Can M&B Engineering's IPO deliver strong returns for investors?

38888
July 30, 2025

Can M&B Engineering's IPO deliver strong returns for investors?

ET Intelligence Group: M&B Engineering, a manufacturer of fabricated steel structures (pre-engineered buildings or PEB) and self-supported roofings, plans to raise ₹275 crore through fresh issue to fund capital expenditure and debt repayment and ₹375 crore through an offer for sale. The promoter stake will fall to 70.5% after the IPO from 100%. Its Sanand facility in Gujarat is the only PEB manufacturing facility in India with a certification from the American Institute of Steel Construction (AISC). The company has undertaken capacity expansion to cater to rising demand. It operates at a higher margin compared with peers. Given these factors, investors may consider the IPO for the long-term. Incorporated in 1981, Ahmedabad-headquartered M&B provides PEB and roofing solutions to customers across various sectors including engineering, manufacturing, food and beverages, warehousing, logistics, power, textiles, and railways. The company operates two manufacturing facilities each in Sanand and Cheyyar, Tamil Nadu, with a combined PEB capacity of 103,800 MTPA and 1,800,000 square metres per annum for self-supported roofing solutions as on March 2025. A part of the IPO proceeds will be used to increase the capacity at Sanand by 28% and at Cheyyar by 142% by FY28. 122985630Exports formed nearly 7% of the revenue in FY25. Top five customer groups contribute about 43% of its revenue. The company had an order book of ₹842.84 crore as of June 2025. Revenue from operations and net profit grew 6% and 53% annually to ₹988.6 crore and ₹77 crore, respectively between FY23 and FY25. Ebitda margin expanded to 12.8% from 7.5% during the period-margin for peers is between 2% and 10%. Debt-equity ratio is expected to fall to 0.1 after the IPO from 0.3. For peers, it is between 0.1 and 0.6. In FY25, 57% of the revenues came from repeat customers. Working capital days increased to 106 in FY25 from 60 in FY23. Considering the post-IPO equity and net profit for FY25, the company demands a P/E multiple of up to 29 vs P/Es between 30 and 34 for peers including Pennar Industries and Interarch Building Products.