Sodhani Capital BSE SME IPO review

•    The company is engaged in the business of distributorship of MF schemes and other investment options.
•    It posted growth in its top and bottom lines for the reported periods.
•    The margins earned by it raises eyebrows and concern over its sustainability as the investment offered are highly regulated and carry market related risks.
•    Based on its recent financial data, the issue appears fully priced.
•    Small paid-up equity post-IPO indicates longer gestation period for migration.
•    Well-informed/cash surplus/risk seekers may park moderate funds for long term.

ABOUT COMPANY:
Sodhani Capital Ltd. (SCL) is a mutual fund distributor headquartered in Jaipur at C-373, 1st Floor, Vaishali Nagar, Rajasthan - 302021. Since its incorporation in March 2019, the company has undergone significant corporate evolution, culminating in its transition to public limited status on August 22, 2023. The company has built a market presence in Jaipur and surrounding areas through its core business of distribution of financial products. Their service portfolio encompasses comprehensive mutual fund schemes, with particular emphasis on systematic investment plans (SIPs).

SCL was established in 2019 in Jaipur. In the year 2021, the Company acquired the mutual fund distribution business (ARN transfer). In the year 2021, the Company took over the AUM of Mr. Rajesh Kumar Sodhani and thereafter grew the business to reach the present AUM of over Rs. 480 cr. After the transfer of his business to our Company, Mr. Rajesh Kumar Sodhani had surrendered his ARN.

The year 2021-22 marked a digital transformation, with the company launching a comprehensive online investment platform and dedicated app. This technological advancement, coupled with efficient operational processes, led to rapid client acquisition, reaching 2,000 active clients. The period between 2022 and 2025 witnessed further growth in both client base and assets under management (AUM). Client numbers grew from 4,000 in 2022 to over 7,000 by 2025, while AUM expanded from ₹200 crore to ₹500 crore. A key milestone in this growth phase was the company's transition from private to public limited status in 2023, enhancing its capital-raising capabilities and operational capacity. The company's success can be attributed to three key factors: consistent investment in operational infrastructure, strong focus on client education through initiatives like awareness seminars, and capable human talent. This combination has positioned the company as a leading mutual fund distributor with robust growth potential.

SCL provides service of financial products distribution to help its clients achieve their financial goals. The company's core business focuses on mutual fund distribution, serving retail investors, high-net-worth individuals (HNIs). While the business is spread across the year, it witnesses peak operations during the tax-saving season (January-March). The service offering encompasses a diverse range of mutual funds, including equity funds for long-term growth, debt funds for stability, hybrid funds for balanced returns, and ELSS for tax savings under Section 80C. A key offering is the Systematic Investment Plans (SIPs), designed to promote disciplined savings and generational wealth building through regular, structured investment. 

Company’s service portfolio is structured around its core business segments. Through its operational processes, the company delivers comprehensive delivery of its business to ensure alignment with client objectives. The company serves a diverse market spanning multiple investor segments, from High-Net-Worth Individuals to retail investors and corporate clients. The client base is strategically segmented based on risk tolerance, with tailored offerings for conservative, balanced, and growth-oriented investors. As of the date of this offer document, it had 15 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 2100000 equity shares at a fixed price of Rs. 51 per share of Rs. 10 each, to mobilize Rs. 10.71 cr. The issue comprises of 1690000 fresh equity shares worth Rs. 8.62 cr., and an Offer for Sale (OFS) of 410000 equity shares worth Rs. 2.09 cr. The IPO opens for subscription on September 29, 2025, and will close on October 01, 2025. The minimum application to be made is for 4000 shares and in multiple of 2000 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 26.43% of post-IPO paid-up equity capital of the company. The company is spending Rs. 0.80 cr. for this IPO (fresh equity issue) process, and from the net proceeds of the issue, the company will utilize Rs. 5.01 cr. for acquisition of office premises at Mumbai, Rs. 0.58 cr. for interior work for proposed office premises, Rs. 0.93 cr. for expenses on brand visibility, Rs. 0.15 cr. for development of mutual fund investment application, Rs. 0.09 cr. for expenses on acquiring information technology hardware and software at new office premises, and Rs. 1.06 for general corporate purposes.

The IPO is solely lead managed by Bonanza Portfolio Ltd., while NSDL Database Management Ltd. is the registrar to the issue. Aikyam Capital Pvt. Ltd., is the market maker. 

The company has issued entire initial equity shares at par, it issued further equity shares at a price of Rs. 125 per share (based on Rs. 10 FV) in September 2023. It has also issued bonus shares in the ratio of 130 for 1 in July 2023, and 350 for 100 in December 2024. The average cost of acquisition of shares by the promoters is Rs. 0.02, and Rs. 3.04 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 6.25 cr. will stand enhanced to Rs. 7.95 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 40.52 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit, of Rs. 2.48 cr. / Rs. 1.20 cr. (FY23), Rs. 3.75 cr. / Rs. 2.21 cr. (FY24), Rs. 4.13 cr. / Rs. 2.18 cr. (FY25). While it marked minor growth in its minuscule top lines, its bottom line posted small erosion for FY25 against FY24 earnings. The profit margins posted by the company is surprising one and all and raises concern over its sustainability going forward.

For the last three fiscals, the company has reported an average EPS of Rs. 3.29, and an average RoNW of 38.73%. The issue is priced at a P/BV of 4.30 based on its NAV of Rs. 11.86 as of March 31, 2025, and at a P/BV of 2.83 based on its post-IPO NAV of Rs. 18.05 per share.

If we attribute its FY25 super earnings on post-IPO expanded equity base, then the asking price is at a P/E of 18.55, and based on its FY24 earnings, the P/E stands at 18.35. Thus, the issue appears fully priced.

The company has posted PAT margins of 49.60% (FY23), 74.51% (FY24), 53.26% (FY25), and RoCE Margins of 77.02%, 54.34%, 40.47%, respectively for the referred periods. The spectacular set of margins reported by the company are highly surprising as a commission income.

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 Vedant Asset, Prudent Corporate, as its listed peers. They are currently trading at a P/E of 50.4 and 52.0 (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 1st mandate from Bonanza Portfolio in the ongoing and thus has no previous mandate track record.