Mohini Health NSE SME IPO Review (Apply)

Mohini Health & Hygiene Ltd. (MHHL) is an ISO 9001(QMS), ISO 14001 (EMS) and 18001 (OHSAS) certified company engaged in manufacturing and export of absorbent cotton and medical consumable products.  It was formerly known as Mohini Fibers Ltd. and was engaged in the business of dealing and processing of cotton and waste cotton and lately diversified into the health and hygiene sector with the change in name. MHHL operates both in domestic and international markets and has been awarded as Star Export House by Office of the Joint Director General of Foreign Trade. It has transferred its cotton waste recycling business activity to its subsidiary Vedant Kotton Pvt. Ltd. Its product portfolio includes Absorbent Bleached Surgical Cotton, Absorbent Cotton Wool, Cotton Balls, Cotton Ear Buds, Cotton Zig Zag etc.

To part finance its repayment/prepayment of debt, working capital and general corpus fund needs, MHHL is coming out with a maiden IPO of 4932000 equity shares of Rs.10 each via book building route in a price band of Rs. 40 – Rs. 42 per share to mobilize Rs. 19.73 cr. to Rs. 20.71 cr. (based on lower and upper price bands). Issue opens for subscription on 05.02.18 and will close on 07.02.18.Minimum application is to be made for 3000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. Issue is jointly lead managed by Pantomath Capital Advisors Pvt. Ltd. and Small Industries Development Bank of India (SIDBI). Link Intime India Pvt. Ltd. is the registrar to the issue. Having raised initial equity at par between incorporation and January 2010, it also raised few shares at par in March 2014. It raised further equity in the price range of Rs. 30 to Rs. 80 per share between March 2011 and January 2018. It has also issued bonus shares in the ratio of 3 for 1 in November 2017. Post issue, MHHL’s current paid up equity capital of Rs. 13.30 cr. will stand enhanced to Rs. 18.24 cr. Issue constitutes 27.04% of post issue paid up capital of the company. 

On performance front, MHHL has posted turnover/net profits of Rs. 48.69 cr. / Rs. 0.73 cr. (FY14), Rs. 91.04 cr. / Rs. 1.93 cr. (FY15), Rs. 123.09 cr. / Rs. 3.82 cr. (FY16), Rs. 137.73 cr. / Rs. 3.39 cr. (FY17). Thus while top line maintained growth pattern, it suffered a setback in bottom line for FY17. For first half of the current fiscal, it has earned net profit of Rs. 3.64 cr. on a turnover of Rs. 85.17 cr. which is a bit surprising. For last three fiscals, it has posted an average EPS of Rs. 2.85 and an average RoNW of 16.15% on an equity base of Rs. 2.96 crore that has quantum jump now and will further rise post issue. Issue is priced at a P/BV of 0.44 based on its NAV of Rs.95.09 as on 30.09.17. If we annualize latest earnings and attribute it on fully diluted post issue equity then asking price is at a P/E of around 11 that augurs well. It has no listed peers to compare with.

On merchant banker’s front, this is the 61st mandate from its stable in last three fiscals. Out of last 10 listings, 1 opened around par and the rest with premiums ranging from 1% to 130% on the day of listing. 130% rewards are from the only main board IPO of this merchant banker i.e. Astron Paper