" were lost, but existing business continued.
• Management declined granularity: When asked for a U.S. vs non-U.S. export growth breakdown and whether non-U.S. exports grew double digits, management said it does not share numbers at that granularity.

Anoop Bector: "It is so new. In fact, the agreement has -- right now, we don't even know. I mean we know we're going to have 18% tariffs. But we don't know. It might be different. It might be lower, it might be something else, because in the newspapers, we read that certain food items are being considered as 0. Now if that is the case, we don't know. So I think end of March, we'll have a clear clarity on what is happening."

Margins: The 14% Target Deferred

• Q3 margin improvement: EBITDA margin rose 44 bps YoY to 12.9%, driven by business mix, revenue growth management, and efficiencies rather than raw material benefits, since the company had hedged through March.
• 14% would have been hit but for policy: Management stated the target was to reach 14% in Q3, and it would have been achieved absent the export incentive suspension.
• H1 FY27 is the new timeline: The company now expects to start getting to the 14% range in H1 of the next financial year.
• Gross margin outlook cautious: Management expects only marginal improvement and said it will provide more clarity in the next call, as the annual operating plan is still being concluded.

Manu Talwar: "Our target was to get to 14%. We would have got to 14%, but for the export incentive, which kind of suddenly was put under suspension by the government. Otherwise, we would have been at 14% in this quarter."

Capacity & Product Pipeline

• Kolkata plant commissioned: The plant was commissioned in January 2026, marking the company's foray into the East.
• Khopoli plant nearing readiness: Progressing toward commissioning in the next few months; management targets an asset turn of 2-2.5x in 2-3 years.
• Premium product launches scaling: Golden Bites, Fruit and Nut, and Pista Almond cookies were introduced and scaled up; the Zero Maida range and NaturBaked platform saw full rollout.
• Quick commerce and retail innovation: A Zero Maida Coconut product was launched as a quick-commerce-first item, and a Blinkit Christmas collaboration for Danish Butter Cookie tins penetrated 3 lakh-plus households.
• Frozen retail pilots: Frozen products were introduced in retail with pilots in NCR.
• Ready-to-eat desserts: The frozen dessert range is scaling up, with key launches planned over coming quarters.

Guidance & Commitments

Key Metrics