Do you know? Mamata Machinery, a packaging machine manufacturing company, is entering the stock market with its IPO. The purpose of this article is to tell you about this company and its IPO.
For this we will understand these 6 categories :-
1. Company's IPO details
2. Business Overview
3. Strengths and Weaknesses
4. Peer Valuations
5. Financials
6. GMP (Grey Market premium)
1. Company's IPO details
The IPO of Mamata Machinery will start on 19th December 2024 and will remain open till 23rd December 2024. The price band of this IPO will be ₹230 to ₹243 per share. The size of one lot will be 61 shares. The total issue size of this IPO will be Rs 179.39 crore which will be completely offer for sale. This means that those who own shares will sell their stake to the public and since this IPO is an offer for sale, the funds will not be used in the growth initiatives of the company. This company is selling its 73.82 lakh shares through offer for sale. Its total paid-up share capital is 24.6 crore shares. This means that the company is selling about 30 percent of its total shares. The company is seeking its full valuation of Rs 598 crore. This valuation shows that if the entire company is sold, its value will be approximately ₹598 crore.
2. Business Overview
FMCG and food and beverage sector is booming due to India's rising GDP and rising income and this sector is also pushing the growth of packaging machinery industry. The size of India's packaging machinery industry was $ 5.5 billion in FY 2023, which can go up to $ 6 billion in FY 2027. The main beneficiary of this development will be Mamta Machinery Limited. Mamta Machinery Limited manufactures plastic bags and packaging pouches manufacturing machines. The machines manufactured by this company are used in making packaging materials used in FMCG, Food and Beverages industries. The company offers a wide range of products serving the entire flexible packaging market value chain.
Its major products are as follows-
Bag and Pouch Machines – Convert rolls of plastic film into bags and pouches.
Packaging Machines - These are used to fill end products into pouches.
Co-Extrusion Blown Film Machines – These machines are used to make co-extruded multi-layer films by processing polymer granules.
This company sells its machines under the Vega and Win brand names and by May 31, 2024, this company has installed more than 4500 machines in 75 countries.
3. Strengths and Weaknesses
1. Strength
Wide Range of Products :-
Mamta Machinery offers a wide range of products to its customers. Which includes co-extrusion blown film machinery, film converting machinery pouches, bag making machines and attachments for polymer processing. The company also manufactures Horizontal Form Fill and Seal (HFFS), Pick Fill Seal (PFS) and Vertical Form Fill and Seal (VFFS) multilayer pouch machines. Which are perfect for small volume requirements. Along with this, the company also provides Mono and Three Layer 5/7 Barrier Film Lines under Extrusion Blown Film Machinery and Attachments. Which are manufactured as per the customer's specifications and offering such a wide range of products also gives the company a competitive advantage.
Hi-Tech Manufacturing :-
This company has two plants. One in Gujarat and the other in Florida USA and the company uses hi-tech machinery in both its plants, which can be used remotely by connecting to the internet. Also, the company has more than 87 engineers till May 31, 2024. Now this company has developed such technology through which the machines made by them can use recycled plastic films in bag and pouch manufacturing. Due to this company's strong and consistent focus on high quality of products, it has received many awards. Which is a proof of their quality and management efficiency.
White Distribution Network :-
This company's customers are present in more than 75 countries and this company has setup more than 4500 machines so far. Therefore this company is not dependent on one geography or some customer.
2. Weakness
Raw material related issues :-
The company has faced problems due to price fluctuations of raw materials in the past and may face the same problems in the future also. Because the prices of raw materials depend on geopolitical distractions, commodity market fluctuations etc. The company may face these problems in the future also. The company is also not in long term contracts with its suppliers. So this company may face the problem of supply issues in future.
Dependence on FMCG, Food and Beverage Industry :-
The machines that Mamta Machinery manufactures are primarily used in the FMCG and food and beverage industries. Therefore, if there is a slowdown in the FMCG and food and beverage industry in the future, the demand for the company's machines will also reduce. Due to which its revenue and profits may be affected.
Competition :-
This company has to face a lot of competition from other companies manufacturing flexible packaging machines. Its main competitors are UFlex Limited, Smart Pack India Limited, Nichrome India Limited, XL Plastics Galaxy PackTech Private Limited and Harikrushma Machines Private Limited etc.
plastic ban
These days there is a lot of discussion about plastic ban. In many places its use has been banned. If these bans are imposed in more places then the business prospects of the company will be directly affected.
4. Peer Valuations
Mamta Machinery has three main listed piers. Raju Engineers Limited, Windsor Machines Limited and Kabra Extrusion Techniques Limited. In Fiscal 2024 i.e. Consolidated FY 2024, Mamta's revenues are Rs 39.2 crore more than its competitors Raju Engineers, Rs 107.3 crore more than Winsor Machine and Rs 584.1 crore less than Kabra Extrusion. But even after the revenue is reduced, the net profit of this company for FY 2024 is Rs 36.1 crore which is still more than all the peers. The reason for this is that the raw material consumption of piers of this company is more than that of this company. Which shrinks the profitability of its peers and its net profit margin of 15.27 percent is also the highest among its peers. This is because the company's operations are more efficient than its peers, which is evident from its high EBITDA margin of 19.94. Mamta Machinery's Return on Equity is 27.76 percent and its Return on Capital Employed is 31.29 percent. Which is the highest among all piers. Meaning this company uses its funds well.
5. Financials
Mamta Machinery has generated 65.28% of its revenue in FY 2024 and 70.42% in the first quarter of FY 2025 from export of goods and services. The revenue of this company has increased by 4.74% in FY 2022 to 23 and the revenue of the company has increased by 17.82% to ₹ 236.6 crore in FY 2023 to 2024. Similarly, the net profits of the company have also increased continuously. Which has increased by 4.16% from FY 2022 to FY 2023 and by 60.4% to Rs 36.1 crore in FY 23 to 24. The biggest reason for its profit increase is its healthy revenue growth. The company reported a healthy return on equity of 27.76 and healthy return on capital employed of 31.29 in FY 2024. The company's EBITDA margin of 19.94 in the same time period is also healthy. The company's net debt to EBITDA margin in FY 24 is 0.16. Meaning the debt label of the company is very less in comparison to the earnings.
6. GMP (Grey Market Premium)
Now you can see the GMP of this company.
But let us tell you that GMP of any company only reflects the speculations and trends happening in the markets. Do not consider GMP as actual share price.
Mamata Machinery is a leading company in India catering to the FMCG sector and food and beverage industry. Along with FMCG and food and beverage industry, packaging and packaging machinery sector will also grow, but this company also has significant competitors.
Link to RHP (Red Heading Prospectus) of Mamta Machinery for your research
Read this also : Ventive Hospitality IPO Detailed Analysis, Financials
Let us tell you that this article is only for educational purpose. Any information given in this article is not a recommendation to buy or sell.
By Anil Paal
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