Mohini Health & Hygiene Ltd

Started in 2009, Mohini Health & Hygiene Ltd is Pithampur, MP based company engaged in the business of manufacturing and export of absorbent cotton and medical consumable products. Company operates in both domestic and international markets. Company's revenue from operations from domestic region is 44.77% and international market is 55.23%. Company exports its products majorly to countries such as Portland, Italy, Lativa, Russia, Spain, Greece, etc. Company was initially engaged in the business of dealing and processing of cotton and waste cotton and is now diversifying into the health & hygiene sector with advent of manufacturing of medical consumable products. Product Portfolio:1. Absorbent Bleached Surgical Cotton2. Absorbent Cotton Wool3. Cotton Balls4. Cotton Ear Buds5. Cotton Zig Zag On financial performance front, MHHL has posted turnover/net profits of Rs. 41.46 cr. / Rs. 0.64 cr. (FY13), Rs. 48.69 cr. / Rs. 0.73 cr. (FY14), Rs. 91.04 cr. / Rs. 1.93 cr. (FY15), Rs. 123.09 cr. / Rs. 3.81 cr. (FY16) and Rs. 137.73 cr. / Rs. 3.39 cr. For first half of current fiscal, it has reported net profit of Rs. 3.64 cr. on a turnover of Rs. 85.17 cr. Thus it has shown consistent growth in top line and bottom lines for all these years, except setback for FY17 in bottom line. Also sudden jump in profit for H1 of FY18 is also surprising. For last three fiscals it has posted an average EPS of Rs. 2.85 and an average RoNW of 16.15% on an equity base of Rs. 2.96 crore. If we annualise latest earnings and attribute it to fully diluted equity post issue, then asking price is at a P/E of around 11. Asking price is at a P/BV of 0.42 (on its NAV of Rs.95.09 as on 30.09.17). As per offer documents, company has no listed peers to compare with. As per latest earnings, issue looks reasonably priced. On merchant banker's front (Pantomath), this is the 61st mandate from its stable in last three fiscals. Out of last 10 listings, 1 opened around par and the rest with premiums ranging from 1% to 130% on the day of listing. (Listing at premium of 130% was for main board IPO of Astron Paper) As per financials, company's growth is consistent, RoNW is 16.15% for last three fiscals and issue looks reasonably priced as per latest earnings. But sudden jump in H1 of FY18 earnings very surprising. Company is in medical consumable products manufacturing business and organised players are very less, so company has huge growth potential. So, we give SUBSCRIBE rating to this SME IPO.

• 1 Sarvapriya Bansal
• 2 Avnish Bansal