Riddhi Display BSE SME - Dec. 25 IPO review (Not Rated)

•    The company is engaged in the business of manufacturing and supply of display counters, kitchen equipments, and refrigeration equipments.
•    It marked growth in its top and bottom lines for the reported periods.
•    Surge in its bottom lines from FY24 is attributed to cost management and value-added tailor-made products.
•    Based on its recent financial data, the issue appears fully priced.
•    Small paid-up equity capital post IPO indicates longer gestation period for migration.
•    Well-informed/cash surplus investors may park moderate funds for long term.

PREFACE:
The company planned its maiden IPO with a time line of Sept. 24, 2025 to Sept. 26, 2025 for raising Rs. 24.68 cr. at the upper cap, but withdrew the same for the reasons known best to promoters and the Lead Manager. Now it is floating its IPO for the same amount with the time line of Dec. 08, 2025 to Dec. 10, 2025. While its financial data remains same, as well as its employees’ strength also shown based as of August 31, 2025, it has not changed the price band. Its peers tally revised based on its latest price movement. 

ABOUT COMPANY:
Riddhi Display Equipments Ltd. (RDEL) is engaged in the business of manufacturing and supply of Display Counter, Kitchen Equipments and Refrigeration Equipments. The Company carries its operations from its manufacturing facility located at Plot No.1, Survey No.2/1 P4/P2, National Highway-27 Gondal Highway, Village Bhojpara, Rajkot, Gondal, Gujarat 360311.

The Company is primarily engaged in creating innovative and tailormade solutions for commercial kitchen and bakery setup requirements. It offers customized display equipment for Sweet, Bakery, Namkeen, Fast-food, Chat, Dry Fruit, Snacks, Panipuri (Gol Gappa), Sweet Corn, Ice-cream and Shrikhand. The products manufacture by it are supplied to Restaurants, Food Courts, Cafes, Retail
Shops, Super Markets, Ice Cream Parlours, Cake & Pastry Shops, etc.

RDEL customizes equipment to suit specific needs of clients, it designs tailor-made layouts that can ideally co-exist with the clients’ specific demands and other variables such as space. The company provides solutions to clients with prime focus on client requirement, equipment design, shape, pattern, space planning, internal temperature maintenance or external sturdiness of the equipment. The equipments provided by it are available in different temperature variants, i.e., refrigerated, heated and ambient display equipment. Further its kitchen equipment, the range which includes burner range, bain-marie, dish trolley, masala trolley, sink table, storage rack and work table.

Kitchen Equipment vertical leads the pack of volume contributor followed by Display counter and Refrigeration equipments. As of August 31, 2025, it had 55 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 2468400 equity shares to mobilize Rs. 24.68 cr. at the upper cap. It has announced a price band of Rs. 95 – Rs. 100 per share of Rs. 10 each.  The IPO opens for subscription on December 08, 2025, and will close on December 10, 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 28.57% of post-IPO paid-up equity capital of the company. From the net proceeds of the issue, the company will utilize Rs. 4.37 cr. for capex towards interior work for purchase of new equipment/machinery for new manufacturing unit at Lucknow - UP, Rs. 3.56 cr. for capex on existing Gondal Unit towards purchase of equipment/machinery, Rs. 1.43 cr. for capex on setting up of new showroom at Gondal, Rs. 9.74 cr. working capital, and the rest for general corporate purpose.

The IPO is solely lead managed by Jawa Capital Services Pvt. Ltd., while Maashitla Securities Pvt. Ltd. is the registrar to the issue. Prabhat Financial Services Ltd., is the market maker. The IPO is underwritten to the tune of 15% by Jawa Capital and 85% by Aftertrade Broking.

The company has issued initial equity shares at par, and issued further equity shares in the price range of Rs. 30 – Rs. 97 per share between January 2012, and September 2024. It has also issued bonus shares in the ratio of 73 for 10 in October 2024. The average cost of acquisition of shares by the promoters is Rs. 0.00, Rs. 6.12, and Rs. 6.53 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 6.17 cr. will stand enhanced to Rs. 8.64 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 86.40 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total revenue/net profit, of Rs. 17.54 cr. / Rs. 0.21 cr. (FY23), Rs. 18.90 cr. / Rs. 2.02 cr. (FY24), Rs. 25.09 cr. / Rs. 4.14 cr. (FY25). For 4M-FY26 ended on July 31, 2025, it earned a net profit of Rs. 2.00 cr. on a total revenue of Rs. 11.23 cr. While the company reported growth in its top lines for the reported periods, its profit surged from FT24 onwards following cost control and high value-added product marketing.

For the last three fiscals, the company has reported an average EPS of Rs. 4.62, and an average RoNW of 42.41%. The issue is priced at a P/BV of 5.15 based on its NAV of Rs. 19.42 as of July 31, 2025, and at a P/BV of 2.33 based on its post-IPO NAV of Rs. 42.88 per share (at the upper cap).

If we attribute its FY26 super annualized earnings on post-IPO expanded equity base, then the asking price is at a P/E of 14.39, and based on its FY25 earnings, the P/E stands at 20.88. Thus, the issue appears fully priced.

The company has posted PAT margins of 1.18% (FY23), 10.69% (FY24), 16.53% (FY25), 17.82% (4M-FY26), and RoCE Margins of 11.26%, 56.15%, 58.40%, 17.50%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not declared any dividends since incorporation. 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 ICE Make Refrigeration as its listed peer. It is currently trading at a P/E of 72.0 (as of December 04, 2025, 2025). However, they are not truly comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORDS:
This is the 8th mandate from Jawa Capital in the last two fiscals (including the ongoing one). Out of the last 7 listings, 4 opened at discount, 1 at par, and the rest with premium ranging from 20.41% to 50.00% on the date of listing. The Lead Manager has a poor track record.