21 August 2024
Source:https://www.thehindubusinessline.com/companies/advent-international-plans-300-400-mn-ipo-of-manjushree-technopack/article68542820.ece
Packaging solutions provider Manjushree Technopack is gearing up for a significant financial move as it plans to raise Rs 3,000 crore through an initial public offering (IPO). The company has filed its draft red herring prospectus with the capital markets regulator on August 20, marking a pivotal step towards going public. Out of the net fresh issue proceeds, Rs 500 crore will be allocated to repay debt, addressing part of its outstanding borrowings, which stood at Rs 1,156.3 crore as of June 2024, including Rs 587.2 crore in compulsory convertible debentures (CCDs).
Manjushree Technopack, a key player in the recycled polypropylene (RPP) industry, boasts a marquee customer base including Varun Beverages, Dabur India, Marico, Honasa Consumer, Hershey India, Kansai Nerolac Paints, Pernod Ricard, and Parag Milk Foods. The company's recent acquisition of the plastics packaging business of Oricon Enterprises for Rs 520 crore, which includes the prominent Oriental Containers brand, further strengthens its market position. This acquisition brings two manufacturing plants in Goa and Odisha under Manjushree's umbrella, expanding its capacity in the plastic caps & closures and preforms segments, primarily used in beverages.
Promoter Al Lenarco Midco currently holds a 97.54 percent stake in Manjushree Technopack. The Bangalore-based company may also consider raising Rs 150 crore via private placement, preferential offer, or other methods before filing the Red Herring Prospectus (RHP) with the Registrar of Companies (ROC). If the pre-IPO placement is completed, this amount will be deducted from the fresh issue.
Currently trading in the unlisted market at Rs 700-800 per share, with a market capitalization between Rs 5,000-6,000 crore, Manjushree's potential IPO valuation of $1.5-2 billion (Rs 12,500-15,000 crore) presents a wide gap. With a current P/E ratio of 33-44 based on FY24 earnings, the IPO would imply a P/E of 60+, which is notably high. However, an optimistic industry median P/E of 35 suggests a more conservative valuation range of Rs 6,000-7,000 crore.
The path forward for Manjushree will depend heavily on its ability to deliver strong EPS and profitability growth. Assuming the IPO valuations remain at the higher end of estimates, the company would need to achieve at least a 70% y-o-y EPS growth and a 140% y-o-y bottom-line (PAT) growth in FY25 to justify the higher valuation. While the company has been expanding and showing resilience, the journey to the public markets may still be subject to potential valuation adjustments.
For investors, this represents both a challenge and an opportunity. As Manjushree Technopack navigates these market dynamics, the coming months will be crucial in determining whether it can meet its ambitious growth targets and deliver the returns that justify its IPO aspirations.
