Macobs Techno NSE SME IPO review (May apply)

Review By Dilip Davda on July 13, 2024

•    MTL is operating in the male grooming industry via e-commerce platform.
•    The company posted growth in its top and bottom lines for the reported periods.
•    Technocrat promoters have reaped the benefits of their efforts and hopes to improve further.
•    Based on FY24 earnings, the issue appears aggressively priced.
•    Well-informed investors may park funds for the medium to long term.

ABOUT COMPANY:
Macobs Technologies Ltd. (MTL) operates within the male grooming industry, specializing in the niche area of below-the-belt grooming, and conducts its business exclusively through e-commerce channels such as its website https://menhood.in/, without maintaining physical stores or a traditional retail footprint. This focus addresses a significant gap in the market, particularly in regions where discussion around such aspects of personal care is often limited. It offers a range of products specifically designed for men’s grooming needs, encompassing tools like specialized trimmers for sensitive areas, hygiene products tailored for male skin, and a variety of self-care items.

These products are developed with a commitment to innovation, safety, and effectiveness, catering to the unique requirements of their target demographic. Beyond its product range, the Company is dedicated to educating and changing societal perceptions about male grooming, primarily leveraging online platforms. This involves creating and sharing content that promotes awareness and open conversation on topics traditionally considered taboo.

The company’s approach is deeply customer-centric, focusing on understanding and meeting the evolving needs of its consumers through digital engagement and feedback mechanisms. As of the date of filing this offer document, it had 15 employees on its payroll.

This company is promoted by technocrats well versed with the e-commerce segment and have yielded the benefits of their efforts in speedy growth. Post more funds availability after the IPO, they are confident to improve their performance as the demand for the products marketed is on the rise.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 2595200 equity shares of Rs. 10 each to mobilize Rs. 19.46 cr. at the upper cap. It has announced a price band of Rs. 71 – Rs. 75 per share. The issue opens for subscription on July 16, 2024, and will close on July 19, 2024. The minimum application to be made is for 1600 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.50% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, it will utilize Rs. 2.00 cr. for customer acquisition, Marketing and Awareness, Rs. 1.50 cr. for repayment/prepayment of certain borrowings, Rs. 12.00 cr. working capital, and the rest for general corporate purposes.

The issue is solely lead managed by SKI Capital Services Ltd., and Maashitla Securities Pvt. Ltd. is the registrar to the issue. SKI Capital Services Ltd. is also the market maker for the company.

The company has issued entire equity shares at par value so far. It has also issued bonus shares in the ratio of 2 for 1 in July 2023. The average cost of acquisition of shares by the promoters is Rs. 7.19 per share.

Post-IPO, company’s current paid-up equity capital of Rs. 7.20 cr. will stand enhanced to Rs. 9.80 cr. Based on the upper IPO price band, the company is looking for a market cap of Rs. 73.46 cr.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 6.02 cr. / Rs. 0.39 cr. (FY22), Rs. 14.83 cr. / Rs. 2.05 cr. (FY23), and Rs. 20.75 cr. / Rs. 2.21 cr. (FY24).

For the last three fiscals, it has reported an average EPS of Rs. 3.71, and an average RoNW of 55.35%. The issue is priced at a P/BV of 5.50 based on its NAV of Rs. 13.65 as of March 31, 2024, and at a P/BV of 2.51 based on its post-IPO NAV of Rs. 29.90 per share (at the upper cap).

If we attribute FY24 earnings to its post-IPO fully diluted paid-up capital, then the asking price is at a P/E of 33.19. Thus the issue appears aggressively priced.

For the reported periods, the company has posted PAT margins of 6.47% (FY22), 13.84% (FY23), 10.73% (FY24), and RoCE margins of 96.30%, 106.02%, 30.53% respectively for the referred periods.

DIVIDEND POLICY:
The company has not declared any dividends since incorporation. It will adopt a prudent dividend policy based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown FSN E-Commerce, and Honasa Consumer as their listed peers. They are trading at a P/E of 433.78 and 126.96 (as of July 12, 2024). However, they are not comparable on an apple-to-apple basis. These peers compare appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORD:
This is the 1st mandate from SKI Capital in the ongoing fiscals and has no past track records.