Mahendra Realtors NSE SME IPO review

•    The company is engaged in offering infrastructure related variety of services with major focus on government and PSU contracts.
•    It marked growth in its top and bottom lines for the reported periods.
•    The higher margins earned from FY24 onwards is attributed to specialized services offered.
•    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:
Mahendra Realtors & Infrastructure Ltd. (MRIL) is engaged in providing a wide variety of services including but not limited to Structural Repairs, Rehabilitation, Retrofitting, Water Proofing, Corporate Interior, Build-Operate-Transfer (BOT) Projects, Maintenance, Construction, Infrastructure Restoration etc. It has undertaken several Structural repairs projects for various government departments and public sectors organizations, for example, Structural Repairs projects at CIDCO Vashi Railway Station and Belapur Railway Station undertaken by deploying various latest innovative techniques viz. Polymer Modified Mortar, micro concrete, Injection Grouting, Texture, Huge waterproofing with heat insulation etc., structural repairs at Ghatkopar wherein Structural Stability Certificate was issued by IIT Bombay, in which Steel Jacketing was carried out along with Fabre wrapping, External Repairs, Retrofitting and Restoration works at SBI Harbour heights etc. 

Further, MRIL has successfully completed various corporate interior projects at IIT Bombay, Airport Authority of India, VVIP Circuit house, Pune, SVP Hospital at Ahmedabad and likewise other major projects. The company has an overall track record of completion of more than 200 projects for over 50 clients and an average rate of completion of projects within the allotted time. Maintenance work is very important to keep the constructed Building, Bridge, Facility etc. in proper working condition. Maintenance work generally includes Inspection of buildings, systems, etc. regularly to identify potential issues, troubleshoot any issues, Repair faulty things or schedule repairs, make minor building repairs, such as fixing drywall or repairing doors, and implement the maintenance budget. 

These activities may vary from Routine maintenance works that must be done on a regular rotation basis in order to maintain the function or appearance of some aspects of the building or ensure inspections are completed to identify the need for more significant work to Preventive maintenance activities that are completed proactively in order to prevent or slow wear, tear, and deterioration and thereby reducing the major cost on major repairs.

The company also undertakes structural repairs, restoration, and retrofitting of infrastructure such as bridges and culverts. The major challenge to executing this type of work is running traffic. With the skill and experience it possess, it has executed such types of typical jobs successfully and has even lifted the Girders and replaced the bearing, which is one of the extreme skilful operations. The Bridge which was closed for traffic on account of structural Deterioration is now operational at Surat “Dr Baba Saheb Ambedkar Flyover”. As of June 30, 2025 it has 76 employees on its payroll and additional 45contract workers at various sites.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route combo IPO of 5817600 equity shares of Rs. 10 each to mobilize Rs. 49.45 cr. at the upper cap. It has announced a price band of Rs. 75 – Rs. 85 per share. The issue consists of 4726400 fresh equity shares (worth Rs. 40.17 cr. at the upper cap), and an Offer for Sale (OFS) of 1091200 equity shares (worth Rs. 9.28 cr. at the upper cap). The issue opens for subscription on August 12, 2025, and will close on August 14, 2025. The minimum number of shares to be applied is for 3200 shares and in multiples of 1600 shares, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.32% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, it will utilize Rs. 30.40 cr. for working capital, and the rest for general corporate purposes. 

The IPO is solely lead managed by Fast Track Finsec Pvt. Ltd., while MUFG Intime India Pvt. Ltd., is the registrar to the issue. Rikhav Securities Ltd. is a market maker. The issue is underwritten to the tune of 85% by Aftertrade Broking Pvt. Ltd., and 15% by Fast Track Finsec Pvt. Ltd.

After issuing initial equity shares at par value, the company has issued further equity shares at Rs. 250 per share in October 2009. It has also issued bonus equity shares in the ratio of 3 for 2 in August 2014, and 13 for 1 in March 2024. The average cost of acquisition of shares by the promoters is Rs. 0.37, Rs. 0.38, Rs. 1.52, Rs. 2.19, and Rs. 2.25 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 17.38 cr. will stand enhanced to Rs. 22.10 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 187.88 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit of Rs. 66.07 cr. / Rs. 4.04 cr. (FY23), Rs. 105.11 cr. / Rs. 11.58 cr. (FY24), Rs. 128.69 cr. / Rs. 14.87 cr. (FY25). Quantum jump in its bottom lines from FY24 raise eyebrows. According to the management, it has around Rs. 180 cr. orders on hand.

For the last three fiscals, the company has reported an average EPS of Rs. 6.88 and an average RoNW of 20.99%. The issue is priced at a P/BV of 2.08 based on its NAV of Rs. 40.79 as of March 31, 2025, but its post-IPO NAV data is missing from offer documents.

If we attribute FY25 super earnings on post-IPO fully diluted equity capital, then the asking price is at a P/E of 12.63. Based on FY24 earnings, the P/E stands at 16.22. Thus, the issue appears fully priced.

For the reported periods, the company has posted PAT margins of 6.41% (FY23), 11.41% (FY24), 11.91%, (FY25), and RoCE margins of 19.72%, 29.87%, 30.56%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It has adopted a dividend policy in July 2024, based on its financial performance and future prospects.

COMPARISION WITH LISTED PEERS:
As per the offer document, the company has shown AB Infrabuild, Maruti Infra, as their listed peers. They are trading at a P/E of 56.1, and 79.6 (as of August 08, 2025). However, they are not truly comparable on an apple-to-apple basis. This compare appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORD:
This is the 9th mandate from Fast Track Finsec in the last three fiscals including the ongoing one.  Out of the last 7 listings, 3 opened at discount, and the rest with premium ranging from 2.86% to 201.21% on the date of listing.