Dhillon Freight BSE SME IPO review (Not Rated)

•    The company is engaged in providing logistics solutions to B2B and B2C clients.
•    The company posted growth in bottom lines on an inconsistent top 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/cash surplus investors may park moderate funds for long term.

ABOUT COMPANY:
Dhillon Freight Carrier Ltd. (DFCL) is engaged in providing logistics solutions to businesses, particularly road transportation. It is a goods transport agency providing Parcel/Less than Truck-Load (LTL), Contract Logistics and Fleet Rental/Fleet Leasing services to different industries. The company serves both B2B and B2C customers.

It is an ISO 9001:2015 certified service provider who handle client requirements in a professional manner to ensure the highest degree of customer satisfaction. Since inception, it has consistently been providing solutions powered by own fleet vehicles. Its present in-house fleet strength is about 62 vehicles, the company operates majorly across West Bengal, Bihar, Delhi and Uttar Pradesh, providing reliable and efficient logistics solutions to businesses nationwide. As on date, it operates through an established network of 22 booking offices, pickup facilities, warehouses, delivery offices and through agency network etc.

DFCL’s vision is to ace the logistics arena by maintaining the best of service, and to establish itself as a strong tech-driven organisation by adopting all latest upgrades with the core idea of customer satisfaction. As of July 31, 2025, it had 23 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 1400000 equity shares at a fixed price of Rs. 72 per share to mobilize Rs. 10.08 cr.   The IPO opens for subscription on September 29, 2025, and will close on October 01, 2025. The minimum application to be made is for 3200 shares and in multiple of 1600 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 35.71% of post-IPO paid-up equity capital of the company. The company is spending Rs. 1.32 cr. for this IPO process, and from the net proceeds of the issue, the company will utilize Rs. 7.67 cr. for purchase of goods transportation vehicles and its fabrication, and Rs. 1.09 cr. for general corporate purposes.

The IPO is solely lead managed by Finshore Management Services Ltd., while KFin Technologies Ltd. is the registrar to the issue. Anant Securities is the market maker. 

The company has issued entire initial equity shares at par, and issued bonus shares in the ratio of 6 for 1 in September 2023. The average cost of acquisition of shares by the promoters is Rs. 1.46, Rs. 2.53, and Rs. 5.14 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 2.52 cr. will stand enhanced to Rs. 3.92 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 28.22 cr. Tiny post-IPO equity capital indicates longer gestation period for migration to mainboard.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit, of Rs. 29.91 cr. / Rs. 0.36 cr. (FY23), Rs. 24.73 cr. / Rs. 1.09 cr. (FY24), Rs. 25.22 cr. / Rs. 1.73 cr. (FY25). The company posted odd set of financial data as it posted inconsistency in its top lines for the reported period with a declining nod and marked surging bottom lines.

For the last three fiscals, the company has reported an average EPS of Rs. 6.12, and an average RoNW of 30.94%. The issue is priced at a P/BV of 3.47 based on its NAV of Rs. 20.75 as of March 31, 2025, and at a P/BV of 1.84 based on its post-IPO NAV of Rs. 39.05 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 16.33, and based on its FY24 earnings, the P/E stands at 25.81. Thus, the issue appears fully priced.

The company has posted PAT margins of 1.20% (FY23), 4.55% (FY24), 6.99% (FY25), and RoCE Margins of 15.34%, 23.48%, 31.77%, 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 Orissa Bengal Carrier, GB Logistics, as its listed peers. They are currently trading at a P/E of 36.7 and 4.26 (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 29th 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.