Macobs Technologies coming with IPO to raise Rs 19.46 crore

Macobs Technologies

• Macobs Technologies is coming out with initial public offering (IPO) of 25,95,200 shares in a price band Rs 71-75 per equity share.
• The issue will open on July 16, 2024 and will close on July 19, 2024.
• The shares will be listed on NSE Emerge Platform.
• The face value of the share is Rs 10 and is priced 7.10 times of its face value on the lower side and 7.50 times on the higher side.
• Book running lead manager to the issue is SKI Capital Services.
• Compliance Officer for the issue is Ankita Soni.

Profile of the company

The company operates within the male grooming industry, specializing in the niche area of below-the-belt grooming, and conducts its business exclusively through e-commerce channels such as its website https://menhood.in/, without maintaining physical stores or a traditional retail footprint. This focus addresses a significant gap in the market, particularly in regions where discussion around such aspects of personal care is often limited. It offers a range of products specifically designed for men's grooming needs, encompassing tools like specialized trimmers for sensitive areas, hygiene products tailored for male skin, and a variety of self-care items. These products are developed with a commitment to innovation, safety, and effectiveness, catering to the unique requirements of their target demographic. 

Beyond its product range, the company is dedicated to educating and changing societal perceptions about male grooming, primarily leveraging online platforms. This involves creating and sharing content that promotes awareness and open conversation on topics traditionally considered taboo. The company's approach is deeply customer-centric, focusing on understanding and meeting the evolving needs of its consumers through digital engagement and feedback mechanisms.

The company is primarily engaged in direct-to-consumer sales, catering to a vast and diverse customer base. Due to the nature of its business model and the extensive size of its clientele, it is not feasible to delineate specific details about its top 10 or top 5 customers. Its focus on end-user sales means that individual transactions are numerous and varied, making it impractical to single out a small subset of customers as representative of its overall market reach.

Proceed is being used for:

• Customer acquisition - Marketing & Awareness.
• Prepayment or repayment of a portion of certain outstanding borrowings availed by the Company.
• Working capital requirements. 
• General corporate purposes.
• Meeting the Issue expenses.

Industry Overview

The company operates within the rapidly growing men's e-commerce grooming industry, focusing specifically on below-the-belt grooming products. The industry is characterized by a rising demand for specialized grooming tools and cosmetics catering to men's grooming needs. With an increasing emphasis on personal care and grooming among men, the industry is dynamic, reflecting evolving consumer preferences and a heightened awareness of personal grooming. India’s e-commerce sector has transformed the way business is done in India and has opened various segments of commerce ranging from business-to-business (B2B), direct-to-consumer (D2C), consumer-to-consumer (C2C) and consumer-tobusiness (C2B). Major segments such as D2C and B2B have experienced immense growth in recent years.

The Indian online grocery market is estimated to reach $26.93 billion in 2027 from $3.95 billion in FY21, expanding at a CAGR of 33%. India's consumer digital economy is expected to become a $1 trillion market by 2030, growing from $537.5 billion in 2020, driven by the strong adoption of online services such as e-commerce and edtech in the country. Indian e-commerce is expected to grow at a compound annual growth rate (CAGR) of 27% to reach $163 billion by 2026. In FY23, the Gross Merchandise Value (GMV) of e-commerce reached $60 billion, increasing 22% over the previous year. In FY22, the GMV of e-commerce stood at $49 billion.

The E-commerce industry has been directly impacting micro, small & medium enterprises (MSME) in India by providing means of financing, technology and training and has a favourable cascading effect on other industries as well. The Indian E-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second-largest E-commerce market in the world by 2034. Technology-enabled innovations like digital payments, hyper-local logistics, analytics-driven customer engagement and digital advertisements will likely support the growth in the sector. India is also planning to introduce Open Network for Digital Commerce (ONDC).

Pros and strengths

Product innovation and diversity: The company has developed a diverse range of products catering to various aspects of male grooming. This includes specialized trimmers designed for sensitive areas, hygiene products that are formulated for the unique requirements of male skin, and a range of self-care items that go beyond traditional grooming. The company continuously invests in research and development to enhance product effectiveness and safety, ensuring that they meet the specific needs and preferences of their target demographic.

