Solvex Edibles BSE SME IPO review

•    The company is in the business of manufacturing, distribution, marketing and selling of solvent extracted Rice Bran Oil and other by-products.
•    Based on standalone financial data, it marked inconsistency in its top lines for the reported periods, but posted improved bottom lines.
•    On consolidated basis, it marked growth in its top and bottom lines for the last two fiscals, however, boosted profits for FY25 appears to be a window dressing for fancy valuations.
•    Based on its recent financial data, the issue appears aggressively priced.
•    The Lead Manager has a poor track record.
•    There is no harm in skipping this pricey and “High Risk/Low Return” bet.

ABOUT COMPANY:
Solvex Edibles Ltd. (SEL) is in the business of manufacturing, distribution, marketing and selling of Solvent Extracted Rice Bran Oil and other by products such as De-oiled Cakes - Rice Bran, Rice Bran, and Mustard Oil, Mustard Cakes, Deoiled Mustard Cakes. Rice bran oil is the oil extracted from the hard outer brown layer of rice called ‘Bran’. 

We are selling Solvex Extracted Rice Bran Oil Deoiled Cakes - Rice Bran, Rice Bran, Mustard Oil, Mustard Cakes and Deoiled Mustard Cakes to various FMCG companies across India. It does not manufacture, market and sell products under its own brands. The company also produces De-oiled Cakes Rice Bran (DORB), which is a by-product in the extraction of Rice Bran Oil and sell the same as cattle feed, poultry feed and fish feed in various states of India. Currently the company is selling its products in 18 states. SEL’s operations are managed by its two wholly owned subsidiaries i.e., Shree Oils and Fats (I) Pvt. Ltd., and Golden Pearl Oil Products LLP. As of the date of filing this offer document, it had 40 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 2620800 equity shares at a fixed price of Rs. 72 per share to mobilize Rs. 18.87 cr. The IPO opens for subscription on September 22, 2025, and will close on September 24, 2025. The minimum application to be made is for 3200 shares and in multiple of 1600 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 29.28% of post-IPO paid-up equity capital of the company. The company is spending Rs. 1.87 cr. for this IPO process, and from the net proceeds of the issue, the company will utilize Rs. 8.31 cr. for capex on new plant and machinery, Rs. 5.90 cr. for repayment/prepayment of certain borrowings, and Rs. 2.79 cr. for general corporate purposes.

The IPO is solely lead managed by Corporate Makers Capital Ltd., while Maashitla Securities Pvt. Ltd. is the registrar to the issue. JSK Securities & Services Pvt. Ltd. is the market maker. The IPO is underwritten to the tune of 15% by Corporate Makers Capital Ltd., and 85% by JSK Securities and Services Pvt. Ltd.

The company has issued initial equity shares at par, and issued further equity shares in the price range of Rs. 50 – Rs. 103 per share between March 2024 and August 2024. It has also issued bonus shares in the ratio of 3 for 4 in July 2024. The average cost of acquisition of shares by the promoters is Rs. 9.11, Rs. 27.37, Rs. 27.43, and Rs. 58.86 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 6.33 cr. will stand enhanced to Rs. 8.95 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 64.45 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total revenue/net profit, of Rs. 93.21 cr. / Rs. 0.34 cr. (FY23), Rs. 71.33 cr. / Rs. 0.99 cr. (FY24), Rs. 74.72 cr. / Rs. 2.84 cr. (FY25). While its top line marked inconsistency, its bottom line surged.

For the last two fiscals, the company has (on a consolidated basis) posted total revenue/Net Profit of Rs. 71.94 cr. / Rs. 1.01 cr. (FY24), Rs. 136.47 cr. / Rs. 4.09 cr. (FY25). The quantum jumps in top lines for FY25 (pre-IPO year) appears to be a window dressing to pave the way for fancy valuations. It is operating in a highly competitive and fragmented segment. 

For the last three fiscals, the company has (on a standalone basis) reported an average EPS of Rs. 2.94, and an average RoNW (on a consolidated basis for the last two fiscals) of 15.86%. The issue is priced at a P/BV of 2.33 based on its NAV of Rs. 30.96 (consolidated basis) as of March 31, 2025, and at a P/BV of 1.65 based on its post-IPO NAV of Rs. 43.61 per share (consolidated basis).

If we attribute its FY25 super annualized earnings on post-IPO expanded equity base, then the asking price is at a P/E of 15.76, and based on its FY24 earnings, the P/E stands at 63.72. Thus, based on its recent consolidated financial data, the issue appears aggressively priced.

The company has (on a standalone basis) posted PAT margins of 0.36% (FY23), 1.39% (FY24), 3.80% (FY25), and RoCE Margins of 22.35%, 19.64%, 29.07%, respectively for the referred periods. On a consolidated basis it posted PAT margins of 1.41% (FY24) and 3.02% (FY25), and ROCE margins of NA% (FY24), (24.51% (FY25).

DIVIDEND POLICY:
The company has not declared any dividends since its 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 Ramdevbaba Solvent, and M K Proteins, as their listed peer. They are currently trading at a P/E of around 19.4 and 29.8 (as of September 18, 2025). However, they are not truly comparable on an apple-to-apple basis. This compare appears to be an eyewash.

MERCHANT BANKER’S TRACK RECORDS:
This is the 5th mandate from Corporate Makers in the last two fiscals (including the ongoing one). Out of last 4 listings, 1 opened at par, and the rest opened at discount. Thus, the lead manager has a poor track record so far.