Business Profile of the M & B Engineering Limited
Established in 1981, M&B Engineering Ltd. is a distinguished subsidiary of M&B Group. M&B Engineering Ltd is one of India’s leading design led engineering solutions provider for construction of steel structures, engaged in the manufacturing of pre-engineered buildings (“PEBs”), self-supported steel roofing solutions and complex structural steel components.
As of Fiscal 2024, the company is 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%. The company is structured into two divisions: Phenix, which provides comprehensive solutions for PEBs and complex structural steel components, and Proflex, which provides self-supported steel roofing solutions.
The company has undertaken over 8,700 projects for over 1,700 customer groups across various industries, including general engineering and manufacturing, food and beverages, warehousing and logistics, under its Phenix and Proflex divisions. The Proflex Division operates 14 mobile manufacturing units equipped with panel manufacturing machines, telescopic cranes, and other ancillary equipment.
As per latest filing, the company is operating two manufacturing facility, one in Sanand, Gujarat and other in Cheyyar, Tamil Nadu.
M & B Engineering Limited IPO Objective
As per the draft red hearing prospects, the IPO issue consists only of offer for sale.
- The OFS consists of up to XXXX equity shares aggregating up to Rs. 3280 million. Nothing from those proceeds of OFS will be allotted to company.
- M & B Engineering IPO offer only has fresh issue of Rs. 3, 250 million. As per filings document, the company aims to utilize IPO proceedings towards purchase of equipment and machinery, payment of certain outstanding debt, funding working capital and corporate general purses.
| Particulars | Estimated amount (in ₹ million) |
| Funding the capex requirements for the
purchase of equipment and machinery |
639 |
| Payment of certain borrowings availed by company | 600 |
| Funding the working capital requirements of Company | 1100 |
| General corporate purposes | XXXX |
| Total | XXXX |
IPO Details of M & B Engineering Limited:
| IPO Open Date | N.A. |
| IPO Close Date | N.A. |
| Basis of Allotment | N.A. |
| Listing Date | N.A. |
| Face Value | ₹1 per share |
| Price | N.A. |
| Lot Size | N.A. |
| Total Issue Size | XXXX Equity Shares |
| Aggregating up to ₹ 6, 530 million | |
| Fresh Issue | XXXX Equity Shares |
| Aggregating up to ₹ 3, 250 million | |
| Offer For Sale | XXXX Equity Shares |
| Aggregating up to ₹ 3, 280 million | |
| Issue Type | Book Built Issue IPO |
| Listing At | BSE & NSE |
| QIB Shares Offered | Not less than 75% of the Net Issue |
| Retail Shares Offered | Not more than 10% of the Net Issue |
| NII (HNI) Shares Offered | Not more than 15% of the Net Issue |
Issue Price & Size: M & B Engineering Limited IPO
The issue price of M & B Engineering Limited hasn’t been released yet. Upon releasing the dates, the investors can bid between those price ranges. The company has both fresh issue of Rs. 325 crores as well as offer for sale of Rs. 328 crores.
Launch Date of M & B Engineering Limited IPO
The IPO opening date of M & B Engineering hasn’t been officially announced yet, upon the declaration of dates investor can bid for IPO.
