Regaal Resources IPO review

•    The company is engaged in manufacturing ZLD maize and its byproducts.
•    It posted growth in its top and bottom lines for the reported periods.
•    Large capacity with cost efficient process fetched good margins.
•    Based on recent financial data, the issue appears fully priced.
•    Well-informed investors may park funds for medium to long term.

ABOUT COMPANY:
Regaal Resources Ltd. (RRL) is headquartered in Kolkata and its manufacturing plant with zero liquid discharge (ZLD) maize milling plant (Manufacturing Facility) spread across 54.03 acres is located in Kishanganj, Bihar. According to F&S Report, it has strategically situated plant in Bihar since it is one of India's major hubs for maize cultivation. According to F&S Report, it is the first maize milling company to have established its plant in Kishanganj district of Bihar which is the maize catchment area and has a bumper harvest in Rabi season which ensures smooth supply of maize during the season. 

The strategic location of its Manufacturing Facility is heightened by the proximity to its market for the sale of products i.e., the East and North India, and according to F&S Report, its key export markets i.e., Nepal and Bangladesh – the Nepal and Bangladesh borders are only 24 kms and 235 kms by road from Manufacturing Facility. RRL caters to domestic and international customers across diverse industries including food products, paper, animal feed, and adhesives. Its business model is structured around catering to 3 broad segments of customers viz., as a manufacturer of end products, manufacturer of intermediate products, and distributors/wholesale traders. Its installed capacity is up 750 MTPD as of March 31, 2025, against 370 MTPD as of March 31, 2023.

Some of its more prominent customers include Emami Paper Mills Limited, Manioca Food Products Private Limited, Century Pulp & Paper, Kush Proteins Private Limited, Shri Guru Oil Industries, Mayank Cattle Food Limited, Aarnav Sales Corporation, AMV Sales Corporation, Eco Tech Papers, Genus Paper Board Private Limited, Krishna Tissues Private Limited, Maruti Papers Private Limited, and M/s Vasu and Sons. RRL’s Manufacturing Facility also comprises large warehouses and 4 humidity-controlled storage silos of 10,000 MT each for storage of maize. As on May 31, 2025, it had an aggregate storage capacity of 65,000 tonnes of maize. According to F&S Report, its Manufacturing Facility is one of the few maizes wet milling facilities with a Zero Liquid Discharge (ZLD) plants in India. Its overall revenue has around 93% share from domestic markets and remaining from exports. As of May 31, 2025, it had 491 employees on its payroll and additional 195 contract workers in various department.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route combo IPO worth Rs. 306.00 cr. for 30000235 equity shares at the upper cap. The issue consists fresh issue worth Rs. 210.00 cr. (approx. 20588235 equity shares at the upper cap), and an Offer for sale for 9412000 equity shares (worth Rs. 96 cr. at the upper cap). The company has announced a price band of Rs. 96 – Rs. 102 per equity shares of Rs. 5 each. The issue opens for subscription on August 12, 2025, and will close on August 14, 2025. The minimum application to be made is for 144 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 29.20% of the post-IPO paid up equity capital. From the net proceeds of the fresh issue, the company will utilize Rs. 159.00 cr. for repayment/prepayment of certain borrowings, and the rest for general corporate purposes.

The joint Book Running Lead Managers (BRLMs) to this issue are Pantomath Capital Advisors Pvt. Ltd., Sumedha Fiscal Services Ltd., while MUFG Intime India Pvt. Ltd. is the registrar to the issue. 

The company has issued initial equity shares at par value. It has also issued further shares in the price range of Rs. 20.00 – Rs. 110.00 per share (based on Rs. 5 FV) between December 2015, and November 2024. It has also issued bonus shares in the ratio of 3 for 1 in November 2024. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. NIL, Rs. 6.66, Rs. 6.69, Rs. 19.24, and Rs. 37.89 per share. 

Post-IPO, its current paid-up equity capital of Rs. 41.07 cr. will stand enhanced to Rs. 51.36 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 1047.79 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit, of Rs. 488.67 cr. / Rs. 16.76 cr. (FY23), Rs. 601.08 cr. / Rs. 22.14 cr. (FY24), and Rs. 917.58 cr. / Rs. 47.67 cr. (FY25). According to the management, with cost management and modern technology, it has increased its output with a resultant higher margins.

For the last three fiscals, the company has posted an average EPS of Rs. 4.36 (basic) and an average RoNW of 18.63%. The issue is priced at a P/BV of 3.56 based on its NAV of Rs. 28.66 as of March 31, 2025, and at a P/BV of 2.35 based on its post-IPO NAV of Rs. 43.36 per share (at the upper cap).

If we attribute FY25 earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 21.98. Based on FY24 earnings, the P/E stands at 47.22. The issue appears fully priced.

The company has posted PAT margins of 3.43% (FY23), 3.68 % (FY24), 5.19 % (FY25), and RoCE margins of 10.99 %, 10.07 %, 14.17 %, respectively for the referred periods.

DIVIDEND POLICY:
The company has declared 30% dividend for FY23 and thereafter it skipped. It has already adopted a dividend policy in May 2023. based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Sanstar Ltd., Gujarat Ambuja Exports, Gulshan Polyols, Sukhjit Starch, as their listed peers. They are trading at a P/E of 35.6, 19.8, 38.2, and 14.6 (as of August 08, 2025). However, they are not truly comparable on an apple-to-apple basis. 

MERCHANT BANKER’S TRACK RECORD:
The two BRLMs associated with this offer have handled 10 issues in the last three fiscals, out of which 1 issue closed below the issue price on listing date.