The Rs 179.39 crore-initial public offering (IPO) of Mamata Machinery shall open for today, that is on Thursday, December 19. The company is selling its shares in the range of Rs 230-243 apiece. Investors can bid for the issue until Monday, December 23, applying for a minimum of 61 equity shares and its multiples thereafter.
Incorporated in April 1979, Ahmedabad-based Mamata Machinery manufactures and exports machines for making plastic bags, pouches, packaging, and extrusion equipment. It provides manufacturing solutions for the packaging industry, catering mostly to FMCG and food & beverage industries.
Analysts tracking the issue are mostly positive on it and suggest investors to apply for long term gain citing its sound financial performance, reasonable valuations, rising demand of packaging solutions, R&D expertise and expansion plans. However, seasonality, stiff competition and complete OFS nature of the business adds to the risks for the company.
Mamata Machinery caters to both the packaging and non-packaging industry. Its continuous investment in R&D and innovative and technological leadership team with 4 patents, targeting Europe, Africa and the Middle East to enhance global presence, said Anand Rathi Research in its note.
"At the upper price band, the company is valued at P/E of 16.6x with a market cap of Rs 597.9 crore post issue of equity shares and return on net worth of 27.4 per cent based on FY24. On the valuation front, we believe that the company is fairly priced compared to their peers. Therefore, we recommend a 'subscribe' rating to the IPO," it said.
Mamata Machinery IPO is entirely an offer-for-sale (OFS) upto 73,82,340 shares by the promoters. It has exported machines to over 75 countries as of May 31, 2024. It has international offices in Bradenton, Florida, and Montgomery, Illinois, as well as sales agents in over five countries across Europe, South Africa, and Asia. It has two machine manufacturing facilities- India and the USA.
At the upper end of its price range, Mamata Machinery is demanding a P/E multiple of 16.6 times, which seems to be at a discount compared to its peers. The company has shown consistent performance over the years, with a growing number of machines sold both in India and internationally, leading to a steady improvement in margins, said Choice Broking.
"Looking ahead, we believe Mamata Machinery has strong long-term growth potential by expanding its presence in regions such as Europe, Africa, and the Middle East, which will further increase its customer base. Thus, we recommend a 'subscribe' rating for this issue," it added.
Mamata Machinery's customers include Balaji Wafers, Dass Polymers, Jflexy Packaging, Euphoria Packaging, Sunrise Packaging, Om Flex India, Chitale Foods, V3 Polyplast, Dhalumal Packaging Industries LLC, Laxmi Snacks, Ganges Jute, Western India Cashew Company and NN Print & Pack and Gits Food Products and Emirates National Factory for Plastic Ind LLC.
Mamata Machinery is a high-potential player in the packaging industry with a strong technological edge, robust financials, and significant global presence. The company’s patents and export-oriented operations provide it with a competitive advantage, ensuring high margins and sustainable growth, said Canara Bank Securities with a 'subscribe for long-term' rating.
Challenges such as seasonality, stiff global competition, and reliance on non-recyclable polymers could pose risks to its growth. The company's strategic focus on recyclable packaging and geographic expansion into the Middle East and Africa indicates proactive efforts to overcome these challenges, added the brokerage firm.
Mamata Machinery reported a net profit of Rs 2.18 crore with a revenue from operations at 27.62 crore for the three-months ended June 30, 2024. The company has reserved 50 per cent of the net offer for qualified institutional bidders (QIBs), 15 per cent for non-institutional investors (NIIs) and 35 per cent for retail investors.
Beeline Capital Advisors is the book running lead manager of the Mamata Machinery IPO, while Link Intime India is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with December 27, Friday as the tentative date of debut. Here's what analysts say about the IPO of Mamata Machinery: