Amid various companies, an SME player, Maruti Interior Products Limited is coming up with its IPO post the budget. So let’s discuss the prospects of the company in detail.
About Maruti Interior Products Limited
Maruti Interior Products Limited is engaged into manufacturing and domestic sale and export of modular kitchen storage system, aluminium long wardrobe handle, and profile handle. It has a range of product offerings for different customer segments. Their brand everyday kitchen is focused towards economic range. The company also manufactures products for other companies on OEM basis.
The company has an in house team of designers who look after product development and quality control. With ecommerce, the company eyes to reach directly to its customers. It has online presence on market places such as Amazon and Flipkart. To catch up with the latest trends, the company has developed a DIY product range that comes with easy installation guide and video helping users in assembling the product.
Maruti Interior Products Limited IPO Details
The following are the details of the company’s IPO:
- The company’s IPO will open for subscription on February 3, 2022 and will close on February 8, 2022.
- The lot size for the IPO is of 2000 shares. A retail investor can apply upto 1 lot.
- The IPO is a fixed price issue with an IPO price of ₹55 per equity share.
- The company’s shares will list on the BSE SME platform.
- The company will issue 20 lakh equity shares of ₹10 each, which sums up to a share capital of ₹11 crore.
- The promoter’s holding will come down to 73.5% post the IPO from the current 100%.
Also check: IPO Grey Market Premium
Objectives of the IPO
The following are the objectives of the company’s IPO:
- The gross proceeds from the issue will be ₹11 crores, and the net proceeds from the issue will be ₹10.4 crores.
- The company will use the proceeds from the net issue to set up a fully automatic Nickel/Chrome Plating plant and powder coating plant. ₹6.65 crores will go towards this purpose.
- The company will also use the proceeds to meet its working capital requirements. ₹2.85 crores will go towards this purpose.
- The proceeds from the IPO will also be used for general corporate purposes. ₹0.9 crores will go towards this purpose.
The following are the key strengths in the company’s business:
- The company’s manufacturing plant consists of automatic machines for various purposes. Due to these machines, the company is able to manufacture high quality and durable range of products.
- The company has presence on market places such as Amazon and Flipkart. This will help them in competing with various D2C competitors in their segment.
- Apart from selling their own products, the company also manufactures products for various other prestigious companies such as Godrej, Walmart, and Livespace.
- The promoters of the company have significant industry experience and have played a key role in its growth.
The following are the key risks in the company’s business:
- The company is a part of several legal proceedings under the direct and indirect tax laws. Any unfavorable outcome in this regards could be negative for the company’s financials.
- The company is required to obtain certain approvals and licenses in the ordinary course of business.
- The company derives a major portion of its revenues from OEMs and dealers.
- The industry in which the company operates is labour intensive and its business operations could be disrupted if there is any labor related unrest.
- Trade receivables and inventories form a sizeable chunk of the company’s current assets and net worth. This is detrimental for business profitability.
Fundamentals of the company
The following are the details about the fundamentals of the company:
- The company’s revenue from operations increased from ₹11.7 crores in FY19 to ₹15.19 crores in FY21. For the half year ended September 2021, the company’s revenue stood at ₹11.46 crores.
- The company’s profit after tax increased from ₹0.98 crores in FY19 to ₹1.54 crores in FY21. For the half year ended September 2021, the company’s profit after tax stood at ₹1.54 crores.
- The company’s cashflow from operations increased from ₹1.06 crores in FY19 to ₹1.89 crores in FY21.
- The company’s earnings per share for the half year ended September 2021 was ₹2.97.
- The company’s net asset value per share as of September 2021 was ₹21.19.
- The company’s total borrowings increased from ₹0.17 crore in FY19 to ₹1.96 crore in FY21.
A comparison with peers
According to the prospectus, the company does not have any similar or comparable listed peer which is involved in the same line of business as the company. Hence a direct comparison is not possible in this regards.
Discussed above are the details of the company’s IPO. As the IPO will open for subscription after the budget, investors will have the time to make a decision based on the post-budget sentiment in the market.