IPO: Mukka Proteins

Mukka Proteins, a fish protein product manufacturer, will launch its IPO (initial public offering) on February 29, 2024. Here's a breakdown of the company's strengths, weaknesses, and growth prospects to help investors make an informed decision. In a nutshell Quality : Its three-year average return on equity ( ROE ) and return on capital employed (ROCE) are 28 and 12 per cent, respectively. However, it reported negative cash flow from operations in FY23. Growth : Its revenue grew 40 per cent annually between FY21-23. Its profit after tax compounded 122 per cent annually during the same period. However, trade receivables grew 54 per cent annually over the same period. Valuation : The stock is valued at a P/E and P/B of 19.1 and 2.1 times, respectively. It has no listed peers engaged in similar business. Overview : Rising demand for fish protein products from the feed industry should drive growth in the coming years. In addition, fish oil-based pharmaceutical products like Omega-3 pills are also experiencing strong demand. Favourable government initiatives targeted at promoting the aquaculture and fishery industry should also provide tailwinds. However, high debt and working capital requirements will remain key monitorables. About Mukka Proteins Mukka Proteins is a manufacturer and supplier of fish protein products used for manufacturing aqua feed, poultry feed, pet food, pharmaceutical products, etc. Strengths of Mukka Proteins High market share. It has a market share of around 25-30 per cent in the Indian fish meal and fish oil industry (CRISIL report). Global footprint. It is present in over 10 countries, including Bahrain, Bangladesh, Indonesia, and Malaysia. Exports accounted for 58 per cent of FY23 revenue. Strong client relationship. As of September 30, 2023, it has generated more than 50 per cent of its revenue from clients associated with the company for over five years. Notably, it has retained its largest client for over 10 years. Weaknesses of Mukka Proteins Stringent regulations. It is subject to various regulations regarding environmental concerns. It has high working capital requirements. IPO details Total IPO size (Rs cr) 224 Offer for sale (Rs cr) 0 Fresh issue (Rs cr) 224 Price band (Rs) 26 - 28 Subscription dates Feb 29-Mar 04, 2024 Purpose of issue Working capital requirements and general corporate purposes Post-IPO M-cap (Rs cr) 840 Net worth (Rs cr) 404 Promoter holding (%) 62.5 Price/earnings ratio (P/E) 19.1 Price/book ratio (P/B) 2.1 Financial history Key financials 2Y growth (% pa) 6M Sept 2023 FY23 FY22 FY21 Revenue (Rs cr) 39.6 60