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12 October 2023

Madhusudan Masala IPO: Spicing Up the Market

Introduction:

Madhusudan Masala Limited, a renowned player in the spices industry, made its mark on the stock market with its recent IPO. This Book Built Issue, with a total value of Rs 23.80 crores, comprised exclusively of a fresh issue of 34 lakh shares. The subscription period for the Madhusudan Masala IPO ran from September 18, 2023, to September 21, 2023. The allotment process concluded on September 26, 2023, with the shares being listed on NSE SME on the same day. Priced within a band of ₹66 to ₹70 per share, the IPO offered a minimum lot size of 2000 shares, necessitating a minimum investment of ₹140,000 for retail investors.

Key Market Players:

The Madhusudan Masala IPO was managed by Hem Securities Limited as the book running lead manager and Kfin Technologies Limited as the registrar. Hem Finlease played the role of the market maker.

Stock Performance:

As of October 6, 2023, Madhusudan Masala Limited's stock was trading at ₹111.20, reflecting a marginal decrease of 0.63%. The stock opened at ₹114.80, reached a high of ₹114.80, and had a low of ₹110.00. The previous closing price was ₹111.90, with a total traded value of 70,000 shares.

Ownership Structure:

Before the IPO, the shareholding was at 100.00%, which reduced to 73.64% after the IPO.

Financial Performance:

Madhusudan Masala Limited displayed strong financial performance. As of March 31, 2023, the company's assets stood at ₹5,736.52 lakhs, indicating significant growth. The company reported impressive revenue of ₹12,750.57 lakhs, showcasing substantial revenue growth. The profit after tax reached ₹575.89 lakhs, reflecting substantial profitability. The net worth increased to ₹1,099.10 lakhs, with reserves and surplus at ₹599.10 lakhs. Total borrowing amounted to ₹4,217.20 lakhs.

Market Indicators:

Key performance indicators included a Market Capitalization of ₹90.3 crores, a Price-to-Earnings (P/E) ratio of 15.7, and a Return on Equity (ROE) of 101.91%.

Objectives of the Issue:

The net proceeds from the IPO were intended for various purposes, including:

1. Meeting working capital requirements.
2. General corporate purposes.

Expert Opinion:

Noted that the company operates in a highly competitive and fragmented segment. The exceptional performance for FY23 raised concerns about sustainability. Based on the strong earnings for FY23, the issue appeared to be fully priced. He suggested that well-informed and cash-surplus investors might consider parking funds for the medium to long term.

Subscription Status:

The Madhusudan Masala IPO received overwhelming interest from investors, with an overall subscription rate of 444.27 times as of September 21, 2023. Retail investors showed remarkable enthusiasm, with a subscription rate of 592.73 times.

Conclusion:

Madhusudan Masala Limited's IPO brought the flavors of the spice industry to the stock market. Potential investors should carefully assess the company's products, market competition, growth prospects, and financial stability before making investment decisions. As with any investment, diversification and prudent risk management are important when considering IPO opportunities, especially in the competitive and dynamic food industry.

Read More IPO related blogs - Kundan Edifice IPO