Ameenji Rubber BSE SME IPO review

•    The company is engaged in the manufacturing, supply, export of rubber-based products, primarily catering to railways, infra projects and other commercial applications.
•    It posted steady growth in its top and bottom lines for the reported periods.
•    It is operating in a highly competitive and fragmented segment.
•    Based on its recent financial data, the issue appears fully priced.
•    Well-informed investors may park funds for medium to long term.

ABOUT COMPANY:
Ameenji Rubber Ltd. (ARL) is engaged in the manufacturing, supply, and export of rubber-based products catering primarily to the requirements of the railways, infrastructure, and other commercial applications. It manufactures a diversified range of products including elastomeric bridge bearings, POT-PTFE bearings, spherical bearings, expansion joints for infrastructure, composite grooved rubber sole plates (CGRSP), UIC rubber vestibules, rubberized railway crossing pads, moulded and long-length rubber sheets, gym mats, rolls, cow mats, rubber beadings, and other commercial rubber products. 

Its products are used in railway coaches, sleepers, railway crossings, bridges, flyovers, roads, highways, and other infrastructure and commercial applications. The company supplies products to Indian Railways as well as to private sector organizations operating across various industries. The Company focuses on developing and delivering rubber solutions that are designed to meet the functional, safety, and performance requirements of modern railway, industrial, and infrastructure projects. The company holds source approval for various infrastructure projects from the Ministry of Road Transport and Highways (MORTH) for supplying Elastomeric Bearings, Expansion Joints, POT-PTFE Bearings, and Strip Seal Joints and is an approved vendor with the Research Designs & Standards Organisation (RDSO) for supplying Elastomeric Bearings, Expansion Joints, POT-PTFE Bearings, Composite Grooved Rubber Sole Plates (CGSRP), and UIC Rubber Vestibules across India. 

It is also listed in the Indian Railways vendor directory of approved manufacturers for Elastomeric Bearings, Expansion Joints, POT-PTFE Bearings, UIC Rubber Vestibules and Composite Grooved Rubber Sole Plates and have secured approvals from the Ministry of Railways and the Dedicated Freight Corridor Corporation of India (DFCC) for projects on the Eastern and Western Corridors. Internationally, its products have been supplied to projects in the Kingdom of Saudi Arabia since 2020, and CE compliance for Rubber Sheets, Structural Bearings, Elastomeric Bearings, and Elastomeric Seals further strengthens global market presence.

The company procures a diverse range of raw materials essential for producing rubber products, including natural and synthetic rubber, metal sheets, rubber compounds, carbon black powder, white clay, oils, activators, adhesives, plasticizers, and other key ingredients, ensuring the durability and performance of products. These raw materials are sourced primarily from domestic suppliers, including manufacturers and traders, and are selected based on factors such as market availability, pricing, and quality. The cost of materials consumed (including the purchase of stock in trade and changes in inventory) accounted for 52.75%, 60.63% and 65.36% of its revenue from operations for the financial years ending March 31, 2025, 2024, and 2023, respectively.

The company caters to both domestic and international markets. Domestically, it serves direct customers, traders, and stockists, while internationally, it collaborates with authorized distributors, traders, and marketing representatives. Since initiating exports in 2020, it has expanded presence to countries including Saudi Arabia, Tanzania, Malawi, Nepal, Iraq, Poland etc. To strengthen its global reach, it has appointed distributors in key markets such as Saudi Arabia and Iraq. As of June 30, 2025, it had 54 employees on its payroll, and additional 666 contract workers in various department.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 3000000 equity shares to mobilize Rs. 30.00 cr. at the upper cap. It has announced a price band of Rs. 95– Rs. 100 per share of Rs. 10 each.  The IPO opens for subscription on September 26, 2025, and will close on September 30, 2025. The minimum application to be made is for 2400 shares and in multiple of 1200 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 26.60% of post-IPO paid-up equity capital of the company. From the net proceeds of the issue, the company will utilize Rs. 16.69 cr. for capex on modernizing existing machinery and procurement of new machinery, Rs. 5.95 cr. for repayment/prepayment of certain borrowings, and the rest for general corporate purposes.

The IPO is solely lead managed by Hem Securities Ltd., while Bigshare Services Pvt. Ltd. is the registrar to the issue. HEM group’s Hem Finlease Pvt. Ltd. is the market maker. 

The company has issued/converted initial equity shares at par, and has also issued bonus shares in the ratio of 13 for 5 in March 2024. The average cost of acquisition of shares by the promoters is Rs. 0.00, Rs. 0.89, and Rs. 1.99 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 8.28 cr. will stand enhanced to Rs. 11.28 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 112.80 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit, of Rs. 74.21 cr. / Rs. 3.50 cr. (FY23), Rs. 84.24 cr. / Rs. 4.31 cr. (FY24), Rs. 94.43 cr. / Rs. 8.03 cr. (FY25). The company posted growth in its top and bottom lines for the reported periods. 

For the last three fiscals, the company has reported an average EPS of Rs. 7.29, and an average RoNW of 34.19%. The issue is priced at a P/BV of 3.73 based on its NAV of Rs. 26.79 as of March 31, 2025, but its post-IPO NAV data is missing from the offer documents.

If we attribute its FY25 super earnings on post-IPO expanded equity base, then the asking price is at a P/E of 14.04, and based on its FY24 earnings, the P/E stands at 26.18. Thus, the issue appears fully priced.

The company has posted PAT margins of 4.73% (FY23), 5.17% (FY24), 8.54% (FY25), and RoCE Margins of 23.50%, 22.68%, 23.43%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. It will adopt a prudent dividend policy, based on its financial performances and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has no listed peers to compare with.

MERCHANT BANKER’S TRACK RECORDS:
This is the 56th mandate from Hem Securities in the last three fiscals (including the ongoing one). Out of the last 10 listings, 1 opened at par, and the rest with premium ranging from 3.43% to 61.92% on the date of listing.