M&B Engineering, a leading company in steel roofing solutions, has filed a Draft Red Herring Prospectus (DRHP) with SEBI for its Initial Public Offering (IPO). The Gujarat-based company plans to raise Rs 653 crore through this public issue, which includes both fresh equity shares and an Offer for Sale (OFS).
IPO Details: Fresh Shares and Offer for Sale
The IPO will include the issuance of fresh equity shares worth Rs 325 crore. Additionally, shares worth Rs 328 crore will be sold through an Offer for Sale (OFS) by the company’s promoters. Key promoters involved in the OFS include Girishbhai Manibhai Patel, Chirag Hasmukhbhai Patel, Vipinbhai Kantilal Patel, and others from the Patel family.
Furthermore, M&B Engineering may raise Rs 65 crore through a pre-IPO placement before the public issue. If this happens, the size of the fresh issue will be reduced accordingly.
How M&B Engineering Plans to Use IPO Proceeds
M&B Engineering will use the funds raised through the IPO for multiple purposes. The company aims to spend Rs 63.9 crore on purchasing new equipment and machinery to enhance production capacity. Additionally, Rs 60 crore will be allocated to repay a portion of the company’s debt. As of August 2024, the company’s outstanding borrowings stood at Rs 386 crore.
A significant portion of the funds, around Rs 110 crore, will be used for working capital needs, while the remaining amount will go towards general corporate purposes.
M&B Engineering’s Business and Market Leadership
M&B Engineering claims to be the largest company in India for manufacturing and installing self-supported steel roofing solutions, with a market share of 75% as of FY 2024. The company operates through two primary divisions:
- Fenix Division: This segment provides solutions for Pre-Engineered Buildings (PEB) and complex structural steel components.
- Proflex Division: This segment specializes in self-supported steel roofing solutions.
M&B Engineering has completed over 8,700 projects across industries like general engineering, food and beverage, logistics, textiles, power, and railways. The company competes with several other listed companies, including Pennar Industries, Bansal Roofing Products, and Everest Industries.
Strong Customer Base and Financial Performance
M&B Engineering enjoys a high level of repeat business, with 73% of its revenue in FY 2024 coming from repeat customers, up from 65.6% in FY 2023. The company generates around 73% of its revenue from its Fenix division, with the remaining 27% coming from the Proflex division.
In FY 2024, the company’s net profit rose by 38.7%, reaching Rs 45.6 crore, despite a 9.7% decline in revenue, which stood at Rs 795 crore. The company’s EBITDA increased by 20% to Rs 79.6 crore, with its margins improving by 250 basis points to 10%.
Lead Managers to the IPO
M&B Engineering has appointed Equirus Capital and DAM Capital Advisors as the book-running lead managers for its IPO.
