20 August 2024
Manjushree Technopack, India's largest rigid plastic packaging firm, is gearing up for a significant milestone with plans to launch an initial public offering (IPO) aimed at raising $300-400 million. With the company seeking a valuation between $1.5 and $2 billion, the IPO is positioned not only as a strategic financial move but also as an opportunity for a potential sharp increase in its valuation, which currently trades much lower in the unlisted market.
Currently, unlisted shares of Manjushree Technopack are trading at around ₹700 per share, giving the company a market capitalization of ₹4,742 crore. This valuation is considerably lower than the $1.5-2 billion (approximately ₹12,500-₹16,600 crore) the company is targeting through the IPO. The disparity between the unlisted market valuation and the anticipated IPO valuation suggests a significant upside potential, especially in the current bullish Indian equity market.
Advent International, a US-based private equity firm, acquired a 40% stake in Manjushree in 2018 from Kedaara Capital, valuing the company at around ₹2,400 crore (approximately $289 million). Over the years, Advent has increased its stake, ultimately gaining full control of the company. Since then, Manjushree has undergone significant transformations, marked by strategic acquisitions, capacity expansion, and robust financial performance, setting the stage for a substantial valuation increase.
In FY24, Manjushree Technopack reported a net profit of ₹140.8 crore, a substantial increase from ₹59 crore the previous year, with revenue growing marginally to ₹2,117 crore. The company has also demonstrated strong cash generation, with ₹378 crore from operations in FY24, up from ₹349 crore in FY23. This financial strength is underpinned by Manjushree’s extensive manufacturing capabilities, which now span 22 plants with a combined capacity of 2.6 lakh tonnes per annum.
Manjushree’s growth has been fueled by strategic acquisitions, including the 2019 purchase of Napla, a manufacturer of pumps and triggers, and the acquisition of the B2B business of Pearl Polymers & Classy Kontainers in 2021. The company further expanded its footprint in 2022 by acquiring two manufacturing units in Maharashtra from Hitesh Plastics, allowing it to enter the specialized caps and closures market.
These strategic moves are part of a broader vision to solidify Manjushree's position as a leader in the packaging industry, offering end-to-end solutions across various sectors including food and beverages, pharmaceuticals, personal care, and automotive industries. This growth trajectory, coupled with the company's impending IPO, suggests that the current undervaluation in the unlisted market could correct rapidly as investors recognize the company’s robust fundamentals and growth potential.
Earlier in 2024, Manjushree Technopack made headlines with its decision to raise capital through a Rights Issue, offering Compulsorily Convertible Debentures (CCDs) to existing shareholders. This move was seen as a preparatory step towards the IPO, allowing the company to strengthen its financial base and attract further investor interest. The Rights Issue, aimed at raising ₹541 crore, provided a solid financial footing as the company approaches the public markets.
The proposed IPO marks a return to the public market for Manjushree, which had previously delisted in 2015. The decision to pursue an IPO underscores the company’s readiness to tap into the booming Indian equity market, which has shown an insatiable appetite for new issuances. Advent International, led by Shweta Jalan in India, has been instrumental in steering Manjushree towards this path, carefully evaluating the most lucrative options for monetizing its stake.
As Manjushree Technopack prepares for its IPO, the potential for a significant revaluation looms large. The company’s robust financial health, strategic expansions, and strong market position make it a compelling candidate for investors. The IPO will not only provide Advent with an opportunity to realize returns on its investment but also offer the market a chance to participate in the growth of a leading player in the packaging industry, with a high likelihood of a valuation upswing in the near term.