Rukmani Devi BSE SME IPO review (Not Rated)

•    The company is carrying on the business of agriculture produce aggregator and marketing it through 123 distributors spread across many states.
•    While its top line marked inconsistency, its bottom line outperformed the industry benchmarks.
•    The company has created a niche market for its quality agri products.
•    Based on its recent financial data, the issue appears fully priced.
•    Well-informed investors may park funds for medium to long term.

ABOUT COMPANY:
Rukmani Devi Garg Agro Impex Ltd. (RDGAIL) is carrying on the business of agricultural produce aggregator. As an agricultural produce aggregator, it consolidates agriculture produce namely, wheat, mustard, coriander, maize, flax seeds, soyabean from the vast network of small and fragmented farmers. The company grades these produces based on quality and sell in bulk (“raw”) to diversified customer base which includes, corporates, flour mills, solvent-extraction plant/ oil mills, export or agriculture-processors across India

As its strategy to diversify product offerings, the company has started processing unit at F-378, Indraprastha Industrial Area, Kota, Rajasthan, 324005 and J-375 G, Indraprastha Industrial Area, IPIA, Kota, Kota, Rajasthan, 324005 (“RIICO Land”) in the Fiscal 2015 for the grading, sorting and packaging of raw wheat (“processed wheat”). It sells processed wheat under its brand “Sharbati”, “Happyfamily”, and “Taj Mahal” through network of distributors and dealers across, Rajasthan, Uttar Pradesh, Maharashtra, Haryana, Punjab, Delhi and Chandigarh (“Branded sales”). Further, the company also sells the low-quality processed wheat in bulk (“Mill quality”). As on March 31, 2025, it engages with over 123 distributor and dealer network.

Its primary agricultural produce is wheat, mustard, coriander, maize, flax seeds, soyabean, which it procures from over a large number of farmers through a network of kaccha aadtiya (“agents”) spread across the state of Rajasthan and Madhya Pradesh. Further, as on March 31, 2025, its network comprises of over 500 kaccha aadtiya/ agents who liaison and coordinate between the Company and the farmers community. RDGAIL procures this agricultural produce during harvest period grade and store them raw and in case of wheat it also stores processed wheat i.e., after grading, sorting and packaging at storage facilities situated at processing unit, owned warehouse and also in warehouses taken on lease basis. As on March 31, 2025, the aggregate warehousing capacity of our 3 (three) owned warehouses is around 20,000 MT. Additionally, processing unit also have a storage capacity of around 3,500 MT. Further, depending on storage requirement it also take warehousing on short term lease basis.

Its sorting machinery at processing unit is imported from London, UK and is fully automatic with capability for cleaning, grading, colour sorting using multi-vision technology, and also automatically pack the processed wheat as per desired packaging requirements (“consumable packages”). Its processing units are also capable to process other agri produce such as Fenugreek (danamethi), Chickpea (Chana), Urad and Mustard (Rai), after making minor modification to PLC settings with necessary attachments. The company has outsourced most of processing unit activities such as, loading, un-loading, packaging, etc. to contractors. 

It sells raw agri commodity agricultural produce such as raw wheat, mustard, coriander, maize, flax seeds, soyabean and, trade in and agri products such as mustard oil, soyabean oil, mustard de-oiled cakes, etc. (collectively “agri commodities”) in bulk to diversified customer base which includes, corporates, flour mills, solvent-extraction plant/ oil mills, export or agriculture-processors across India. Started as an agriculture produce aggregator, it has over the years engaged in the business of processing of agricultural produce namely, raw wheat. Raw wheat received at processing unit contains weeds, seeds, chaff, and other foreign material. The raw wheat is graded and sorted at processing units which includes cleaning, grading, colour sorting and automatic packaging (“processed wheat”). As of Mach 31, 2025, it had 18 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 2376000 equity shares to mobilize Rs. 23.52 cr. at the upper cap. It has announced a price band of Rs. 93 – Rs. 99 per share of Rs. 10 each.  The IPO opens for subscription on September 26, 2025, and will close on September 30, 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 26.77% of post-IPO paid-up equity capital of the company. From the net proceeds of the issue, the company will utilize Rs. 16.50 cr. for working capital, and the rest for general corporate purposes.

The IPO is solely lead managed by Fedex Securities Pvt. Ltd., while Bigshare Services Pvt. Ltd. is the registrar to the issue. Sunflower Broking Pvt. Ltd. is the market maker. Rikhav Securities Ltd. is a syndicate member.

The company has issued initial equity shares at par, and issued further equity shares in the price range of Rs. 100.00 – Rs. 360.00 per share between February 2008, and June 2011. It has also issued bonus shares in the ratio of 1 for 4 in March 2003, and 84 for 10 in March 2011. The average cost of acquisition of shares by the promoters is Rs. 1.17, Rs. 1.25, and Rs. 32.17 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 6.50 cr. will stand enhanced to Rs. 8.88 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 87.87 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit, of Rs. 248.50 cr. / Rs. 0.47 cr. (FY23), Rs. 245.03 cr. / Rs. 5.02 cr. (FY24), Rs. 327.32 cr. / Rs. 7.57 cr. (FY25). The company posted inconsistency in its top lines, but bottom lines marked improvements for the reported periods. Its debt-equity ratio of 1.52 as of March 31, 2025, raises a concern.

For the last three fiscals, the company has reported an average EPS of Rs. 8.52, and an average RoNW of 18.80%. The issue is priced at a P/BV of 1.98 based on its NAV of Rs. 49.89 as of March 31, 2025, and at a P/BV of 1.57 based on its post-IPO NAV of Rs. 63.03 per share (at the upper cap).

If we attribute its FY25 super earnings on post-IPO expanded equity base, then the asking price is at a P/E of 11.61, and based on its FY24 earnings, the P/E stands at 17.52. Thus, the issue appears fully priced.

The company has posted PAT margins of 0.19% (FY23), 2.05% (FY24), 2.32% (FY25), and RoCE Margins of 7.11%, 16.60%, 15.61%, 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 NHC Foods, Neelkant Ltd., as its listed peers. They are currently trading at a P/E of 9.47 and NA (as of September 26, 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 26th mandate from Fedex Securities in the last three fiscals (including the ongoing one). Out of the last 10 listings, 1 opened at discount, 1 at par, and the rest with premium ranging from 3.25% to 90.00% on the date of listing.