MMP Industries IPO Closes on April 4, Should You Invest?

MMP Industries Ltd. (MMPIL) has come with an initial public offering (IPO) of 4,500,000 equity shares of Rs. 10 each to mobilize Rs 84.60 cr. on upper price band. The price band of the MMP Industries IPO is Rs. 186- Rs. 188 per equity share. Minimum order quantity is 600 shares and in multiple thereon, thereafter. MMP IPO is listed at NSE SME Emerge.

MMP Industries Business Profile

MMP industries is Nagpur, Maharashtra based company established in year 1973. The company is engaged in manufacturing of Aluminum products which includes atomized aluminum powder, pyro and flake aluminum powder, aluminum conductors, aluminum pastes etc.

Aluminum powders are used in many industrial sectors like defense, railway, construction and agriculture etc.  Aluminum conductors are used in power sectors. Aluminum pastes are used in industrial paints, decorative and automotive sectors.

Key dates of MMP industries

• Issue opening date: 28^th March, 2018
• Issue closing date: 04^TH April, 2018
• Issue constitutes: 26.57%
• Finalization of basis of allotment: On or before 9th April 2018
• Initiation of refunds: On or before 10th April 2018
• Credit of equity shares: On or before 11^th April 2018
• Listing date: On or before 12^thApril 2018

Purpose of MMP industries IPO

The net proceeds from the issue of MMP SME IPO will be used

• To set up new facilities in manufacturing of pyro and flake aluminum, Atomized aluminum powder and aluminum foils.
• Prepayment/ repayment of a portion of loan facilities availed by the company.
• General corporate expenses.

Valuation parameter

If we go through financials of the MMPIL, from FY 2014 to FY 2017, we can see revenue/net profit for FY 2014 is Rs. 121.73 cr. / Rs. 2.50, for FY 2015 Rs. 157.64 cr. / Rs. 3.70 cr., for FY2016 Rs. Rs. 181.20 cr. / Rs. 887 cr., for FY 2017 Rs. 203.93 cr. / Rs. 16.56 cr. and for first nine month of current fiscal year revenue is Rs.105.56 cr. and net profit is Rs. 8.06 cr.

If we annualize latest working and attribute it on fully diluted equity post issue, then we will find P/E at around 20, while the industry average is 35. Mann Aluminum ltd. is listed peer of the company, which is trading at 8.4 P/E.

It has posted an average EPS of Rs. 8.15 for last three fiscals.

Should you invest in MMP Industries IPO?

The company has expansion plan by setting up new manufacturing units. Also, the NSE SME has strong customer base in diversified industries.

In the current bearish scenario, recent listing gain of Tasty dairy specialties ltd. was 7.44% whereas Hindustan aeronautics ltd. IPO was -7.13%.

Though the listing gain of MMP SME IPO is expected around 5-10%, but based on progressing financial performance and bright growth prospect ahead of the company, investors with moderate risk profile can subscribe for medium to long term. Click here for the subscription status of the IPO