Started in 1995, Ahmedabad based Mahip Industries Limited is a company engaged in the manufacturing and trading of corrugated boxes. Initially company was known as "Care Beverages (India) Limited", in 2001 its renamed to "Care Corupack Limited" and in 2018, it was again renamed to "Mahip Industries Limited". They offer a wide range of packaging services which are the core strength of the company. Owing to the extensive experience and sustained efforts, they have acquired unique product development skills for customized packaging applications. Besides this, they also offer printing and designing of corrugated boxes. The most significant feature of these packaging products is that they are environment-friendly and gets easily decomposed without damaging or creating pollution in the environment. Products of the company are as follow:– Corrugated Boxes– Corrugated Boxes with Partition– Corrugated Boxes With Lid– Printed Corrugated Boxes– Customized Corrugated Boxes– Laminated Corrugated Boxes– Bituminized corrugated boxes Company is currently catering to clients in Gujarat, through its network of dealer / distributor / agents / directly and is looking to reach national and international clients to serve top brands in the best possible way. Currently, they have the manufacturing unit at Dholka, Ahmedabad which is spread across a vast area of 25000 sq. meter which is taken on lease for the period of 30 years commencing from June 10, 2011 to June 9, 2041. The installed capacity of plant is 3500 tons per annum and company intends to increase it to 8352 tons per annum. The company has more than 2 decades of experience in the packaging industry, they are among the leading players in the industry offering the best products that are known to be of topmost quality. Company caters to different industries like FMCG, Garment, Food, Automotive, Electronic, Pharma, etc. It has 50 full-time employees on its payroll. On the financial performance front, for last four fiscals, MIL has (on a consolidated basis) has posted turnover/net profits of Rs. 93.09 cr. / Rs. 0.94 cr. (FY15), Rs. 104.40 cr. / Rs. 1.12 cr. (FY16), Rs. 107.83 cr. / Rs.1.22 Cr. (FY17) and Rs. 140.78 cr. / Rs. 4.29 cr. (FT18). For the first five months of FY19 ended on 31.08.18, it has earned a net profit of Rs. 2.54 cr. on a turnover of Rs. 64.72 cr. According to management, jump in the top and bottom lines from FY18 is a result of expansion/diversification going into commercial production as the company enhanced in last three years its product base from Outer Box to Inner Box and mono packing materials with the gradual increase in capacity utilisation. For last three fiscals, MIL has posted (on a consolidated basis) an average EPS of Rs. 2.04 and an average RoNW of 13.35%. The issue is priced at a P/BV of 1.79 on the basis of its NAV of Rs. 17.91 as on 31.08.18 and at a P/BV of 1.47 on the basis of post issue NAV of Rs. 21.71. If we annualize latest earnings and attribute it on fully diluted post issue equity, then asking price is at a P/E of around 10 thus issue appears reasonably priced and if we take FY18 earnings, then P/E is around 14.35. As per offer documents, MIL has shown Worth Peripherals as its listed peer that is currently trading at a P/E of around 16. (As on 22.02.2019). On BRLM's front, for Finshore Management Services Limited this is the 9th SME IPO. From last 8 IPOs, 3 opened below issue price and 5 above issue price with 1% to 20% gains. As of now from last 8 IPOs, 5 are trading below or at issue price and 3 above. ( As on 25.02.19 ) Company has shown great improvements since FY17, RoNW is 13.35% and issue looks reasonably priced with respect to current earnings. Performance of BRLM is average. Company is in environment friendly packing material business and use of plastic materials in packaging will be see down trend as environment friendly materials are preferred. So we give NEUTRAL rating to this SME IPO.
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