Mamata Machinery IPO - Should You Subscribe? Read DRChoksey's Analysis

Deven Choksey Research Report

Mamata Machinery Ltd. will launch its initial public offering on December 19 and the offer closes for subscription on Dec. 23. The Gujarat-based the manufacturer and exporter of plastic bag and pouch-making machines, packaging machinery, and extrusion equipment has fixed the price band of Rs 230-243 per share. Bids can be made for a minimum of 61 shares for Rs 10 and above.

The Rs 179.39-crore issue is an entirely offer-for-sale of 74 lakh shares.

Outlook and Valuation:

Mamata Machinery is strategically positioned to capitalize on the robust growth potential in the Indian and global packaging sectors. The growth strategy involves aggressively expanding its footprint in international markets, with a focus on Europe, Africa and the Middle East regions which are projected to deliver substantial demand growth in the coming years. In terms of financial performance, Mamata Machinery reported robust profitability metrics with a return on capital employed of 31% and a return on equity of 29% for FY24.

Mamata Machinery is attractively priced at a price to sales ratio of 2.5 times and a price to earnings (post IPO) ratio of 16.6 times, making it well-positioned within its peer group.

Given the company's strong fundamentals, growing industry opportunities and attractive valuation metrics, we recommend a ‘Subscribe’ rating for Mamata Machinery's IPO.

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