Prime Highlights:

• M&B Engineering’s ₹650 cr IPO makes market debut with price band of ₹366-385 and grey market premium (GMP) of 11%.
• Day 1 subscription remains weak at around 2%, despite optimistic GMP indicating listing gains.

Key Fact:

• IPO consists of ₹275 crore fresh issue and ₹375 crore offer-for-sale, reducing promoter holding to 70.5%.
• Proceeds would be utilized for repayment of debt, capital spending, technology upgradation, and working capital requirements.

Key Background:

M&B Engineering, the dominant India pre-engineered buildings (PEB) and steel roofings player, launched its ₹650 crore IPO on July 30 and closed it on August 1. The issue is in the₹366–385 a share range and seeks up to ₹2,200 crore post-issue market capitalization. The IPO has the composition of fresh issue of ₹275 crore and offer-for-sale by promoters of ₹375 crore, which will reduce their holding to about 70.5% post listing.

Anchor investors including big institutions like Abu Dhabi Investment Authority and HDFC Mutual Fund had invested ₹292 crore at ₹385 a share, reflecting strong institutional faith. The company will utilize IPO proceeds to pre-pay debt, use for technology upgradation, and expand manufacturing capacities in its Gujarat-based units.

M&B Engineering is known to have state-of-the-art manufacturing units, such as its Sanand unit that is the sole Indian PEB building certified by the American Institute of Steel Construction (AISC). It also has a diversified client list, such as Adani Group, Tata Advanced Systems, and Alembic Pharma. Its order book stood at ₹840 crore as on June 30, reflecting buoyant demand. In FY25, it recorded revenue of ₹988.6 crore, 24% YoY higher, while net profit grew 69% at ₹77 crore.

Though with a decent grey market premium of about ₹43 (11% higher than the upper price band), Day 1 retail subscription was poor, with overall subscription being around 2%. Based on analysts, while the IPO appears to be overvalued at a P/E multiple of 28.5x, growth prospects from the company, combined operations, and good institutional backing make it a buy on medium to long term. Suggestion for subscription leans marginally towards cautious optimism, factoring in listing gains and value potential on the longer term.