Mukka Protein to knock on the doors of primary market early next week for its ₹225 cr IPO

Costal Karnataka-based, Mukka Protein is expected to launch its ₹225 crore IPO on February 26. Mukka Protein is the largest manufacturer of fishmeal, oil and insect meal in India. The company also boasts of being the largest exporter of fishmeal having a diversified geographical presence across 15+ countries.

According to sources close to the development, Mukka Protein’s IPO is likely to be priced between ₹25-30 per share and the company could look at a post-listing market capitalization of ₹750-900 crore.

Importantly, Mukka Protein’s IPO is a complete fresh issue and the company intends to use the proceeds from the IPO to the tune of ₹120 crore towards working capital requirements, up to ₹10 crore towards investment in its associate, Ento Proteins.

Mukka Protein would be issuing 8 crore shares through its IPO which would be nearly be around 27% of its post issue equity base.

Mukka Protein, a Mangalore-based company led by Kalandan Mohammed Haris is one of the key player in fish protein industry in India. The company manufacturers fishmeal, fish oil and fish soluble paste, an essential ingredient in manufacturing of aqua feed, poultry feed and pet food. An important distinction to note here would be that Mukka Protein makes ingredients which go into making aqua feed, fish feed and pets feed.

The company is the largest manufacturer of fishmeal and insect meal in India, also the largest exporter to countries like Vietnam.

As per a CRISIL Report, Mukka Protein contributes 45-50% of total market share in revenue of fishmeal and fish oil industry. The company’s output capacity for fishmeal, oil and paste stands at 1.52 lakh MT per year. The company also boasts of having 6 plants situated in different strategic locations across the country.

Compound animal feed market, especially aqua feed is on a rise. Fishmeal is a crucial component for compound feed where a strong demand is anticipated. Also, about 70-75% demand for fishmeal and oil comes from the growing aqua culture industry. Anticipation of a strong demand in aqua culture industry is also on the back of increasing per capita fish consumption.

The government has put a structured focus on India’s fisheries sector. From carving out a fisheries ministry to announcing a Atma Nirbhar Bharat package of ₹20,000 crore for the fisheries sector, PM Modi has been looking to fill the gaps in the fisheries sector and propel the power of blue economy. The government support schemes for the fisheries sector through schemes like PMMSY, FIDF, Kisan Credit Card aim to boost fisheries and the aqua culture sector in the country and these schemes are also expected to enhance the growth of fishmeal and fish oil industry, crucial for feed used in aqua culture.

Another demand driver for the aquaculture industry could be nutraceuticals. The demand for nutraceuticals especially omega-3 pills and related products has increased substantially which is also expected to drive demand for the products made by Mukka Protein.

Mukka Protein has also witness a consistent improvement in its financials over the last three years. The company’s revenue from operations grew at 28% in FY22 and 53% in FY23. The company’s revenue from operations stood at ₹1,177 crore at the end of FY23, it has also achieved revenues of ₹606 crore in the first half of FY24.

Company’s EBITDA grew at 22% and 40% respectively in FY22 and FY23. It clocked an EBIDTA number of ₹94 crore in FY23 and has already done an EBITDA of ₹61 crore in the first half of FY24.

Margins have also grown consistently in the last 3 years. EBITDA margins grew to 7.04% in FY22 from 5.27% in FY21. The number stood at 8.01% in FY23 and for the first half of FY24, EBITDA margins came in at 10.11%.

Profits for Mukka Protein grew by 136% and 85% in FY22 and FY23 and the company is on track to double its profits in FY24.

Mukka Proteins expects expand its network of supply partners and aggregate major portion of supply of raw fish across coastlines of India and Middle East. The company also plans to enter into tie-ups with various local plants to strengthen its supply chain network.

The company also plans to expand the manufacturing footprint of Ento Proteins. Ento Proteins produces insect meal from food waste and is the winner of Network 18 Sustainability Award under the category circularity for the year 2022.

Currently company’s manufacturing units are located at strategic geographical locations like Karnataka, Gujarat and Maharashtra, along the Indian coastline and in Oman which is along the Gulf coastline. Oman facility provides higher yield of fish oil.

Mukka Protein also looks at expanding its sales network in categories like insect meal and insect oil.