Chiraharit BSE SME IPO review (Not Rated)

•    The company is engaged in specializing turnkey EPC projects focusing on water based and renewable energy-based segments.
•    It posted inconstancy in its top lines, but bottom lines marked improvements 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/cash surplus investors may park moderate funds for long term.

ABOUT COMPANY:
Chiraharit Ltd. (CL) is specializing in turnkey EPC (Engineering, Procurement and Construction) projects focusing on two broad segment viz Water-based and Renewable Energy-based. With a commitment to excellence, it delivers innovative and comprehensive solutions tailored to meet the unique challenges of each project, ensuring optimal performance and sustainability. The name Chiraharit, derived from the Sanskrit words “Chira” (Always) and “Harit” (Green), reflects its unwavering commitment to sustaining the world’s greenery through efficient water transportation and construction of green energy projects. With a focus on seamless water movement via pipeline systems, the company ensures that wherever water flows, life and verdant growth follow. 

Guided by its vision of keeping the world “Always Green,” it is dedicated to efficient water transportation and application. By integrating cutting-edge technology and engineering excellence, the company enables efficient water utilization, fostering sustainability and resilience in communities and industries. Through its efforts, CL aims to ensure a greener, more sustainable future for generations to come. In the Water-based segment, its focus is on the efficient and reliable movement of piped water in pressurized applications. Its expertise in water movement extends across diverse sub-sectors, including piped irrigation for agriculture, drinking water supply projects for Industrial and residential townships, large-scale pressurized irrigation networks, water based solar module cleaning systems and landscape irrigation.

Whether it’s a large solar power project, a small farmer, or a group housing project, its customers depend on the company to deliver the water that touches every aspect of their lives. Farmers rely on it for efficient irrigation, solar project operators for cleaning solar modules, cement factories for dust suppression, and residential housing projects for a reliable water supply. Across diverse applications, one thing remains constant, i.e., the need for clean and safe water, delivered with precision and reliability and that is what CL excels at providing.

Its Renewable Energy-based segment is focused on the construction of Compressed Bio-Gas (CBG) plants. In this domain, the company provides turnkey execution of all civil, mechanical, and pumping systems, ensuring seamless project delivery. As a recent addition to its portfolio, this segment represents commitment to sustainable energy solutions and technical excellence. Chiraharit is proud to be a part of the MALAXMI Group, a diversified conglomerate. The Group has established successful verticals in Water Management, Alternate Fuels, Property Development and Infrastructure. MALAXMI is an established brand, which is why it currently operate under its logo. However, it is in the process of building and establishing its independent identity under the CHIRAMAX brand, reflecting unique vision and expertise. As of August 31, 2025, it had 91 employees on its payroll. As of the said date, it had an order book worth Rs. 51.38 cr.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 14796000 equity shares at a fixed price of Rs. 21 per share of Re. 1 each, to mobilize Rs. 31.07 cr.  The IPO opens for subscription on September 29, 2025, and will close on October 03, 2025. The minimum application to be made is for 12000 shares and in multiple of 6000 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 27% of post-IPO paid-up equity capital of the company. The company is spending Rs. 3.11 cr. for this IPO process, and from the net proceeds of the issue, the company will utilize Rs. 14.14 cr. for working capital, Rs. 5.26 cr. for capex on setting up of HDPE Ball Valves and fittings manufacturing unit, Rs. 3.90 cr. for repayment/prepayment of certain borrowings, and Rs. 4.66 for general corporate purposes.

The IPO is solely lead managed by Finshore Management Services Ltd., while Bigshare Services Pvt. Ltd. is the registrar to the issue. Anant Securities is the market maker, as well as a syndicate member. 

The company has issued entire initial equity shares at par, and has also issued bonus shares in the ratio of 15 for 1 in October 2024. The average cost of acquisition of shares by the promoters is Rs. 0.06, and Rs. 0.07 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 4.00 cr. will stand enhanced to Rs. 5.48 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 115.07 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit, of Rs. 33.03 cr. / Rs. 0.42 cr. (FY23), Rs. 30.57 cr. / Rs. 0.60 cr. (FY24), Rs. 59.80 cr. / Rs. 6.02 cr. (FY25). The company posted odd financial data, while it marked inconsistency in its top lines, its bottom line kept surging for the reported periods. In particular, for FY25 it posted bumper profits that raise eyebrows and concern over its sustainability going forward, as it is operating in a highly competitive and fragmented segment.

For the last three fiscals, the company has reported an average EPS of Rs. 0.82, and an average RoNW of 40.25%. The issue is priced at a P/BV of 8.79 based on its NAV of Rs. 2.39 as of March 31, 2025, and at a P/BV of 2.83 based on its post-IPO NAV of Rs. 7.42 per share.

If we attribute its FY25 super earnings on post-IPO expanded equity base, then the asking price is at a P/E of 19.09, and based on its FY24 earnings, the P/E stands at 190.91. Thus, the issue appears fully priced.

The company has posted PAT margins of 1.28% (FY23), 1.97% (FY24), 10.10% (FY25), and RoCE Margins of 8.58%, 10.50%, 32.29%, 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 shown Polysil Irrigation, as its listed peer. It is currently trading at a P/E of NA (as of September 26, 2025). However, they are not truly comparable on an apple-to-apple basis. This comparison appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORDS:
This is the 30th mandate from Finshore Management in the last four fiscals. Out of the last 10 listings, 2 opened at discount, 1 at par, and the rest with premium ranging from 3.63% to 90% on the date of listing.