IPO Size: Rs. 179 cr, Entirely Offer for Sale (OFS)   

• By promoter (92% stake to drop to 62% post IPO)

Price band: Rs. 230-243 per share

M cap: Rs. 598 cr, implying 30% dilution

IPO Date: Thu 19^th Dec to Mon 23^rd Dec 2024, Listing Fri 27^th Dec 2024

Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.

Packaging Machinery Maker

Mamata Machinery is a 35-year-old machinery manufacturer, for plastic bags, pouches, packaging and co-extrusion blown films. The B2B company has 1 plant in India and 1 in US, selling machines under Vega and Win brand names. Company enjoys 3% export market share for packaging machinery, with 70% of its Rs.237 cr revenue generated from international geographies, where realisation is ~3x domestic realisation.

Double Digit Net Margins

Of Rs. 237 cr revenue in FY24, 60% comprised bag and pouch making machines. Business operates on healthy margins – 58% gross, 21% EBITDA and 15% net. FY24 PAT rose 60% YoY to Rs. 36 cr, with an EPS at Rs. 14.7, on equity of Rs. 25 cr and net worth of Rs. 133 cr.

Nearly 2/3^rd of annual revenue is generated in H2, hence Q1FY25 revenue was only Rs. 28 cr, with barely 4% EBITDA margin.

Mouth-Watering Valuation

Estimating FY25E EPS at about Rs.17, m cap of Rs. 600 cr leads to a PE multiple of 14x, on current year basis, which is seen attractive for high margins, 27% RoE and debt-free balance sheet. Mamata’s financial parameters are stronger than peers, yet valuation the lowest:

• Rajoo Engineers – Rs. 200 cr topline, 10% net margin, 18% RoE, Rs. 4,000 cr m cap for Rs. 25 cr PAT
• Windsor Machines – M cap of Rs. 2,650 cr, for Rs. 350 cr topline, but low operating margin and net loss.
• Kabra Extrusion – M cap of Rs. 1,750 cr, for Rs. 600 cr topline, 5% net margin, single digit RoE