MMP Industries NSE SME IPO review (Apply)

Review By Dilip Davda on Mar 20, 2018

MMP Industries Ltd. (MMPIL) is engaged in manufacturing of aluminium products that includes pyro and flake aluminium powders, atomised aluminium powders, aluminium pastes, aluminium conductors (all aluminium, alloy aluminium and aluminium steel reinforced). Its  Unit I and Unit IV (NPM Industries) are engaged in the manufacturing of aforesaid Products, Unit III (Mars Industries) is engaged in the manufacturing of manganese oxide and di-oxide powders and Unit II (H.M. Engineering) is engaged in job work of sheet metal components for Group Entity, Star Circlips & Engineering Limited.

Aluminium powders (pyro, flake and atomised) are used in many industrial sectors like construction (AAC Blocks) and mining (Aluminised slurry explosives), agriculture (pesticides), defence (ammunition), fire crackers, railways (Thermit portions) etc. Aluminium pastes are used in automotive, decorative and industrial paints. Aluminium Conductors are consumed by the power sector for laying of overhead transmission lines. MMPIL has entered into a Joint Venture with Toyo Aluminium K.K. of Japan for the manufacturing of specialty aluminium pastes in a new company ?Toyal MMP India Private Limited. Its  association with Global Industry leader ?Toyo Aluminium K.K., Japan would help in moving up the value chain alongside technological support. Company holds 26% shareholding in this JV Company. The commercial production in this unit has already commenced in February 2018.

From a start-up capacity of 300 MTPA in 1983 of pyro and flake aluminium powders, the capacity presently is 7,860 MTPA. In addition, Atomised powder capacity is 7,200 MTPA including for captive consumption and aluminium paste capacity of 1,500 MTPA. The aluminium conductor capacity is presently 7,200 MTPA. Company is constantly adding more capacities for Powder and Conductors to meet the growing demand of its products. In addition, it holds shareholding in Star Circlips & Engineering Limited (26.06%). Star Circlips & Engineering Limited is the manufacturer of Circlips, retaining rings, washers, shims and formed components mainly used in auto and auto component industries.

To part finance setting up of new facilities for manufacturing atomized aluminium powder, pyro and flake aluminium powder, aluminium foils, repayment/pre-payment of certain debts, working capital and general corpus fund needs, MMPIL is coming out with a maiden IPO of 4500000 equity shares of Rs. 10 each via book building route with a price band of Rs. 186 – Rs. 188 to mobilize Rs.83.70 cr. – Rs. 84.60 cr. (based on lower and upper price bands). Issue opens for subscription on 28.03.18 and will close on 04.04.18. Minimum application is to be made for 600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is solely lead managed by Guiness Corporate Advisors Pvt. Ltd. and Bigshare Services Pvt. Ltd. is the registrar to the issue. Issue constitutes 26.57% of the post issue paid up capital of the company.  Except for few shares at Rs. 45 per share in June 1995, it has raised all other equity at par and has also issued bonus shares in the ratio of 1 for 1 (March 1993), 3 for2 (March 1994), 1 for 1 (March 1996) and 1 for 2 (Sept. 2017). Average cost of acquisition of shares by the promoters is Rs. 6.12 per share. Post issue, its current paid up equity capital of Rs. 12.44 cr. will stand enhanced to Rs. 16.94 cr.

On performance front, MMPIL has posted turnover/net profits of Rs. 121.73 cr./ Rs. 2.51 cr. (FY14), Rs. 157.64 cr. / Rs. 3.71 cr. (FY15), Rs.181.21 cr. / Rs. 7.78 cr. (FY16) and Rs. 203.93 cr. / Rs. 13.84 cr. (FY17). For the first half of the current fiscal, it has earned net profit of Rs. 8.40 on a turnover of Rs. 105.56 cr. For last three fiscals, it has posted an average EPS of Rs. 8.15 and an average RoNW of 28.04%. Issue is priced at a P/BV of 4.76 on the basis of its NAV of Rs. 39.52 (standalone) as on 30.09.17. However, on a consolidated basis with share of profits from JVs it has posted net profit of Rs. 8.88 cr. (FY16), Rs. 16.56 cr. (FY17) and Rs. 8.06 cr. (first half of FY18) on the same turnover as standalone. If we annualize latest (consolidated) working and attribute it on fully diluted equity post issue, then asking price is at a P/E of around 20 against industry average of 35. It has shown Maan Aluminium and Manaksia as its listed peers and are trading at a P/E of 8 and 26 respectively (as on 19.03.18). Based on these parameters, issue appears reasonably priced.

On merchant banker’s front, this is the 27th mandate from its stable in last three fiscals. Out of last 10 listings, 1 opened at discount to offer price, 1 at par and the rest eight with a premium ranging from 2.6% to 25% on the day of listing.


Conclusion / Investment Strategy

This is the first mega primary offer by SME so far. Considering progressing performance and bright prospects ahead, investors may invest in this reasonably priced offer for medium to long term.

Reviewer recommends Subscribing to the issue.

Review By Dilip Davda on Mar 20, 2018

Review Author

DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on information published here. With entry barriers, SEBI wants only well-informed investors to participate in such offers. With crazy listings in the past, SME IPOs drew the attention of investors across the board. However, as SME issues have entry barriers and continued low preference from the broking community, any reader taking decisions based on any information published here does so entirely at own risk. The above information is based on information available as on date coupled with market perceptions. The Author has no plans to invest in this offer.

(SEBI registered Research Analyst-Mumbai).


About Dilip Davda

Dilip Davda

Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.

Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.

Email: dilip_davda@rediffmail.com

MMP Industries IPO FAQs

  1. 1. Why MMP Industries IPO?

    The initial public offer (IPO) of MMP Industries Limited offers an early investment opportunity in MMP Industries Limited. A stock market investor can buy MMP Industries IPO shares by applying in IPO before MMP Industries Limited shares get listed at the stock exchanges. An investor could invest in MMP Industries IPO for short term listing gain or a long term.

  2. 2. How is MMP Industries IPO?

    Read the MMP Industries IPO recommendations by the leading analyst and leading stock brokers.

  3. 3. MMP Industries IPO what should investors do?

    MMP Industries IPO offers an opportunity to buy IPO shares before they get listed at the stock exchanges. Read the MMP Industries IPO Notes, Analysis and Recommendations by leading stock brokerage firms and experts in the above answer.

  4. 4. Is MMP Industries IPO good?

    Our recommendation for MMP Industries IPO is to subscribe.

  5. 5. Is MMP Industries IPO worth Investing?

    As per the analysis by our lead analyst Mr. Dilip Davda, we suggest you to subscribe to the MMP Industries IPO.

  6. 6. When will MMP Industries IPO allotment status?

    The MMP Industries IPO allotment status will be available on or around Apr 9, 2018. The allotted shares will be credited in demat account by Apr 10, 2018. Visit MMP Industries IPO allotment status to check.

  7. 7. When will MMP Industries IPO list?

    The MMP Industries IPO will list on Thursday, April 12, 2018, at NSE SME.








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