The Indian mattress industry is highly fragmented, with numerous branded and non-branded players selling various types of mattresses through local distribution channels.
Dominated by the unorganised sector, the organised segment is now growing due to rising consumer demand for quality products. Tech advancements and shifting client dynamics are driving this expansion.
Magenta Lifecare Pvt Ltd operates in this evolving market, providing a range of foam-based mattresses and pillows. Established in 2015, Magenta has carved out a niche with its focus on quality and innovation.
Now, Magenta is going public with a BSE SME IPO. In this blog, let’s explore the key details of the Magenta Lifecare IPO and what it means for investors.
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Magenta Lifecare Private Limited
Magenta Lifecare Pvt Ltd, is known for its wide range of foam-based products. The company operates under the brand name “Magenta” in India. It manufactures various types of mattresses and pillows, catering to different customer needs.
The product range consists of pocketed spring, latex-based, bonded, and memory foam mattresses. They also sell contour foam pillows, memory foam pillows, and moulded memory foam pillows. The purpose of these goods is to improve the quality of sleep by offering comfort and support.
The company prioritises innovation, launching innovative goods including herbal mattresses made of bamboo charcoal and green tea. Additionally, they sell adjustable bed frames, processed raw foam, and pet bed mattresses. The company aims to deliver quality products to a diverse customer base, from retail to hotels and institutions.
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Magenta Lifecare Pvt Ltd today
The Gujarat-based manufacturing plant of Magenta Lifecare is capable of making 70,000 pillows and 60,000 mattresses per year. The key raw materials include various types of foam, fabric, adhesive, cotton, and threads, all sourced domestically. For the financial year 2023, raw material purchases represented 57.98% of the revenue from operations.
Magenta Lifecare Pvt Ltd Vadodara reported a diverse revenue mix. Mattresses contributed 36.81% of the total revenue. Pillows accounted for 58.11%. Raw foam and hydraulic beds made up 1.09% and 1.82% respectively. Additional products made up 2.17%.
By online as well as offline platforms, the company sells its merchandise. Offline sales include multi-brand outlets and a network of dealers. Online sales are conducted through e-commerce platforms. However, as of December 2023 offline sales dominate, comprising 99.92% of total revenue, while online sales are just 0.15%.
In terms of geography, the company has an extensive distributor and dealer network across multiple states in India. A significant portion, 68.16%, of the revenue comes from Gujarat.
Here, is table summarises the pre-issue shareholding pattern, dividing it among promoters, the promoter group, and the public.
| Particulars | Percentage (%) holding pre-issue |
| Promoters and promoter group | |
| Divyesh Modi | 44.93% |
| Khyati Modi | 34.19% |
| Vipinchandra Modi | 5.54% |
| Public | |
| Priyang Patel | 3.92% |
| Jimit Gandhi | 2.24% |
| Jagdish Patel | 1.13% |
| Riyaz Shaikh | 0.01% |
| Urvi Vyas | 0.01% |
| Nilesh Pravinkmar Verma | 0.01% |
| 7NR Retail Limited | 8.62% |
Source: Magenta Lifecare RHP
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Financial snapshot
| (₹ lakh) | FY23 | FY22 | FY21 |
| Revenue from operations | 906.61 | 924.4 | 964.74 |
| Growth in revenue from operations | -1.92% | -4.18% | NA |
| EBITDA | 87.21 | 106.31 | 104.51 |
| EBITDA margin | 9.62% | 11.50% | 10.83% |
| Restated profit after tax | 24.55 | 18.89 | 19.44 |
| PAT margin | 2.71% | 2.04% | 2.02% |
| Net worth | 520.81 | 361.73 | 142.85 |
| Capital employed | 973.81 | 1,119.24 | 1,125.56 |
| Return on capital employed- ROCE% | 11.86% | 8.95% | 7.64% |
| Return on equity- ROE% | 5.56% | 7.49% | 14.60% |
Source: Magenta Lifecare RHP
Magenta Lifecare IPO details
Key facts and figures
| Fresh issue | ₹7 crore |
| Total issue size | ₹7 crore |
| Price band | ₹35 |
| Lot size | 4000 |
| Stock exchange | BSE SME |
Source: Magenta Lifecare RHP
In the Magenta Lifecare IPO, which is estimated to be worth ₹7 crore, 2,000,000 new equity shares with a face value of ₹10 apiece would be issued. There is no offer-for-sale component to this issue.
The BSE SME exchange will list this initial public offering. The issue’s lead manager is Fedex Securities, while the registrar is Cameo Corporate Services. The market maker is Sunflower Broking.
A minimum of ₹1.4 lakh must be invested by retail investors. HNIs, or high net worth individuals, must apply for a minimum of two lots, or 8,000 shares, with an investment of ₹2.8 lakh.
IPO calendar
| Event | Date |
| Subscription period | 5th June to 7th June 2024 |
| Allotment finalisation date | 10th June 2024 |
| Refund initiation date | 11th June 2024 |
| Share credit date | 11th June 2024 |
| Listing date | 12th June 2024 |
| Anchor investors lock-in release date (50%) | 10th July 2024 |
| Anchor investors lock-in release date (remaining 50%) | 10th September 2024 |
The above schedule is subject to change. The anchor lock-in period expires thirty days after the actual allotment date for fifty percent of the shares and ninety days thereafter for the other fifty percent. By June 11, 2024, the allotment status will be available on both the exchange’s and company’s websites.
Fund utilisation plan
Magenta Lifecare intends to utilise the funds from the IPO for specific purposes. Supporting the company’s increasing working capital requirements is the main goal. The total amount allotted is ₹4.24 crore. A portion of the money will also be utilised for basic business needs. The amount allotted is ₹1.74 crore.
Subscription status for Magenta Lifecare IPO
On day 1, the Magenta Lifecare IPO was subscribed 24.49 times, indicating strong initial interest. By day 2, this interest had surged, with the subscription status reaching 120.75 times.
The IPO has received 450.76 subscriptions as of day three. The retail segment had 474.34 subscriptions, indicating a high level of involvement from private investors. There was significant interest from larger investors as evidenced by the 413.81 subscriptions made to the Non-Institutional Investor (NII) component.
Latest GMP of Magenta Lifecare Pvt Ltd
The recently released grey market premium (GMP) for the Magenta Lifecare IPO is +₹28 as of June 7, 2024. The anticipated listing price for the company’s shares is ₹63 per share, given the higher end of the IPO pricing band and the current GMP. This is 80% more than the ₹35 IPO price.
GMP is an indicator of investors’ readiness to pay more than the issue price. It shows that the market is feeling upbeat before the official listing.
Bottomline
The Magenta Lifecare IPO presents an interesting opportunity for investors, given its strong market demand and positive grey market premium. But comes with notable risks. Failure to keep up with consumer trends and technological advancements could impact demand and operations. Investors should consider these factors before making a decision.
