Malpani Pipes & Fittings Ltd. (MPFL), a leading manufacturer of high-quality plastic pipes, is set to launch its Initial Public Offering (IPO) on January 29, 2025, with a price band of Rs 85-90 per share. The IPO aims to raise Rs 25.92 crore by issuing 28.80 lakh fresh shares, marking a significant step in the company’s growth journey. Specializing in the production of High-Density Polyethylene (HDPE), Medium-Density Polyethylene (MDPE), and Linear Low-Density Polyethylene (LLDPE) pipes under the Volstar brand, Malpani Pipes caters to key industries such as irrigation, telecommunications, and infrastructure. The company also trades in PVC pipes and granules, providing a diverse range of services to meet the needs of industrial, agricultural, and water distribution sectors.
About Malpani Pipes & Fittings Ltd.
Founded in Ratlam, Madhya Pradesh, Malpani Pipes & Fittings Ltd. is an ISO 9001:2015 certified company renowned for its high-quality plastic pipes. The company’s product portfolio includes HDPE, MDPE, and LLDPE pipes, along with sprinkler and drip irrigation pipes, all marketed under the Volstar brand. MPFL has expanded its operations to include a range of products designed to meet the demands of modern infrastructure and agricultural projects.
The company’s manufacturing plant, based in central India, is equipped with state-of-the-art machinery, infrastructure, and an in-house testing facility to ensure that products adhere to international quality standards. With a current installed capacity of 11,500 Metric Tons per annum (M.T.P.A.), MPFL operates 10 production lines. The company employs 51 people full-time, along with an additional 30 contract workers.
IPO Details
Malpani Pipes’ IPO will offer 28.80 lakh fresh equity shares, with a price band set between Rs 85 and Rs 90 per share of Rs 10 each. The offer opens for subscription on January 28, 2025, and closes on January 31, 2025. Investors can apply in multiples of 1,600 shares, with the minimum investment amount being Rs 1,36,000 (at the upper price band).
The net proceeds from the IPO will be utilized as follows:
- Rs 3.50 crore for expanding its manufacturing plant and acquiring new machinery.
- Rs 17.00 crore for the repayment of existing debt.
- The remainder for general corporate purposes.
The issue will be listed on the BSE SME platform post-allotment.
Financial Overview
Over the past three fiscal years, Malpani Pipes has shown impressive growth in its revenue and profits. In FY22, the company reported total income of Rs 34.94 crore and a net profit of Rs 0.89 crore. By FY24, these figures had increased significantly to Rs 141.16 crore in income and Rs 7.40 crore in profit. For the first eight months of FY25, the company posted a net profit of Rs 5.09 crore, on a total income of Rs 84.55 crore. However, the surge in profitability in recent periods raises questions about its long-term sustainability, particularly given the company’s relatively high debt-to-equity ratio of 2.04. Despite these concerns, the company’s financials suggest robust growth potential.
Comparing with Industry Peers
Malpani Pipes has highlighted AiK Pipes and Kriti Industries as its listed peers. These companies are currently trading at higher price-to-earnings (P/E) ratios of 23.2 and 30.1, respectively. However, direct comparisons are challenging, as each company operates in slightly different segments within the broader pipe manufacturing industry.
Investment Outlook
Given the competitive nature of the pipe manufacturing sector, coupled with Malpani Pipes’ recent financial performance, the IPO is seen as fully priced at the current levels. The company’s strong growth trajectory from FY24 onward is noteworthy but raises some concerns regarding its sustainability. For investors with a medium-term outlook and a solid understanding of the sector, this IPO presents a moderate investment opportunity. The IPO is managed by Interactive Financial Services Ltd., with Bigshare Services Pvt. Ltd. acting as the registrar. The market maker for the company is MNM Stock Broking Pvt. Ltd., which also underwrites the issue.
Conclusion
Malpani Pipes & Fittings Ltd. presents an intriguing investment opportunity, but with a few caveats. The company has shown impressive growth in recent years, but investors should be cautious due to its high debt levels and the competitive nature of the industry. For well-informed and cash-surplus investors looking for a medium-term investment, this IPO could offer potential returns, but careful consideration of the risks is advised.