Pajson Agro BSE SME IPO review (Not Rated)

•    The company is engaged in the business of processing raw cashew nuts to cashew kernels and supplying globally.
•    The company is operating through a multi-channel sales and distribution structure.
•    The company marked inconsistency in its top lines and boosted profits compared to industry standards.
•    Based on its recent financial data, the issue appears fully priced.
•    Well-informed investors may park moderate funds for medium term.

ABOUT COMPANY:
Pajson Agro India Ltd. (PAIL) is into processing of raw cashew nuts into cashew kernels and supplies to domestic and international markets. Its product portfolio primarily comprises various grades of cashew nuts, which are processed and packaged in bulk as well as consumer-oriented retail packs. Additionally, the company markets select dry fruits under its white-label brand “Royal Mewa” through a combination of e-commerce platforms and offline distribution channels. In addition, the cashew husk and cashew nut shells which are the by-products after processing of Raw Cashews are also supplied which are utilized in agricultural and industrial applications, hence offering additional value from processing operations.

The company operates through a multi-channel sales and distribution structure comprising four key verticals: Wholesale Mandis, Institutional Sales, Exports, and the B2C brand, Royal Mewa. The wholesale mandi segment contributes significantly to domestic distribution. PAIL is operational in 18 states and 3 Union Territories. It works with mandi traders who possess established networks and handle both whole and broken cashew grades. The company also supplies its products to a range of institutional customers, including entities such as Bikanervala, More Retail, Nutraj, Farmley, Reliance Retail, and Haldiram, among others.

PAIL also exported to UAE in FY 2024-2025. Initially the processing unit had processing capacity of 7,000 metric tonnes till the FY 2023. Further, through strategic investments in technology the capacity was increased to 12,000 metric tonnes in FY 2025. Its current capacity of 18,000 metric tonnes. As of September 30, 2025, it had 479 employees on its payroll. It also hires worker on contract basis as and when required.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 6309600 equity shares to mobilize Rs. 74.45 cr. at the upper cap. It has announced a price band of Rs. 112 – Rs. 118 per share of Rs. 10 each.  The IPO opens for subscription on December 11, 2025, and will close on December 15, 2025. The minimum application to be made is for 2400 shares and in multiple of 1200 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 26.50% of post-IPO paid-up equity capital of the company. From the net proceeds of the issue, the company will utilize Rs. 57.00 cr. for capex on establishing a second cashew processing facility at Vizianagaram, AP, and the rest for general corporate purpose.

The IPO is solely lead managed by mart Smart Horizon Capital Advisors Pvt. Ltd., while Bigshare Services Pvt. Ltd. is the registrar to the issue. Giriraj Stock Broking Pvt Ltd., is the market maker, as well as a syndicate member.

The company has issued/converted entire initial equity shares at par value. It has issued further equity capital at a fixed price of Rs. 93.33 in December 2021, and has also issued bonus shares in the ratio of 4 for 1 in May 2025. The average cost of acquisition of shares by the promoters is Rs. (5.16), Rs. 2.00, and Rs. 18.67per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 17.50 cr. will stand enhanced to Rs. 23.81 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 280.95 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit, of Rs. 101.13 cr. / Rs. 0.02 cr. (FY23), Rs. 96.04 cr. / Rs. 3.35 cr. (FY24), Rs.  187.28 cr. Rs. 20.42 cr. (FY25). For H1- FY26 ended on September 30, 2025, it earned a net profit of Rs. 14.20 cr. on a total income of Rs. 118.37 cr. Quantum jump in bottom line from FY25 onwards raises eyebrows and concern over its sustainability. It has outperformed the industry average with fabricated numbers to fetch fancy pricing. Its debt equity ratio with its current borrowings is higher than the industry.

For the last three fiscals, the company has reported an average EPS of Rs. 6.47, and an average RoNW of 27.80%. The issue is priced at a P/BV of 3.54 based on its NAV of Rs. 33.37 as of September 30, 2025, but its post-IPO NAV data is missing from the offer documents.

If we attribute its FY26 super annualized earnings on post-IPO expanded equity base, then the asking price is at a P/E of 9.90, and based on its FY25 earnings, the P/E stands at 13.75. Thus, the issue appears fully priced. 

The company has posted PAT margins of 0.02% (FY23), 3.50% (FY24), 10.90% (FY25), 11.99% (H1-FY26), and RoCE Margins of 0.81%, 12.18%, 48.21%, 20.14%, respectively for the referred periods. 

DIVIDEND POLICY:
The company paid not paid 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 Krishival Foods, Prospect Consumer, and Aelea Commodities, as its listed peers. They are currently trading at a P/E of 64.0, 12.3, and 47.5 (as of December 08, 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 17th mandate from Smart Horizon in the last two fiscals. From the last 10 listings, 2 listed at discount, 1 at par and the rest with premium ranging from 0.81% to 5.88% on the date of listing. The lead manager has an average track record.