M&B Engineering
IPO Size: Rs. 650 cr
- Fresh Issue of Rs. 275 cr for (i) capex Rs. 131 cr (ii) debt repayment Rs. 59 cr of Rs. 101 cr net debt (iii) Rs. 5 cr tech upgradation
- Offer for Sale (OFS) of Rs. 375 cr by the promoter (100% to shrink to 70%)
Price band: Rs. 366-385 per share
M cap: Rs. 2,200 cr, implying 30% dilution
- Only 10% retail, as cash equivalents exceeded 50% of net worth in FY23 and FY22
IPO Date: Wed 30th Jul to Fri 1st Aug 2025, Listing Wed 6th Aug 2025
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
Gujarat Based Construction Products Maker
M&B Engineering manufactures Pre-engineered Steel Buildings (PEB) with an installed capacity of 1.04 lakh MTPA, across 2 plants in Gujarat and Tamil Nadu, operating under Phoenix division and accounting for nearly 3/4th of Rs. 988 cr annual revenue. Balance 1/4th revenue is generated from Proflex division, comprising 18 lakh sq meters per annum capacity for self-supported roofing solutions. Nearly 70% revenue is generated from Western India, 10% for North and South India each, and ~7% from exports.
44% PEB Capacity Addition in FY25
In FY25, company added 31,800 MTPA PEB greenfield capacity at Tamil Nadu, which was only 23% utilized during the year. Thus, overall PEB capacity utilization stood at 50% in FY25, indicating headroom for growth in FY26E.
33% of energy needs are met captively, through a 990kW solar plant in Gujarat. This is being expanded by 300 kW, in addition to a greenfield 990 kW solar plant in Tamil Nadu, to help expand margins through backward integration.
Another 63% Planned over the next 3 Fiscals
After investing over Rs. 200 cr in capex during FY24 and FY25, M&B Engineering has outlined Rs.130 cr capex for FY26E to FY28E, to be funded via IPO proceeds, to increase PEB installed capacity to 1.7 lakh MTPA by FY28E.
Growing Financials
FY25 revenue grew 24% YoY to Rs. 988 cr, proportionate to the rising production of PEBs, with EBITDA up 45% YoY to Rs. 135 cr, translating into 13% EBITDA margin. On PAT of Rs. 77 cr, up 69% YoY, net margin was at 7.8%, with an EPS of Rs. 15.4.
With a tiny equity of Rs. 50 cr (face value Rs.10 each), company’s net worth has doubled in the past 3 fiscals to Rs. 307 cr. Net debt stands at Rs. 101 cr, mainly for Tamil Nadu expansion, which will halve to be Rs. 42 cr post repayment, with net debt to equity ratio also dropping below 0.1:1. Company has a healthy order book of Rs. 843 cr, as of 30.6.25.
Attractive Pricing
M cap of Rs. 2,200 cr implies a historic PE of 25x, which is 20-25% lower than both smaller and larger peers, clocking mid-single digit margins.
- Interarch Building Products, having 1.6 lakh MTPA PEB capacity and Rs. 1,450 cr topline in FY25, is ruling at PE multiple of 34x.
- Whereas smaller peer Bansal Roofing, with Rs. 97 cr topline, 5.7% net margin, has a PE of 30x.
Pennar Industries, with Rs.3,226 cr revenue and a lower net margin of just 3.7%, is trading at a PE of 26x, while Everest Industries, with Rs.1,722 cr topline has a negative bottomline. Moreover, M&B Engineering has the highest RoE of 25% among the peers, which average 15-20%. Thus, M&B Engineering’s IPO pricing is seen attractive, for company’s 8% net margin and 25% RoE.
30th Jul 2025 at 08:11 pm