Mamata Machinery IPO: 10 key things investors must know from the RHP | Stock Market News

Mamata Machinery IPO: The initial public offering (IPO) of Mamata Machinery, valued at ₹179.39 crore, is set to open for subscription from December 19 to December 23. 

The IPO is entirely an offer for sale (OFS) of 0.74 crore equity shares. The price band for the IPO is fixed at ₹230 to ₹243 per share. Retail investors can apply for a minimum of 61 shares in one lot, amounting to an investment of ₹14,823. 

Beeline Capital Advisors is the book-running lead manager for the issue, and Link Intime India serves as the registrar.

1: IPO Structure: The IPO is entirely an offer for sale (OFS). There is no fresh issue component, meaning the company will not retain any proceeds from the offering. The funds raised will go to the promoter selling shareholder, after accounting for offer-related expenses and taxes.

2. Key Dates: The IPO will open on December 19 and close on December 23, with allotment expected on December 24 and the listing of shares on December 27.

3. Purpose of the Issue: Since the IPO is purely an OFS, the purpose of the issue is to provide an exit route for the selling promoter. The company will not receive any funds for expansion or operational activities. 

4. Industry Overview: Mamata Machinery operates in the flexible packaging market, a sector that was valued at $49 billion in 2023. This industry is projected to grow at a compound annual growth rate (CAGR) of 12.6% between 2022 and 2027, driven by increasing demand for packaged food and cost-efficient packaging solutions.

5. Company Overview: Incorporated in 1979, Mamata Machinery is one of India’s top exporters of packaging machinery, ranking seventh globally with a 3% market share in FY24. Its machines cater to industries like FMCG, food, and beverages and are used in over 75 countries, including the US, UAE, Poland, and Spain.

6. Client Base and Product Range: Mamata Machinery serves an extensive clientele that includes well-known companies such as Balaji Wafers, Chitale Foods, Dass Polymers, Sunrise Packaging, Hershey India, and Emirates National Factory for Plastic Ind LLC. Its machines, sold under the brand names “Vega” and “Win,” are used for producing plastic bags, pouches, and sachets. As of September 30, 2024, the company has installed more than 4,500 machines globally.

7. Financial Performance: The company has demonstrated consistent growth in both revenue and profits over the last three financial years. Revenue from operations increased from ₹192.25 crore in FY22 to ₹200.86 crore in FY23, and further to ₹236.61 crore in FY24. Profit after tax (PAT) also saw an upward trend, rising from ₹21.70 crore in FY22 to ₹22.50 crore in FY23, and reaching ₹36.12 crore in FY24.

8. Listed Peers: Rajoo Engineers, Windsor Machines and Kabra Extrusion Technik are the listed peers of Mamata Machinery. Rajoo Engineers has a price-to-earnings ratio of 57.16 while Extrusion Technik has a P/E of 30.64 and Windsor Machines’ P/E is negative. The P/E of Mamata Machinery is 16.58.

9. Promoter-selling shareholders: Mahendra Patel, Nayana Patel, Bhagvati Patel, Mamata Group Corporate Services LLP and Mamata Management Services LLP are the promoter-selling shareholders in Mamata Machinery IPO who will receive IPO proceeds.

10. Key risks: The company has highlighted significant risks tied to its reliance on the performance of the FMCG, Food & Beverage, and Consumer industries. Any slowdown or adverse changes in these sectors, along with factors affecting the plastic processing, converting, and packaging machines market, could have a detrimental impact on its business operations, financial health, and growth prospects.

A substantial portion of the company’s revenue is derived from its top ten customers, who accounted for an average of 30.76% of revenue over the past three fiscal years. The loss of any of these key clients or a decline in their purchasing volumes could negatively affect the company’s financial condition and operational results.

Additionally, the company’s business is heavily reliant on exports, with international sales contributing 70.42%, 65.28%, 71.52%, and 66.13% of revenue for the three-month period ending June 30, 2024, and for Fiscal years 2024, 2023, and 2022, respectively. Any disruptions to its export operations could adversely affect cash flows, financial stability, and overall performance.

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