Ravelcare BSE SME IPO review (Not Rated)

•    The company is currently engaged in digital first distribution model in beauty and personal care segment.
•    At present, it undertakes manufacturing activities through contract manufacturing.
•    From FY24 onwards, it posted almost static top and bottom lines.
•    Based on its recent financial data, the issue appears fully priced.
•    Only well-informed investors may park moderate funds for medium term, others can skip it.

ABOUT COMPANY:
Ravelcare Ltd. (RL) is operating through a digital first distribution model in the beauty and personal care segment (“BPC”) offering a range of haircare, skincare, and body care products. Its current operations are built around a direct-to-consumer (D2C) approach, supported by e-commerce and data-driven product development processes. RL’s products are sold through multiple channels including its website, major online marketplaces such as Amazon, Flipkart and Myntra and quick commerce platform i.e., Blinkit. In Financial Year 2024-25 the Company has initiated catering to customers based out of UAE, Australia, Canada, Germany, USA and Saudi Arabia.

Its manufacturing is currently undertaken through contract manufacturing arrangement with licensed third-party contract manufacturer. The formulations of the products are developed by the company and the product Research and Development (“R&D”) is carried out in collaboration with external formulation experts and third-party laboratories. The company also manages logistics and warehousing operations across key Indian states to ensure timely delivery and supply chain reliability. However, the Company intends to set-up its own manufacturing facility at Mauje-Peth, Amravati, Maharashtra with a total installed capacity of 1,050 TPA. The proposed facility will contain end to end processes from manufacturing till the dispatch of product comprising of R&D, manufacturing, packaging, warehousing and distribution.

Its business model focuses on leveraging e-commerce platforms and digital channels to engage with customers directly through its product offering. The company aims to leverage technology to streamline customer engagement, demand forecasting, and fulfilment, forming an essential part of its digital-first platform. The company also focuses on providing personalized experience through customized haircare and skincare products.

The word “Ravel” holds a dual meaning to entangle and to untangle which mirrors the philosophy of the Company. In a personal care landscape often marked by generic solutions and overwhelming choices, its brand seeks to untangle this complexity by offering structured, data-informed, and personalized product experiences. As of September 30, 2025, it had 20 employees on its payroll.

ISSUE DETAILS:
The company is coming out with its maiden book building route IPO of 1854000 equity shares of Rs. 10 each to mobilize Rs. 24.10 cr. at the upper cap.  The issue opens for subscription on December 01, 2025, and will close on December 03, 2025. The company has announced a price band of Rs. 123 - Rs. 130 per share. Post allotment, shares will be listed on BSE SME. The minimum application to be made is for 2000 shares and in multiples of 1000 shares thereon, thereafter. The issue constitutes 27.03% of the post-IPO paid-up capital of the company. From the net proceeds, it will utilize Rs. 11.50 cr. for marketing and advertising for enhancing awareness and visibility of its brand, Rs. 7.81 cr. for setting up a new facility at Mauje-Peth in Amravati, and the rest for general corporate purposes. 

The IPO is solely lead managed by Marwadi Chandarana Intermediaries Brokers Pvt. Ltd., while KFin Technologies Ltd., is the registrar to the issue. SS Corporate Securities Ltd.is the market maker. The IPO is underwritten to the tune of 15.05% by Marwadi Chandarana and 84.95% by Nikunj Stock Brokers.

The company has issued entire initial equity capital at par value. It has also issued bonus shares in the ratio of 1000 for 1 in June 2024. The average cost of acquisition of shares by the promoters is Rs. Negligible and Rs. 0.01 per share.  

Post-IPO, company’s current paid-up equity capital of Rs. 5.01 cr. will stand enhanced to Rs. 6.86 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 89.17 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted total income / net profit, of Rs. 3.49 cr. / Rs. 0.42 cr. (FY23), Rs. 22.28 cr. / Rs. 5.02 cr. (FY24), Rs. 25.30 cr. / Rs. 5.26 cr. (FY25). For H1 of FY26 ended on September 30, 2025, it posted a net profit of Rs. 3.20 cr. on a total income of Rs. 14.44 cr. Quantum jump in net profits from FY24 onwards raises eyebrows and concern over its sustainability as it is operating in a highly competitive and fragmented segment. 

For the last three fiscals, the company has posted an average EPS of Rs. 8.74, and an average RoNW of 154.91%. The issue is priced at a P/BV of 4.80 based on its NAV of Rs. 27.07 per share as of September 30, 2025, but its post-IPO NAV data is missing from the offer documents.

If we attribute annualized super earnings of FY26 on post-IPO paid-up capital, then the issue price is at a P/E of 13.95, and based on its FY25 earnings, the P/E stands at 16.97. Thus, the issue appears fully priced. 

For the reported periods, the company has posted PAT margins of 11.87% (FY23), 22.75% (FY24), 21.04% (FY25), 22.20% (H1-FY26), and RoCE margins of 106.11%, 133.05%, 68.32%, 32.01% respectively for the referred periods. 

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods. It will adopt a prudent dividend policy, based on its financial performance and future prospects. 

COMPARISON WITH LISTED PEERS:
As per offer document, the company has no listed players to compare with.

MERCHANT BANKER’S TRACK RECORD:
This is the 7th mandate from Marwadi Chandarana in the last two fiscals. Out of the last 5 listings, 2 listed at par and the rest with premium ranging from 0.70% to 90% on the date of listing.