Mukka Proteins IPO opens today: Should you subscribe to the issue?

The Rs 224 crore-initial public offering (IPO) of Mukka Proteins opens for subscription on Thursday, February 29 and can be subscribed until Monday, March 4. The company is offering its shares in the fixed price band of Rs 26-28 apiece. Investors can bid for a minimum of 535 equity shares and its multiples thereafter.

Incorporated in March 2003, Mukka Proteins specializes in the production of fish protein products. The company manufactures and delivers fish meal, fish oil, and fish soluble paste, crucial components for aqua feed used in fish and shrimp farming, as well as poultry feed for broilers and layers, and pet food for dogs and cats.

Analysts are mostly positive on the issue on the back of rising demand for fish protiens and fish oil across various sectors, expansion plans in more countries and strong financial performance. However, they have flagged dependance on some big players and changes in policy and licensing may pose challenges to the company.

Mukka Proteins is one of the leading companies for manufacturing and marketing of fish meal, fish oil and allied products in domestic and global markets. It sells its products domestically and exports them to over 10 countries- Bahrain, Bangladesh, Chile, Indonesia, Malaysia, Myanmar, Philippines, China, Saudi Arabia, South Korea, Oman, Taiwan and Vietnam, said Anand Rathi Research.

"The company has around 25-30 per cent market share in India that has two-third coastal land. At the upper price band, the company is valued at P/E of 17.7 times with a market cap of Rs 840 crore post issue of equity shares. We believe that valuations of the company are fairly priced and recommend a 'subscribe for long term' rating to the IPO," it added.

The issue is entirely a sale of 8 crore fresh equity shares. The net proceeds from the issue shall be utilized towards funding working capital requirements of the company; investment in the Associate- Ento Proteins- for funding its working capital requirements; and general corporate purposes.

Mangalore-based Mukka Proteins raised Rs 67.2 crore from anchor investors as it allocated 2.39 crore shares at of Rs 28 apiece The anchor book includes names like Neomile Growth Fund, Saint Capital Fund, Zinnia Global Fund PCC, Eminence Global Fund PCC, Craft Emerging Market Fund PCC and Elara India Opportunities Fund.

Mukka Proteins presents a persuasive investment opportunity in the fish protein industry, given its strong market position, diversified product portfolio, and global presence, said StoxBox by BP Equities. "The issue is valued at a P/E of 9.3 times on the upper price band based on FY24 earnings, which is fairly valued. We recommend an 'subscribe' rating for the issue," it said.

Mukka Proteins operates six production facilities, comprising four in India and two in Oman, owned by its overseas subsidiary, Ocean Aquatic Proteins LLC. The company oversees three blending plants and five storage facilities, all situated within India. Strategically positioned near coastal areas, all of the company's facilities ensure optimal operational efficiency.

Mukka Proteins has a rich legacy of around five decades in the Indian Marine Industry and is one of the pioneers in the fishmeal industry having set up one of India’s first steam sterilised fishmeal plants. In fiscal 2023, the industry is estimated to see a huge jump in value as well as volume, said  Master Capital Services

"The company posted YoY growth of 130-150 per cent in value terms and 90-110 per cent in volume terms and aims to increase market share by meeting customer demand for fish meal and fish oil. It sees huge potential and demand in insect based nutrition and has entered into the business of manufacturing and selling of insect meal and insect oil," it said with 'subscribe' rating.

For the period ended on September 30, 2023, Mukka Proteins reported a net profit of Rs 32.98 crore, with a revenue of Rs 612.88 crore. The company clocked a net profit of Rs 47.53 crore with a revenue of Rs 1,183.80 crore for the financial year 2022-23.

Mukka Proteins has reserved 50 per cent of the net offer for qualified institutional investors (QIBs), while non-institutional investors (NIIs) will have 15 per cent of shares reserved for them. Retail investors will have 35 per cent of the net issue reserved for them.

Fedex Securities is the book running lead manager of the Mukka Proteins IPO, while Cameo Corporate Services is the registrar for the issue. Shares of the company are likely to be listed at the bourses on both BSE and NSE with March 7, Thursday as the tentative date of debut.

 

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.