Mamata Machinery IPO analysis

Mamata Machinery IPO (initial public offering) will open for subscription on December 19, 2024 and close on December 23, 2024. We breakdown the strengths, weaknesses and growth prospects of the packaging machinery manufacturer to help investors make an informed decision. Mamata Machinery IPO in a nutshell Quality: Between FY22 and FY24, Mamata Machinery reported an average three-year ROE and ROCE of 23.4 and 21.8 per cent, respectively. Growth: During FY22-24, its revenue and profit after tax grew every year by 10.9 and 29 per cent, respectively. Valuation: At the upper price band of Rs 243, the stock is valued at a P/E and P/B ratio of 16.6 and 4.5 times, respectively. Overview: Mamata Machinery stands to benefit from the growing demand for packaging across industries like food and beverage, FMCG (fast-moving consumer goods) and pharmaceuticals. At the same time, its prospects may be affected since the packaging machinery market (the business in which this company operates) is not a high-growth segment. Further, in the packaging machinery industry, there exist several small, medium and large players, making it difficult for Mamata Machinery to achieve a sizable market share. About Mamata Machinery Mamata Machinery provides end-to-end manufacturing solutions for the packaging industry. Its key products include bag and pouch-making (comprising a 63 per cent share in the total revenue as of FY24) and packaging machines. The company mainly sells its packaging machinery to direct consumer brands in industries such as FMCG, food and beverages and consumer goods. In addition to manufacturing, the company also provides after-sales service to its clients. Presently, Mamata Machinery has an installed base of over 4,500 machines across 75 countries and operates a robust network, including facilities in India and the US. As of FY24, the company derived more than 65 per cent of its revenue from exports. Strengths of Mamata Machinery Leading exporter: Mamata Machinery is among the leading exporters of packaging-related machinery and equipment. Currently, it is ranked seventh in terms of packaging machine exports and had a market share of 3 per cent as of FY24. Further, the company has a global customer base, with clients from the US, UAE, Poland and Spain. Weaknesses of Mamata Machinery Sluggish growth: Although the Indian packaging market is expected to grow in double digits, the market for packaging machinery is expected to grow at a CAGR of barely 2 per cent until 2027. Also, Mamata Machinery faces intense competition from small, medium and large enterprises within the market. Mamata Machinery IPO details Total IPO size (Rs cr) 179 Offer for sale (Rs cr) 179 Fresh issue (Rs cr) - Price band (Rs) 230 - 243 Subscription dates December 19 - 23, 2024 Purpose of issue Offer for sale Post-IPO M-cap (Rs cr) 598 Net worth (Rs cr) 133 Promoter holding (%) 62.4 Price-to-earnings ratio (P/E) 16.6 Price-to-book ratio (P/B) 4.5 Financial history Key financials (Rs cr) 2Y annual growth (%) FY24 FY23