Mayank Cattle Food Limited was established in the year 1998 with intention to engage into the business of manufacturing of Maize oil (Non-edible) and Maize Cake (Cattle Feed). Since then, the Company is engaged in manufacturing of Maize Cake (Cattle Feed) & Maize Oil (Non-edible). The business process involves purchase of the Maize Germ, then mechanized expelling, packaging and selling of the Maize Oil and Maize Cake. The company operates a manufacturing facility that is equipped with the latest machinery and technology which is spread over approx. 87,133 sq.ft. situated at R. S. No. 162, Rajkot Jamnagar Highway, Near Khandheri Stadium, Naranka, Paddhari, Rajkot – 360110, Gujarat. The manufacturing facility is located in a strategic location that provides easy access to raw materials and transportation. Also, as the factory is located on Rajkot Jamnagar Highway, which is a well-developed area in terms of road, water, electric connectivity, internet connectivity, it will enjoy all the infrastructural facilities like electricity, water, communication, banking etc. very easily. At present, the Company has a production capacity of 22,896 MT per annum of Maize Oil and 45,792 MT per annum of Maize Cake. During the financial year 2023-24, they have expanded the installed capacity from 18,126 MT per annum to 22,896 MT per annum of Maize Oil and 36,252 MT per annum to 45,792 MT per annum of Maize Cake and during financial year 2021-22, they have expanded the installed capacity from 14,310 MT per annum to 18,126 MT per annum of Maize Oil and 28,620 to 36,252 MT per annum of Maize Cake with a view towards expanding the scale of operations and increasing the market presence. The Company has a diversified customer base covering states majorly like Gujarat, Delhi and Maharashtra. They mainly market the product through different revenue channels which includes marketing agents, brokers and direct to consumers. In the year 2020, they setup environment friendly solar power panels of 150 kva at the factory premises. The electricity generated at these solar plants is used for captive consumption by the company. As per financial performance, Mayank Cattle Food Limited has posted total income / net profits of Rs 186.53 Cr / Rs 0.72 Cr (FY21), Rs 323.00 Cr / Rs 0.80 Cr (FY22), Rs 309.58 Cr / Rs 1.31 Cr (FY23) and Rs 75.27 Cr / Rs 0.57 Cr (upto Q2 FY24). So as per previous financials data, company has shown average results, but sudden rise in net profit just before IPO raises doubts. Company has posted an average EPS of Rs 2.90 and average RoNW of 26.06% for last three fiscals. Issue is priced at a P/BV of 2.35 as per NAV of 45.88 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 72.99, 44.38 and 33.87 respectively, which looks aggressively priced. As per RHP, there are no listed peers. On BRLM's front, Finshore Management Services Limited is associated with this SME IPO and handled 24 SME IPOs in last 4 year. From last 10 IPOs, two opened below issue price and remaining opened above and at par issue price on the day of listing. As of now from last 10 IPOs, three are trading below issue price and remaining are trading above and at par issue price. ( As on 22.01.24 ) As per financials, Mayank Cattle Food Limited has shown average results, RoNW is 27.60% and P/E is respectively 72.99, 44.38 and 33.87 as per FY22, FY23 and annualised FY24 earnings. So, issue looks aggressively priced and sudden rise in net profit just before IPO raises doubts. Company is in business of manufacturing of Maize Cake (Cattle Feed) & Maize Oil (Non-edible), which is highly competitive and fragmented segment. 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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