Customer-centric approach: Central to the Company’s business philosophy is a deep understanding of their customers’ needs and preferences. The company employs a customer-centric approach, gathering feedback and insights through various channels to inform product development and marketing strategies. This approach ensures that the products and services offered by the company are aligned with the evolving needs of their consumer base.

Open and empowering brand messaging: The Company positions itself as a brand that empowers its customers. By fostering a culture of openness, the company aims to break down barriers and destigmatize aspects of male grooming that have traditionally been ignored. This strategy not only differentiates the brand in a competitive market but also helps in building a loyal customer base that resonates with the brand’s philosophy.

Risks and concerns

Dependent on E-commerce platforms: The company has historically relied on, and continues to depend heavily upon, major e-commerce platforms and digital media marketing for its business operations. This reliance places it in a position where its ability to negotiate effectively with these platforms is limited. Any changes in the existing terms and conditions, pricing structures, or policies of these e-commerce platforms and digital marketing channels could have a direct and adverse impact on its profitability.

Dependent on few suppliers for purchase of products: It cannot assure that it will be able to get the same quantity and quality of supplies, or any supplies at all, and the loss of supplies from one or more of them may adversely affect its purchases of stock and ultimately its revenue and results of operations. However, the composition and amount of purchase from these suppliers might change as it continues to seek new suppliers for its product for better quality and price in the normal course of business. Though it will not face substantial challenges in maintaining its business relationship with them or finding new suppliers, there can be no assurance that it will be able to maintain long term relationships with such suppliers or find new suppliers in time.

Depends on supply and transportation: Its success depends on the smooth supply and transportation of the trading materials and transportation of its products from its suppliers to it/ or its buyers/clients, both of which are subject to various uncertainties and risks. In addition, materials may be lost or damaged in transit for various reasons including occurrence of accidents or natural disasters. There may also be delay in delivery of materials which may also affect its business and its results of operation negatively. Any failure to maintain a continuous supply of materials to it as well as to its clients in an efficient and reliable manner could have a material and adverse effect on its business, financial condition and results of operations and reputation.

Outlook

Macobs Technologies operates an e-commerce platform Menhood.in specializing in below-the-belt grooming products for men. The website offers a curated selection of trimmers, skincare, and various grooming essentials. Operating within the legal framework, menhood.in provides a seamless online shopping experience for customers seeking quality products tailored to male grooming needs. It offers a range of products specifically designed for men's grooming needs, encompassing tools like specialized trimmers for sensitive areas, hygiene products tailored for male skin, and a variety of self-care items. On the concern side, the company significantly relies on the import of electronics from China, which subjects it to various risks associated with geopolitical relations between India and China. Fluctuations in these international relations can lead to trade restrictions, import duties alterations, or supply chain disruptions. Any deterioration in diplomatic ties or escalation of geopolitical tensions between the two countries could directly impact its ability to import necessary electronics, potentially leading to increased costs, supply shortages, or delays in its operations.

The company is coming out with a maiden IPO of 25,95,200 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 71-75 per equity share. The aggregate size of the offer is around Rs 18.43 crore to Rs 19.46 crore based on lower and upper price band respectively. On performance front, its revenue from operations grew by 39.49%, rising from Rs 1,478.08 lakh in Fiscal 2023 to Rs 2,061.79 lakh in Fiscal 2024. Its profit after tax for the year increased by  8.20% from net profit of Rs 204.50 in Fiscal 2023 to net profit Rs 221.27 lakh in Fiscal 2024. Meanwhile, the company has expanded its market presence into new regions, including the Middle East, by empanelling itself on platforms of a global e-commerce portal in the UAE and Saudi Arabia, and continues to explore additional regions for expansion. These efforts are expected to enhance revenue and extend product reach. Additionally, the company has strengthened its distribution capability by way of execution of a definitive agreement with a pan-India retailer.