E to E Trans. NSE SME IPO review (Not Rated)

•    The company is operating as a system integrator for rail engineering solutions across the board. 
•    While expressing good fiscal performance for FY24 and FY25, it marked loss for H1-FY26, that raises alarm.
•    The company has order on hands worth Rs. 401+ cr. as of September 30, 2025.
•    Based on its recent financial data, the issue appears aggressively priced.
•    Well-informed investors may park moderate funds for medium term.

ABOUT COMPANY:
E-to-E Transportation Infrastructure Ltd. (ETIL) is an ISO 9001:2015 certified company, operating as a system integrator for rail engineering solutions across mainline, urban transit, and private siding segments. With over 15 years of experience, the company offers comprehensive rail engineering services for railway infrastructure projects, providing customized solutions for designing, procurement, installation and testing of rail signaling & tele-communication systems, track electrification and turnkey projects involving civil and track components, both in India and in select international markets. Its client base includes Zonal Railways, public sector undertakings (PSUs) under Indian Railways, large-scale manufacturers, corporate entities with their privately owned rail sidings and infrastructure development companies. Its integrated offerings include design, consultancy, procurement, supply chain solutions, system integration, installation and operations & maintenance services across a wide spectrum of railway infrastructure projects focusing on railway signal modernization and automation initiative.

Since its incorporation in Financial Year 2010, the company has successfully completed diverse projects including railway signaling and telecommunication, railway electrification, design, construction for railway tracks, operation and maintenance of the railway and urban transit projects. Some of major projects includes CBTC signaling system for Hyderabad Metro and Nagpur Metro, signaling and telecommunication modernization for siding works for Vizag Steel Plant, NUPPL Power plant, UPVRNL at Hardwaganj, Electronic Interlocking system modernization for Hosur Salem, Gujrat Pipavav port limited siding expansion with DFCC connectivity, Railway Electrification and Signaling system upgradation for South Western Railway for Kadur – Chikmagalur as part of 100% electrification initiative of Indian Railway, platform screen door installation for Mumbai metro line 3 and Chennai Metro Phase 1. 

Further, over a span of last five financial years (FY 2021 to FY 2025), ETIL has completed around 17 contracts relating to designing, procurement, installation and testing of rail signaling & tele-communication systems, private sidings and track electrification. As of September 30, 2025, it had order book (unfulfilled portion of the original order) comprising 50 ongoing contracts (including projects with Subsidiaries), with a total order value of Rs. 401+ cr. pending to be completed. These ongoing contracts span various segments, including signaling and telecommunication, electrification, civil infrastructure, and system integration, and are currently at different stages of execution. Its proven track record in executing complex projects across multiple disciplines demonstrates company’s readiness to take part in future rail infrastructure tenders. 

The company follows a structured approach to project execution, balancing in-house capabilities with selective outsourcing to ensure timely delivery and adherence to quality standards. While its core activities such as design, engineering, and system integration are managed internally, ETIL outsources certain execution components such as civil works, fabrication, and installation to qualified subcontractors and vendors. All outsourced activities are monitored through quality control processes, supervisory oversight, and compliance with project specifications and safety protocols. This enables it to optimize resource allocation, scale operations across multiple sites, and maintain consistency in delivery while ensuring that each project meets the technical and regulatory requirements of clients. As of November 30, 2025, it had overall 463 employees on its roll (including 45 consultants, 3 interns and 62 employees on its subsidiaries payroll.

ISSUE DETAILS/ CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 4840000 equity shares of Rs. 10 each to mobilize Rs. 84.21 cr. at the upper cap. The company has announced a price band of Rs. 164 – Rs. 174 per share. The minimum application to be made is for 1600 shares and in multiples of 800 shares thereon, thereafter. The issue opens for subscription on December 26, 2025, and will close on December 30, 2025. The IPO constitute 28.04% of the post-IPO paid-up capital of the company. The shares will be listed on NSE SME Emerge. From the net proceeds of the IPO, it will utilize Rs. 70.00 cr. for working capital, and the rest for general corporate purposes. 

The IPO is solely lead managed by Hem Securities Ltd., and Bigshare Services Pvt. Ltd. is the registrar to the issue. HEM group’s Hem Finlease Pvt. Ltd. is the market maker, as well as a syndicate member.

The company has issued initial equity capital at par value, and has issued/converted further equity shares in the price range of Rs. 2.50 – Rs. 12548.00 per share between February 2012, and March 2025. It has also issued bonus shares in the ratio of 32 for 1 in August 2025. The average cost of acquisition of shares by the promoters is Rs. 1.05, and Rs. 87.53 per share.

Post-IPO, company’s current paid-up equity capital of Rs. 12.42 cr. will stand enhanced to Rs. 17.26 cr. Based on the upper band of the IPO pricing, the company is looking for a market cap of Rs. 300.28 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted total income / net profit/ - (loss), of Rs. 135.70 cr. / Rs. 8.15 cr. (FY23), Rs. 172.50 cr. / Rs. 10.26 cr. (FY24), Rs. 253.82 cr. / Rs. 13.99 cr. (FY25). For H1 of FY26 ended on September 30, 2025, it marked a loss of Rs. – (7.49) cr. on a total income of Rs. 112.78 cr. 

For the last three fiscals, the company has reported an average EPS of Rs. 9.46, and an average RoNW of 13.30%. The issue is priced at a P/BV of 1.99 based on its NAV of Rs. 87.54 per share as of September 30, 2025, but its post-IPO NAV data is missing from the offer documents.

If we attribute FY26 annualized negative earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a negative P/E, and based on FY25 earnings, the P/E stands at 21.46. The issue appears aggressively priced.

For the reported periods, the company has posted PAT margins of 5.77% (FY23), 5.71% (FY24), 5.73% (FY25), - (6.58) % (H1-FY26), and RoCE margins of 14.21%, 15.68%, 15.69%, - (1.23) %, 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. 

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Texmaco Rail, KEC Intl., Ircon Intl., as its listed peers. They are currently trading at a P/E of 25.4, 29.0, and 24.5 (as of December 22, 2025). However, they are not truly comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACL RECORD:
This is the 62nd mandate from Hem Securities in the last three fiscals.  Out of the last 10 listings, 2 opened at discount, and the rest with premium ranging from 1.00% to 61.92% on the listing date.