Boss Packaging NSE SME IPO review (May apply)

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Review By Dilip Davda on August 27, 2024

•    The company is engaged in sticker labeling machines of various types for various purposes.
•    It is operating in a highly competitive and fragmented segment.
•    Though the company posted growth in its top lines, bottom line remained static for the last two fiscals. 
•    Based on FY24 earnings, the issue appears aggressively priced. 
•    Well-informed investors may park moderate funds for long term in this packaging sector company. 

ABOUT COMPANY:
Boss Packaging Solutions Ltd. (BPSL) started business in 2012 as manufacturer of filling and sticker labeling machines, it has come a long way today to become a manufacturer, supplier and exporter of diversified packaging, capping, filling machines, self-adhesive sticker labeling machine, conveyors, turn tables, web sealers, sleeve applicator etc. It has sales and distribution network in Pan India.

The company has well-equipped machine manufacturing facilities along with registered office at 11-C, Survey No. 56/1/2/3, Ramdev Estate, Near Siddipura Estate, Opposite Ramol Mehmdabad Highway, Vinzol Road, Ahmedabad, Gujarat 382445 India. From a single type equipment manufactured to facilitate filling and sticker labeling machine in 2012, it has expanded equipment portfolio to wide range of packaging machines which includes a comprehensive range of packaging machinery such as, industrial packaging machines with Semi-Automatic or automatic Liquid Filling Machines, Semi-Automatic or Automatic Screw or ROPP Capping machine, Pick and Place Screw Capping Machines. Wide range of Self-Adhesive Sticker Labelling Machines, Hologram Applicator Machines, Shrink Sleeve Applicator Machine, Conveyors and Turn Tables, Air Jet Cleaning Machine, Semi-Automatic or automatic shrink-wrapping machines (Web Sealer), Electric Tunnels and Winder Re winder and customized atomization to cater to diverse customer requirements. BPSL sells these machines under brand "Boss" and also under the brand of its customers i.e. as a white label.

Its products find application in various end-use industries including edible oil, lubricants, chemicals, cosmetics, homecare, pharmaceuticals, viscous liquid, juices and dairy, agriculture and pesticides, food and ancillaries, cosmetic and toiletries, and distilleries and breweries. As of March 31, 2024, it had 64 employees on its payroll. 

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 1274000 equity shares of Rs. 10 each at a fixed price of Rs. 66 per share to mobilize Rs. 8.41 cr. The issue opens for subscription on August 30, 2024, and will close on September 03, 2024. The minimum application to be made is for 2000 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 28.65% of the post-IPO paid-up capital of the company. The company is spending Rs. 0.65 cr. for this IPO process, and from the net proceeds, it will utilize Rs. 3.34 cr. for purchase of machineries, Rs. 3.00 cr. for working capital, and Rs. 1.42 for general corporate purposes. 

The issue is solely lead managed by Fedex Securities Pvt. Ltd., and KFin Technologies Ltd. is the registrar to the issue. B N Rathi Securities Ltd. is the market maker for the company. 

Having issued initial equity shares at par value, the company issued further equity shares at a price of Rs. 1450 per share in May 2023. It has also issued bonus shares in the ratio of 155 for 1 in July 2023. The average cost of acquisition of shares by the promoters is Rs. 0.22, Rs. 6.27, Rs. 9.29, and Rs. 1450.00 per share. 

Post-IPO, company's current paid-up equity capital of Rs. 3.17 cr. will stand enhanced to Rs. 4.45 cr. Based on the upper IPO price band, the company is looking for a market cap of Rs. 29.35 cr.  

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 5.48 cr. / Rs. 0.42 cr. (FY22), Rs. 10.35 cr. / Rs. 1.01 cr. (FY23), Rs. 12.18 cr. / Rs. 1.01 cr. (FY24). The company marked growth in its top lines, but its bottom line remained static for the last two fiscals. 

For the last three fiscals, it has reported an average EPS of Rs. 4.28, and an average RoNW of 34.60%. The issue is priced at a P/BV of 4.62 based on its NAV of Rs. 14.28 as of March 31, 2024, and at a P/BV of 2.27 based on its post-IPO NAV of Rs. 29.10 per share. 

If we attribute FY24 earnings to its post-IPO fully diluted paid-up capital, then the asking price is at a P/E of 29.08. 

For the reported periods, the company has posted PAT margins of 7.63% (FY22), 9.72% (FY23), 8.30% (FY24), and RoCE margins of 53.26%, 67.35%, 28.99% respectively for the referred periods. 

DIVIDEND POLICY:
The company has not declared any dividends for the last five fiscals. It will adopt a prudent dividend policy based on its financial performance and future prospects. 

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Windsor Machines, Manugraph India, and Macpower CNC as their listed peers. They are trading at a P/E of NA, NA and 54.0 (as of August 27, 2024). However, they are not comparable on an apple-to-apple basis.

MERCHANT BANKER'S TRACK RECORD:
This is the 32nd mandate from Fedex Securities in the last four fiscals (including the ongoing one), out of the last 11 listings, all listed with premiums ranging from 1.43% to 140.82% on the date of listing.

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