Snehaa Org NSE SME IPO review (Not Rated)

•    The company is engaged in solvent recovery and recycling services and trading.
•    It posted growth in its top and bottom lines for the reported periods.
•    The sudden boost in bottom lines for FY25 raise eyebrows and concern over its sustainability going forward.
•    The company is operating in a highly competitive and fragmented segment.
•    Based on its recent financial data, the issue appears aggressively priced.
•    There is no harm in skipping this pricey bet.

ABOUT COMPANY:
Snehaa Organics Ltd. (SOL) operates in the solvent recovery and recycling sector, providing sustainable solutions for industries that utilize solvents in their processes. The company collects spent solvents from various industries and employs distillation and purification technologies to process them for reuse. Company’s workforce ensures efficient recovery from diverse solvent mixtures, including those with significant variability between batches. Each batch undergoes comprehensive quality control measures to align with industry requirements. 

The company also maintains a testing facility to address specific customer needs. The recovered solvents are returned to the respective companies for reuse, while the additional purified solvents are sold in the market, supporting resource efficiency and waste reduction. Additionally, the company engages in direct trading of solvent, sourcing raw materials from suppliers, conducting quality assessments, and sold them in the open market. As of July 31, 2025, it had 59 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book-building route IPO of 2679000 equity shares of Rs. 10 each to mobilize Rs. 32.68 cr. at the upper cap. It has announced the price band of Rs. 115 – Rs. 122 per share. IPO opens for subscription on August 29, 2025, and will close on September 02, 2025. The minimum application to be made is for 2000 shares and in multiple of 1000 shares thereon, thereafter. Post allotment, shares will be listed on NSE SME Emerge. The issue constitutes 26.32% of post-IPO paid-up equity capital of the company. From the net proceeds of the issue, the company will utilize Rs. 3.50 cr. for repayment of loans, Rs. 23.94 cr. for working capital, and the rest for general corporate purposes.

The IPO is solely lead managed by Fast Track Finsec Pvt. Ltd., while Skyline Financial Services Pvt. Ltd. is the registrar to the issue. Nirman Share Brokers Pvt. Ltd. is the market maker. 

The company has issued entire initial equity shares at par, and issued bonus shares in the ratio of 6.5 for 1 in December 2024. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. 1.07 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 7.50 cr. will stand enhanced to Rs. 10.18 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 124.18 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted total Income/Net Profit of Rs. 20.41 cr. / Rs. 3.25 cr. (FY23- two broker periods), Rs. 23.8 cr. / Rs. 3.66 cr. (FY24), and Rs. 26.30 cr. / Rs. 7.34 cr. (FY25). Boosted profits for FY25 raise eyebrows and concern over its sustainability.

For the last three fiscals, the company has reported an average EPS of Rs. 7.31, and an average RoNW of 55.55%. The issue is priced at a P/BV of 6.19 based on its NAV of Rs. 19.70 as of March 31, 2025, but its post-IPO NAV data info is missing from offer documents. 

If we attribute its FY25 super earnings on post-IPO expanded equity base, then the asking price is at a P/E of 16.92, and based on its FY24 earnings, the P/E stands at 38.89. Thus, based on its recent financial data, the issue appears aggressively priced.

The company has posted PAT margins of 7.26%+20.35% (FY23- two broker periods), 15.43% (FY24), 27.98% (FY25), and RoCE Margins of 14.36% + 50.33%, 46.70%, 50.38%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not declared any dividends for the referred 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 offer document, the company has no listed peers to compare with.

MERCHANT BANKER’S TRACK RECORDS:
This is the 19th mandate from Fast Track Finsec in the last eight fiscals (including the ongoing one). Out of the last 18 listings, 5 opened at discount, and the rest with premium ranging from 0.83% to 201.21% on the date of listing.