Mamata Machinery is engaged in manufacture and export of machinery that makes plastic bags and pouches, packaging machines and extrusion equipment. It sells its machines under the brand name “Vega” and “Win”.

The company provides end-to-end solutions for the entire ecosystem of plastic film-based flexible packaging, offering services from concept to commissioning throughout the complete lifecycle of its machinery. Its product basket is comprehensive under each vertical. It offers a variety of machines such as side/bottom seal, universal, wicketer, stand-up zipper/spout, side seal pouch makers machines and extensive range of attachments for value added bags under bag and pouch making machinery vertical.

It manufactures co-extrusion blown film machines, which are used for processing various polymer granules into coextruded multilayer films. Under co-extrusion blown film machinery and attachments, it offers mono and 3-layer, 5/7 barrier film lines with line width: monolayer (900 – 1,750mm), 3 layer (900- 3,125mm), 5/7 layer (1,200 – 2,625mm) etc. based on specification provided by its customers. It manufactures packaging machines that are used to fill the end products into pouches categorised as horizontal form fill and seal machines (“HFFS”), vertical form fill and seal machines (“VFFS”) and pick fill seal machines (“PFS”) for smaller volume requirements. As of September 30, 2024, it has installed over 4,500 machines in 75 countries around the world.

Of the FY24 revenue from operations, 63.41% came from machines for plastic bag and pouch making, 14.77% from Packaging Machinery, 4.31% from Co-Extrusion Blown Film Machinery, 13.34% from attachment and spares and 3.20% from after sales.

Products manufactured using the machines of the company are used across several industries as packaging applications, such as the packing of food and FMCG products. It primarily sells its packaging machinery to direct consumer brands catering to the FMCG, Food, & Beverage Industries and bag and pouch making machines to convertors and service providers who, in turn, mainly catering the FMCG and consumer industry. The machinery of the company is utilised in non-packaging applications, such as e-commerce bags and garment packaging bags. The company also provides after-sales service to its customers.

The company consistently endeavours to expand its product offerings and solutions to its customers. As part of its focus on innovation, the company has launched new and advanced machines from time to time.

It operates two machine manufacturing facilities, one in India (Sanand, Gujarat) and one in the USA (Bradenton, Florida). It also has a pre/after-sales service and product application centres at Bradenton(Florida, USA) and a pre-sales/after sales centre at Montgomery(Illinois, USA) dedicated for bag and pouch-making machines.

It derives a significant portion of its revenues from operations from sales outside India, both directly and through its wholly owned Subsidiary, Mamata Enterprises, Inc. In FY24 of the total revenue from operation, sales from outside of India was about 65.28% (including 19.2% from US)[and balance 33.76% from sales from India] and export revenue from its wholly owned subsidiary in FY24 stood at 33.27%.

The company is planning to invest in backward integration to improve manufacturing efficiency and reduce input costs. It is planning to set up a captive unit to fabricate and manufacture frames for its machines. The manufacturing facility once operational will improve its manufacturing efficiency and reduce delivery time.

The Issue and objects

The offer consists of offer for sale (OFS) of 7382340 equity shares of Rs 10 face value. The entire OFS is made of equity sale by promoters, members of promoter family and group companies.

The company will not receive any proceeds from the OFS.

Strengths

Offer comprehensive range of products serving the entire flexible packaging market value chain and strong track record.

Advanced manufacturing infrastructure and material knowledge to customize systems and products based on customer specifications.

Technology-driven operations with a strong focus on quality, innovation-led research and development, leading to products that cater to dynamic market requirements.

Extensive global sales and distribution network. In Fiscal 2024 the company emerged as seventh largest exporter of packaging machines from India and contributed 3% of market share of total export of Packaging Machineries.

The Top 5/10 customers contributed 21.39%/31.69% and 19.67%/30.00%, respectively, in FY24 and FY23, respectively.

Weakness

Heavily dependent on the performance of the FMCG, Food & Beverage and Consumer Industry and any slowdown in these end use industries or any other adverse changes in the conditions affecting the plastic processing/converting and packaging machines market can adversely impact the business.

Partial or complete bans on packaging material in respect to its products may severely impact business and future business prospects.

The Trademark “Mamata” is registered in the name of one of its Promoters, Mahendra Patel, and it is dependent on its trademark licence agreements under which it pay a royalty/consideration.

Certain unsecured loans have been availed from Sharvil V Patel by its material subsidiary, Mamata Enterprises Inc, which may be recalled by lenders at any time.

Operates in a highly competitive industry with competition from both organized and unorganized players.

Valuation

Consolidated sales (restated) were up by 18% to Rs 236.61 crore in FY 2024 over FY 2023. The OPM expanded by 810 bps to 19.9%. Thus, the growth of OP jumped up by 99% to Rs 47.18 crore. Eventually, net profit increased61% to Rs 36.13 crore.

For the quarter ended Jun 2024, the net profit was Rs 0.22 crore on sales of Rs 27.62 crore.

The EPS for FY2024 on expanded equity (on the upper price band) was Rs 14.7. The PE on upper price band works out to 16.5 times and P/BV stood at 1.6 times.

In comparison the Rajoo Engineers and Kabra Extrusion quotes at a PE of 214.4 times and 53.6 times of their FY24 EPS.