Bhadora Ind. NSE SME IPO review (Not Rated)

•    The company is engaged in the manufacturing of industrial cables being marketed under “Vidhut Cables” brand name.
•    Quantum jump it its top and bottom lines from FY24 onwards raise eyebrows.
•    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:
Bhadora Industries Ltd. (BIL) is engaged in the business of manufacturing industrial cables which provide efficient electricity transmission and distribution solutions to the government discoms and EPC companies which cater to the diverse electrical connectivity needs of various industrial sectors. It operates under the brand name of "Vidhut Cables". With over three decades of experience in the cable industry, it has consistently evolved to meet the dynamic requirements of the industry. The company started with production of Polyvinyl Chloride (PVC) cables, and later expanded its range to include Low Voltage (LV) cables, LT Aerial Bunched Cables, Cross-Linked Polyethylene (XLPE) cables. 

These products are designed for specific functions in electricity transmission and distribution. Each product serves a specific function from reliable power distribution in low voltage applications to high performance cables used in overhead power lines. It ensures all its cables meet industry standards for safety and performance, while also staying aligned with the technology and requirements of the sector. To maintain product integrity, its manufacturing facility is equipped with an in-house testing laboratory, which plays a crucial role in monitoring and verifying the quality of the industrial cables.

Its manufacturing facility is equipped with efficient machinery like RBD (Rod Breakdown), Skip Stranding cum Armouring Machines, Stranding Cum Armouring Machines and Laying Cum 48 Bobbin Armouring Machine etc, used for drawing, laying, armouring and in other cable manufacturing process. The company also has self-sufficient laboratory equipped with machines and instruments to carry out routine and special tests on industrial cables. Its workforce comprises of skilled and semiskilled technicians, supervisory, quality control, commercial and managerial staff. BIL’s Order Book as on date of RHP is approximately Rs. 85 cr. Its total revenue and net profit as restated in the financial statements have shown positive CAGR in last three Financial Years. Its total revenue has increased from Rs. 18.44 cr. for Fiscal 2023 to Rs. 110.11 cr. for Fiscal 2025, at a CAGR of 144.36%. As of June 30, 2025, it had 87 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 5400000 equity shares of Rs. 10 each to mobilize Rs. 55.62 cr. at the upper cap. It has announced a price band of Rs. 97 – Rs. 103 per share. The issue opens for subscription on August 04 2025, and will close on August 06, 2025. The minimum number of shares to be applied is for 2400 shares and in multiples of 1200 shares, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 29.03% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, it will utilize Rs. 22.32 cr. as capex to part finance establishing of new manufacturing unit in MP, Rs. 20 cr. for working capital and the rest for general corporate purposes.

The IPO is solely lead managed by Unistone Capital Pvt. Ltd., and MUFG Intime India Pvt. Ltd., is the registrar to the issue. NNM Securities Pvt. Ltd. is the market maker as well as a syndicate member. The issue is underwritten to the tune of 15% by Unistone Capital, and 85% by Swastika Investmart Ltd.

The company has issued/converted initial equity shares at par value. It has issued bonus equity shares in the ratio of 7 for 1 in December 2024. The average cost of acquisition of shares by the promoters is Rs. 0.43, Rs. 1.14, and Rs. 1.92 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 13.20 cr. will stand enhanced to Rs. 18.60 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 191.58 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 18.81 cr. / Rs. 0.18 cr. (FY23), Rs. 83.28 cr. / Rs. 4.96 cr. (FY24), Rs. 110.69 cr. / Rs. 10.79 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. 5.36 and an average RoNW of 42.60%. The issue is priced at a P/BV of 6.49 based on its NAV of Rs. 15.86 as of March 31, 2025, and at a P/BV of 2.50 based on its post-IPO NAV of Rs. 41.16 per share (at the upper cap). 

If we attribute FY25 super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 17.76. Based on FY24 earnings, the P/E stands at 38.72. Thus, the issue appears fully priced.

For the reported periods, the company has posted PAT margins of 0.98% (FY23), 6.09% (FY24), 9.80%, (FY25), and RoCE margins of 7.72%, 42.91%, 42.41%, respectively for the referred periods. 

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

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown Dynamic Cables, DCG Cables, as their listed peers. They are trading at a P/E of 27.0, and 16.8 (as of July 31, 2025). However, they are not truly comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORD:
This is the 23rd mandate from Unistone Capital in the last three fiscals including the ongoing one.  Out of the last 10 listings, 3 opened at discount, and the rest with premium ranging from 3.84% to 36.72% on the date of listing.