Magenta Lifecare Limited is manufacturer of foam-based product such as mattresses and pillows which is marketed under the brand 'Magenta' in India. The Product offerings include wide range of mattresses such as memory foam, latex based, bonded mattresses, pocketed spring etc. and pillows such as memory foam pillow, molded memory foam pillow, molded contour foam pillow etc. They believe that the success is attributable to the quality of products that they offer to the customers, spread across retail, hotels and institutions. Driven by innovation, they strive to introduce new and innovative products on a continuous basis with the help of the team. For instance, they have introduced green tea and bamboo charcoal based herbal mattress and pet bed mattresses in the range of products. Further, they are also supply processed raw foam and adjustable bed frame (hydraulic bed) which they import under the brand Magenta. They believe that the product offering is across the section of the society from value-added product to premium segment. The thoughtfully-designed products provide comfort, with ergonomic design, thermal comfort, pressure relief, motion isolation, easy position realignment, and long-term durability. They believe that the products are designed to support, comfort, and cool the body, leading to better-quality sleep. They believe that they offer mattresses with the diverse customization options in terms of fabric, shape, firmness, material, height, foam type & density, personalization, utility and structure. They have developed distributor and dealer/retailer network across multiple states in India. They sell the products through offline channel of multi brand outlet and through a network of dealers and also through online e-commerce platform. The distributors are appointed region wise. They are capable of manufacturing both standardized as well as customized products. The manufacturing facility is located at N P Patel Estate, A & T Padamla, Vadodara-391350, Gujarat, India. The installed capacity for manufacturing of mattresses is currently at 60,000 Nos. and 70,000 nos. of pillows. The key raw material for the manufacturing the products is raw foam, bonded foam, memory foam, latex, fabric, adhesive, cotton and threads. All the raw materials are purchased from the domestic market. The purchase for the Financial Year ended March 31, 2023, for the Financial Year ended March 31, 2022 and for the Financial Year ended March 31, 2021 was Rs. 623.25 lakhs, 695.73 lakhs and Rs. 688.13 lakhs representing 57.98%, 63.64% and 60.46% of the revenue from operations, respectively and for the period ended on December 31, 2023 the raw material purchase were 448.10 Lakhs which represent 74.46% of the revenue from operations. As per financial performance, Magenta Lifecare Limited has posted total income / net profits of Rs 9.66 Cr / Rs 0.19 Cr (FY21), Rs 9.38 Cr / Rs 0.18 Cr (FY22), Rs 9.55 Cr / Rs 0.24 Cr (FY23) and Rs 6.30 Cr / Rs 0.24 Cr (upto Q3 FY24). So as per previous financials data, company has shown almost static results. Company has posted an average EPS of Rs 0.50 and average RoNW of 6.37% for last three fiscals. Issue is priced at a P/BV of 1.80 as per NAV of Rs 19.47 as on Post issue. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 127.22, 97.74 and 73.91 respectively, which looks aggressively priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, Fedex Securities Private Limited is associated with this SME IPO and handled 24 SME IPOs and 1 Main board IPO in last 3 year. From last 11 SME IPOs, all opened above issue price or at par on the day of listing and From last 1 Main board IPO, that is opened above issue price on the day of listing. As of now from last 11 SME IPOs, seven are trading below issue price and remaining are trading above issue price and From last 1 Main board IPO, that is trading above issue price. ( As on 03.06.24 ) As per financials, Magenta Lifecare Limited has shown almost static results, RoNW is 4.71% and P/E is respectively 127.22, 97.74 and 73.91 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fully priced, but higher issue expenses raises some doubts. Company is manufacturing of foam-based product such as mattresses and pillows, which is highly competitive and fragmented segment. Performance of BRLM is average. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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