M & B Engineering Limited Financial Statements
| Particulars | FY24 | FY23 | FY22 |
| Income | |||
| Revenue From Operations | 7950.6 | 8804.7 | 6882.25 |
| Other income | 132 | 85.34 | 106.98 |
| Total income | 8082.6 | 8890.04 | 6989.23 |
| Expenses | |||
| Cost of materials consumed and operational expenses | 5771.69 | 6563.38 | 5147.3 |
| (Increase)/Decrease in inventories of finished goods,
stock in trade and work-in-progress |
-37.71 | 116.39 | -214.8 |
| Employee benefits expenses | 809.9 | 753.52 | 705.62 |
| Finance costs | 230.58 | 191.79 | 189.61 |
| Depreciation and amortization expenses | 88.8 | 103.01 | 105.85 |
| Other expenses | 611.31 | 707.11 | 805.79 |
| Total expenses | 7473.76 | 8435.2 | 6759.37 |
| Restated Profit before tax | 608.84 | 454.84 | 229.86 |
| Restated Profit for the year | 456.34 | 328.92 | 163.13 |
| Particulars | For Fiscal 2024 | |||||
| M & B Engineering | Pennar Industries | Bansal Roofing Products | HIL Limited | Everest Industries | Interarch Building Products | |
| Revenue from Operations (₹ million) | 7950.6 | 31305.7 | 1055.84 | 33749.66 | 15754.52 | 12933.02 |
| EBITDA (₹ million) | 796.22 | 2729.7 | 64.54 | 1244.49 | 409.61 | 1130.15 |
| EBITDA Margin (%) | 10.01% | 8.72% | 6.11% | 3.69% | 2.60% | 8.74% |
| Profit/ (Loss) for the Year (₹ million) | 456.34 | 983.5 | 35.46 | 347.85 | 179.98 | 862.62 |
| PAT Margin (%) | 5.65% | 3.10% | 3.35% | 1.02% | 1.13% | 6.60% |
| Return on Equity (%) | 19.68% | 11.22% | 12.84% | 2.78% | 3.01% | 19.40% |
| Return on Capital Employed (%) | 19.17% | 15.31% | 16.82% | 1.87% | 4.10% | 25.96% |
| Net Debt (₹ million) | 1056.1 | 5916.1 | 38.59 | 4123.13 | -186.28 | -1274.99 |
| Net Debt to EBITDA (times) | 1.33 | 2.17 | 0.6 | 3.31 | NM | NM |
| Net Debt to Equity (times) | 0.45 | 0.67 | 0.14 | 0.33 | -0.03 | -0.29 |
| Net Fixed Assets Turnover Ratio (times) | 5.54 | 3.42 | 3.59 | 2.35 | 3.29 | 7.36 |
| Net Working Capital Days (No of days) | 111 | 62 | 18 | 51 | 72 | 52 |
M & B Engineering Limited Promoters & Shareholding
As of date, there are twelve promoters of the company, including corporate and individual.
The promoter in aggregate collectively holds 96% of the paid-up share capital of company.
| Name of the Shareholder | % of the pre- Offer Equity capital |
| Promoter | |
| Girishbhai Manibhai Patel | 38.98 |
| Chirag Hasmukhbhai Patel | 34.99 |
| Birva Chirag Patel | 10 |
| Vipinbhai Kantilal Patel | 5 |
| Aditya Vipinbhai Patel | 3 |
| Malav Girishbhai Patel | 2 |
| Leenaben Vipinbhai Patel | 2 |
| Chirag H Patel Family Trust | 0.01 |
| MGM11 Family Trust | 0.01 |
| MGM5 Family Trust | 0.01 |
| Vipin K Patel Family Trust | Negligible |
| Aditya V Patel Family Trust | Negligible |
| Promoter Group | |
| Umaben Girishbhai Patel | 4 |
Should You Subscribe to M & B Engineering Limited IPO or Not
While investing or subscribing to any IPO, consider the investment rationales related to the company. Hence, here you can find out the strength of the company that will be its growth factors. And also check the risk factors that can affect the growth and operational efficiency of the company.
Competitive Strengths of Swiggy Limited:
Leading players in domestic PEB industry
As of Aug 31, 2024, M & B Engineering is India's leading provider of PEBs and Self-Supported Roofing, with a market share of 75%. Their leadership position is attributed to its comprehensive services, integrated manufacturing facilities, customer service focus, and track record of over 8,700 projects. They export PEBs and complex structural steel components to over 20 countries, including the US.
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Wide range of specialized products and services
The company is an integrated manufacturing partner that specializes in design-led manufacturing solutions for pre-engineered metal buildings, complex structural steel components, and self-supported steel roofing. They offer solutions ranging from simple PEB structures for warehousing applications to complicated constructions, such as a retractable roof structure for a Kolkata-based shipyard. The company has demonstrated its credentials by handling over 6,700 projects across various terrains, geographical regions, end-use applications, customer specifications, delivery timelines, and size.
