Manjushree Extrusions is entering the capital market on 31st January 08, with a public issue of 51.26 lakh equity shares of Rs.10 each, at a premium of Rs.35 per share (total issue price at Rs.45 per share) for Rs.23.07 crores.
The existing shares of the company are listed on Calcutta, Gauhati and Ahmedabad exchanges but are not traded. Post issue, it would also list on Mumbai Stock Exchange.
The company is a manufacturer of speciality plastic packaging product for Pharma, Food, FMCG and Processing and Agrochemical sectors. Some of the clients are Cadbury, Nestle, P&G, HUL, Godrej, Glaxo and Tata Tea, which contributes 62% of the company's total revenue.
Topline for FY 07 was at Rs.80 crores, with EBITDA of Rs.8.71 crores, PAT of Rs.2.82 crores, resulting in an EPS of Rs.6.70. FY 6 months ending 30-09-07, topline was at Rs.32.26 crores with PAT of Rs.1.86 crores resulting in an EPS of Rs.8.85, on an annualized basis. Considering, FY 08 financial performance, shares are being issued at a PE multiple of about 5 times which are quite attractive.
Present net worth of the company, as at 30-09-07, was at Rs.15.04 crores, with a debt of Rs.25.50 crores, resulting into a debt equity ratio of 1.7 : 1. The company, inspite of being into existence for the last over 15 years, has a very high debt equity ratio.
Now, the company is implementing an expansion cum diversification plan of Rs.53.70 crores, which looks quite ambitious, considering the present level of operations of the company. This is being financed with rights issue of Rs.12.63 crores, proposed issue of Rs.23.07 crores and term loan of Rs.18 crores. This means of financing would bring down debt equity ratio to less than 1 to about 0.85 : 1.
Since the promoters of the company are well versed and expansion likely to commence by June 08, makes the issue attractive. Post issue equity of Rs.13.55 crores would get adequately serviced form the enlarged level of activities.
In this aggressively priced issue IPO market, this is a good issue, where investment is recommended.