Adroit Industries
Adroit Industries
IPO Size: Rs.151 cr
- Fresh Issue of Rs. 133 cr (22% dilution) for (i) brownfield capex Rs. 64 cr (ii) repaying Rs. 24 cr of Rs. 69 cr gross debt as of 31.7.26
- Offer for Sale (OFS) of Rs. 18 cr by promoter (96% to drop to 72% post IPO)
Price band: Rs. 126-134 per share
M cap: Rs. 600 cr (IPO is 25% of m cap)
IPO Date: Wed 23rd Sep to Fri 25th Sep 2026, Listing Wed 30th Sep 2026
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
Auto Component Exporter
Adroit Industries is a four-decade old, Pithampur, Madhya Pradesh headquartered manufacturer of propeller/ drive shafts and torque-transmission components, with revenue split 1:2 between these product segments. While these products do not find significant use in electric vehicles, they are used for both automotive (mainly commercial vehicles) and non-automotive application, with revenue split 3:1 respectively.
Export-Focused Business
Nearly 95% of Rs. 140 cr topline comes from exports, mainly to US, Columbia and Canada. 40% revenue comes from top 3 customers, and 60% from top 10 customers, which is risky for small scale of operations.
In addition, 2/3rd revenue comes from distributors, implying focus on replacement market, which is quite cyclical, although repeat rate is good.
Increasing Manufacturing Capacity
Company has 3 integrated plants in Madhya Pradesh for forging, precision machining, heat treatment, assembly, with aggregate effective capacity of 9.85 lakh units per annum of machining and 2,515 MTPA of die making and forging. This was utilized 72% and 88% respectively in FY26.
Adroit is looking to expand machining capacity to 5,500 MTPA by FY28E and also expand forging capacity with Rs. 44 cr capex. While this is expected to increase topline, it is likely only from FY29E onwards and not in near term.
Low Growth but Healthy Margin
Revenue growth has been poor – 6% CAGR between FY23’s Rs. 104 cr to FY26’s Rs. 140 cr, with growth mainly from automobile segment as non-automotive topline de-grew. However, EBITDA margin was healthy at 28% while net margin was 18.7%. On PAT of Rs. 26 cr, EPS stood at Rs. 7.48 for FY26.
Working capital days are very elongated at 237 days, with debtors being outstanding for over 111 days and even large inventory 135 days. Due to this, FY26 RoE of 22.5% is likely to slip to mid-teens post IPO. In addition, incremental working capital from expansion is not provided for in the objects of issue, which will keep net debt to EBITDA ratio elevated over 1x, post listing.
Small Scale of Operations
M cap of Rs. 600 cr and Enterprise Value of Rs. 644 cr leads to a historic PE multiple of 18x, making IPO fully priced for geographically concentrated revenue, likely mid-teen RoE, single-digit historic revenue growth.
As at 31.3.26, company’s non-current investments aggregated to Rs. 21 cr, including Rs. 10 cr loan to related party. While on one hand company is raising fresh capital with a significant 22% dilution, on the other, extending inter corporate loans looks contradictory.