The Phenix Division offers comprehensive solutions for customers, including estimation, designing, engineering, and manufacturing of PEBs within controlled environments. The company also manufactures complex structural steel components using various steel grades. The Proflex Division provides comprehensive self-supported steel roofing solutions, determining the optimal thickness of steel required for each project using proprietary software to run building parameters. The company also provides value-added products and services, such as side wall, gable wall cladding, ventilators, skylights, and HVLS fans.
Long-standing relationships
Over the past eight years, the company has executed over 8,700 projects and established long-term relationships with diverse set of customers across various industries. Its Phenix and Proflex Divisions provide products and services to a wide range of customers, including Adani Ports, Adani Logistics, AIA Engineering, Tata Advanced Systems Limited, Balaji Wafers Private, etc,.
Their long-term association with customers offers significant competitive advantages such as revenue visibility, industry goodwill, a deep understanding of customer requirements, and a testament to the quality of products and services.
Strategically located manufacturing facility
M&B Engineering Ltd has two manufacturing facilities in Sanand, Gujarat, and Cheyyar, Tamil Nadu, catering to customers in Western India, Northern India, and Central India. The Sanand Facility is strategically located to cater to customers in Western India, Northern India, and Central India, while the Cheyyar Facility is well-positioned to cater to potential customers in South India.
M&B Engineering Ltd operates a fleet of 14 mobile manufacturing units, each equipped with panel manufacturing machines, telescopic cranes, and other ancillary equipment. Their engineering expertise and technology-driven processes enable them to deliver on projects in accordance with designs, specifications, and timelines. They also invest in computer-aided design software and offer on-site project management of the installation and erection of PEBs.
Risk Factors of M & B Engineering Limited:
Dependence on manufacturing facility
M & B Engineering as of filing prospectus has two manufacturing facilities in Sanand, Ahmedabad and Cheyyar, Tamil Nadu. The Sanand Facility has an installed capacity of 72,000 MTPA, while the Cheyyar Facility has an installed capacity of 31,800 MTPA. The company's business relies on managing its facilities, which are subject to various operating risks. Any disruptions, breakdowns, or shutdowns could result in significant damage to the manufacturing capabilities, delays in product and raw material transport, and adversely affect the business, results of operations, financial condition, cash flows, and future prospects.
Dependence on division fro revenue
The company provides comprehensive solutions for Pre-Engineered Buildings (PEBs), including estimation, design, engineering, and manufacturing of PEBs and their components. They also manufacture complex steel components for various end-user industries.
The company's PEB business is dependent on customer capital expenditure plans, which may be impacted by factors such as cancellations, downsizing, or deferrals. The company's growth prospects and financial performance depend on obtaining new orders for PEBs, and any loss or significant reduction in revenue could have a material adverse effect on the company's business, results of operations, financial condition, and cash flows.
In table mentioned below is the of company's revenue from Phenix and Proflex Divisions in the given period. Phenix division product portfolio include main frames, secondary structural components (H-Type Beams, I-Type Beams), accessories, etc. Whereas, proflex division include manufactures and install self-supported steel roofing’s.
| Divisions | FY24 | FY23 | FY22 |
| As a % of consolidated revenue from operations | |||
| Phenix Division | 72.98% | 71.42% | 71.28% |
| Proflex Division | 26.98% | 27.53% | 27.20% |
| Others | 0.04% | 1.05% | 1.52% |
Quality standards and stringent specifications
M & B Engineering specializes in manufacturing and installation of pre-engineered metal buildings and is required to meet high quality standards and stringent specifications from customers. These specifications include design and production, testing and inspection, safety, quality of raw material, packaging, shipment and delivery, adherence to environmental, health and safety laws, and usage of skilled manpower.
Agreement with customer requires the company to provide warranty against the products and engineering services. If the supplied products or services that do not comply with the specifications provided by the customers, they may hold the company responsible for repair, replacement costs, and all losses incurred due to damages to third parties due to defective products or services.
