M&B Engineering plans to raise Rs 653 crore via IPO, files DRHP with SEBI

M & B Engineering IPO

M&B Engineering, the pre-engineered buildings (PEBs) and self-supported roofing provider, plans to mobilise Rs 653 crore via an initial public offering. It has filed the Draft Red Herring Prospectus (DRHP) with the capital markets regulator SEBI on September 25.

The company targets to raise Rs 325 crore via fresh issue component, and the remainder Rs 328 crore through offer-for-sale route.

Promoters Girishbhai Manibhai Patel, Chirag Hasmukhbhai Patel, Vipinbhai Kantilal Patel, Birva Chirag Patel, Aditya Vipinbhai Patel, Leenaben Vipinbhai Patel, and Umaben Girishbhai Patel will be the selling shareholders in the offer-for-sale.

The Gujarat-based company may also consider fund raising of Rs 65 crore in a pre-IPO placement before the launch of its initial public offering or filing of the Red Herring Prospectus with the Registrar of Companies (ROC). The said amount will be reduced from the fresh issue if the company manages to raise funds in pre-IPO placement.

M&B Engineering claimed to be the largest player in terms of revenue for the manufacturing and installation of self-supported steel roofing solutions in India with a market share of 75 percent as per the fiscal 2024. Its business is divided into two segments - Phenix division provides solutions for PEBs and complex structural steel components; and proflex division provides self-supported steel roofing solutions.

It has executed over 8,700 projects till June 2024 in diverse sectors such as general engineering and manufacturing, food and beverages, warehousing and logistics, power, textiles, and railways.

The Patel family-owned company will spend Rs 63.9 crore out of the net fresh issue proceeds for purchase of equipment and machinery, and Rs 60 crore for repaying debt. The total outstanding borrowings stood at Rs 386 crore as of August 2024.

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In addition, Rs 110 crore of IPO funds will be utilised for its working capital requirements, and the remaining money for general corporate purposes.

The company that competes with listed peers like Pennar Industries, Bansal Roofing Products, HIL, Everest Industries, and Interarch Building Products earned nearly 73 percent of business from its phenix division and the rest nearly 27 percent from proflex division. Additionally, the 73 percent of its total revenue came from repeat customers in fiscal 2024, increasing from 65.6 percent in FY23.

Net profit in the fiscal 2024 grew sharply by 38.7 percent to Rs 45.6 crore compared to previous year despite negative topline, driven by strong operating performance with lower input cost and other expenses. Revenue from operations fell by 9.7 percent to Rs 795 crore during the same period.

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EBITDA (earnings before interest, tax, depreciation, and amortisation) for FY24 increased by 20 percent to Rs 79.6 crore with margin expanding by 250 bps to 10 percent compared to previous fiscal 2023.

Equirus Capital, and DAM Capital Advisors are the book running lead managers to the issue.