Mukka Proteins IPO: 10 key risks from RHP to consider before investing

Mukka Proteins IPO price band has been fixed in the range of ₹26 to ₹28 per equity share of the face value of Re 1. Mukka Proteins IPO lot size is 535 equity shares and in multiples of 535 equity shares thereafter.

Also Read: Mukka Proteins IPO continues to see strong demand from retail investors, NIIs on Day 2; check GMP

It has reserved not more than 50% of the shares in the public issue for qualified institutional buyers (QIBs), not less than 15% for non-institutional investors (NIIs), and not less than 35% of the offer is reserved for retail investors.

“Exciting news! Mint is now on WhatsApp Channels 🚀 Subscribe today by clicking the link and stay updated with the latest financial insights!” Click here!

Mukka Proteins IPO, which is worth ₹224 crore, comprises a fresh issue of 8,00,00,000 equity shares with a face value of Re 1. There is no offer-for-sale component.

Also Read: Mukka Proteins IPO Day 2: Check GMP, subscription status, review, key dates, more. Should you subscribe or not?

The company intends to use the net proceeds from the issue, as stated in the red herring prospectus (RHP), to fund the following: general corporate purposes, investment in their associate, Ento Proteins Private Limited, and the company’s working capital requirements.

Here are some of the key risks listed by the company:

• A part of the net proceeds of the offering will be used by the firm to fund its working capital needs, which are estimated and dependent on specific factors and have not been evaluated by a bank or other financial institution.
• As part of their regular business operations, the company has to get specific permissions and licences and adhere to a set of laws and regulations. It might have a negative impact on operations if permits and licences are not obtained, maintained, and renewed, or if laws and regulations are broken.

Also Read: Mukka Proteins IPO opens: GMP, issue details, 10 key things to know before investing to ₹224-crore issue

• To run the business, the company needs to adhere to a number of laws and regulations and get the necessary licences and permits for the Mukka Manufacturing Facility II. Any noncompliance with such rules and regulations or with obtaining, holding, and renewing such permits and licences might have a negative impact on the activities.
• The credit ratings affect the company’s capacity to get financing at reasonable rates. A low credit rating or non-availability may limit the company’s access to funding, which would be unfavourable to the operations and business.
• Recently, the company has entered the insect protein industry, but it may not be able to locate a suitable market or implement the plan to grow the business. This might have a materially negative impact on the business, its financial health, and operational performance.
• The business’s revenues from the sale of fishmeal in China, Vietnam, India, and Japan account for the majority of its income. The business, financial standing, and operational performance might be significantly impacted by unfavourable events or shifts in the demand for the products, consumer habits, or governmental laws in India or other similar nations.
• A few Group Companies had losses in the preceding fiscal years.
• The firm has had negative cash flows from operations and could continue to do so in the future. This might have a significant negative impact on the company’s operations, prospects, financial health, cash flows, and business outcomes.
• The operations and profitability of the firm may suffer if appropriate insurance coverage is not obtained, maintained, or associated with the business.
• Many of the company’s vendors provide the bulk of the goods needed for its operations. Regarding the primary raw material suppliers, the firm does not own any formal, long-term agreements. The operations and profitability of the organisation might be negatively impacted by any notable fluctuations in the supply.

Also Read: Mukka Proteins IPO fully booked on day 1, retail portion sees huge demand. Check GMP, subscription status, more.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

Milestone Alert!
Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!

Published: 01 Mar 2024, 05:10 PM IST