On not matching quality standards, the company may be liable to pay for damages for any delay in the supply, typically ranging from 0.15% to 0.5% of the total contract and are typically capped at 5% of the total contract.
Revenue concentration
The company has historically relied on customer groups for repeat orders for a substantial portion of its revenue. The company's business, financial condition and cash flows could be negatively impacted by the loss of certain customer groups, as well as defaults, delays in payments from the customers. The company's reliance on a select group may also constrain negotiation.
Data in the below-mentioned table shows companies revenue from repeat orders and revenue concentration of their top clients.
| Particulars | FY24 | FY23 | FY22 |
| Revenues from repeat customers | 5824.51 | 5776.98 | 3947.81 |
| Revenues from repeat customers as % of
consolidated revenues from operations |
73.26% | 65.61% | 57.36% |
| As a % of the revenue from operations | |||
| Largest customer group | 12.75% | 18.34% | 8.78% |
| Largest 5 customer group | 35.94% | 34.79% | 26.24% |
| Largest 10 customer group | 46.30% | 46.81% | 38.80% |
Risks from Multinational operations
The company plans to expand its presence in international markets, focusing on target countries with diverse economic and infrastructure development. However, the company has experienced regular downfall in revenues from operations outside India. Multinational operations are subject to inherent risks, including entry barriers, exposure to government actions, increased costs related to raw materials and marketing, start-up costs, and political and economic instability.
Failure to develop effective policies to manage these risks along with competition from companies could adversely affect the company's business, operating results, and financial condition.
| Particulars | FY24 | FY23 | FY22 |
| As a % of the revenue from operations | |||
| Revenue from operations outside India | 2.41% | 6.84% | 11.06% |
Capacity utilization
The company operated two manufacturing facility, one in Gujarat and other in Tamil Nadu. The Cheyyar Facility, commissioned in May 2024, has an existing capacity of 31,800 MTPA. The installed capacity for self-supported roofing’s was 18, 00, 000 square meters per annum as of Aug 31, 2024.
Underutilization of manufacturing capacities over extended periods or significant short-term underutilization could materially and adversely impact the business, growth prospects, and future financial performance. Additionally, disruptions in any part of the country could impact the actual utilization of the mobile manufacturing units.
The table below outlines the installed capacity utilization of the two manufacturing facility for the time given.
| Product Segment | Units | FY24 | FY23 | FY22 |
| Capacity Utilization | ||||
| Sanand Facility | MTPA | 58.12% | 60.39% | 53.55% |
| Cheyyar Facility | Square meter | 74.64% | 82.83% | 88.85% |
Competitive bidding
The company's growth relies on its relationship with existing clients and also on its ability to secure projects through competitive bidding processes. The competitive bidding process consider factors such as pricing power, technical capabilities, performance, reputation along with experience, and financing capabilities to execute the project. The company spends significant time and resources in preparing and submitting bids, but cannot guarantee acceptance or prequalification.
The company also provides estimated costs for project completion, but an increase in raw material, fuel, or labor costs could lead to increased costs and reduced profit margins. The company may also lose bids to competitors due to market conditions and external economic outlook.
M & B Engineering Limited Grey Market premium
Grey market premium is the premium quoted over the IPO issue price. GMP shows that investors are ready to pay above the upper band of the IPO issue price. GMP is determined in the grey market as per the demand and supply of the shares in the primary market. A grey market is that unofficial ecosystem of unlisted companies' stocks that start trading even before the launch of the IPO to the date of its listing.
Also Read: What is Grey Market Premium in IPO: How is GMP Calculated & Reliable
However, GMP is not a reliable factor, as it keeps fluctuating as per the demand and supply of shares in the primary market. There are numerous factors that affect the stock market in India and individual stock prices of different companies that are already listed and trading in the secondary market. However, for an IPO-bounded company, you can consider the GMP as the speculative listing price of the share
According to various online sources, the Grey Market Premium or GMP of the M & B Engineering Limited is trading around Rs XX in the grey market. It means shares are trading at the upper band issue price of Rs XX with a premium in the grey market and may list around the same price.
