Speb Adhesives NSE SME IPO review (Not Rated)

•    The company is engaged in the business of manufacturing solvent based synthetic rubber adhesives.
•    It is operating in a highly competitive and fragmented segment.
•    The company posted growth in its top and bottom lines for the reported periods.
•    Boosted margins from FY24 raises eyebrows and concern over its sustainability going forward.
•    Based on its recent financial data, the issue appears fully priced.
•    Well-informed investors may park funds for medium to long term.

ABOUT COMPANY:
Speb Adhesives Ltd. (SAL) is engaged in the business of manufacturing solvent-based synthetic rubber adhesives. Within the synthetic rubber-based adhesive, it offers both – solvent-based and water-based adhesives. The company primarily focuses on in-house manufacturing of solvent-based adhesives, with water-based adhesives being produced on a contractual manufacturing basis. Within the solvent-based category, it primarily specializes in polychloroprene-based and SBS (styrene-butadiene-styrene)-based adhesives, known for their high bonding strength, durability, and wide application range. Its product portfolio includes various products customized for industrial and retail applications, such as multi-purpose adhesives, spray-grade adhesives, premium bonding adhesives, Ducting and Insulation adhesives, woodworking adhesives, footwear-grade adhesives, and adhesives used in Generator Set. 

The company follows a B2B business model, and its products are used in Hardware, Foam and Furnishing, Ducting and Insulation, Woodworking, Footwear, and Generator Set industries. To serve a diverse customer base, the company operates through three major business channels, viz. Dealer-Distribution Network, Industrial Sales, and Government Supply Contracts.

Given its significant exposure to the retail and distribution segment, the company follows a continuous manufacturing model, producing ahead of demand rather than relying solely on order-based production. This approach ensures product availability across markets and enables rapid turnaround to meet distributor and dealer requirements. SAL manufactures products in SKUs (Stock Keeping Units) ranging from 10ml to 30 litres, along with a newly added 200kg SKU in the Woodworking category. It operates out of a manufacturing facility located in the MIDC (Maharashtra Industrial Development Corporation) – industrial area of Taloja, Raigad, Maharashtra, with an installed production capacity of 12,000 liters per day.

The total revenue includes around 93% domestic and the balance from international markets. Dealer Distribution mode has the lion share in its top line. Major revenue comes from the state of Maharashtra, followed by Gujarat. Its capacity utilization increased to 74.69% (H1-FY26) from 57.76% (FY23). As of November 20, 2025, it had 41 employees on its payroll. It also engages external partners for contractual manufacturing oof certain products.

ISSUE DETAILS/ CAPITAL HISTORY:
The company is coming out with its maiden book building route combo IPO of 6024000 equity shares of Rs. 10 each to mobilize Rs. 33.73 cr. at the upper cap. The IPO comprises of fresh equity issue of 4854000 shares (worth Rs. 27.18 cr. at the upper cap), and an Offer for Sale of 1170000 equity shares (worth Rs. 6.55 cr. at the upper cap). The company has announced a price band of Rs. 52 – Rs. 56 per share. The issue opens for subscription on December 01, 2025, and will close on December 03, 2025. The shares will be listed on NSE SME Emerge. The minimum application to be made is for 4000 shares and in multiples of 2000 shares thereon, thereafter. The IPO constitutes 26.82% of the post-IPO paid-up capital of the company. From the net proceeds of the IPO, it will utilize Rs. 20.44 cr. for capex on new manufacturing unit at Tambati – Khalapur, District Raigad, Maharashtra, and the rest for general corporate purposes. 

The IPO is solely lead managed by Unistone Capital Pvt. Ltd., and MUFG Intime India Pvt. Ltd. is the registrar to the issue. Kalpalabdhi Financials Pvt. Ltd. is the market maker as well as a syndicate member. 

Having issued initial equity capital at par, the company issued bonus shares in the ratio of 415 for 4 in January 2025. The average cost of acquisition of shares by the promoters is Rs. 0.00, Rs. 0.13 per share. 

Post- IPO, company’s current paid-up equity capital of Rs. 17.61 cr. will stand enhanced to Rs. 22.46 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 125.80 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted total revenue / net profit, of Rs. 38.79 cr. / Rs. 1.83 cr. (FY23), Rs. 43.21 cr. / Rs. 4.94 cr. (FY24), Rs. 45.54 cr. / Rs. 5.90 cr. (FY25). For H1 of FY26 ended on September 30, 2025, it earned a net profit of Rs. 3.65 cr. on a total income of Rs. 25.04 cr. 

For the last three fiscals, the company has reported an average EPS of Rs. 2.70 and an RoNW of 23.25%. The issue is priced at a P/BV of 3.40 based on its NAV of Rs. 16.47 per share as of September 30, 2025, and at a P/BV of 2.24 based on its post-IPO NAV of Rs. 25.01 per share (at the upper cap).

If we attribute FY26 annualized super earnings to post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 17.23, and based on FY25 earnings, it stands at 21.37%. Thus, the issue appears fully priced. 

For the reported periods the company has posted PAT Margins of 4.77% (FY23), 11.58% (FY24), 13.16% (FY25), 14.76% (H1-FY26), and RoCE margins of 12.96%, 34.13%, 32.07%, 16.91%, respectively for referred periods.

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods. It will adopt a prudent dividend policy, based on its financial performance and future prospects. 

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown H P Adhesives, Nikhil Adhesives, Jyoti Resins, as its listed peers. They are currently trading at a P/E of 26.6, 31.8, and 19.7 (as of November 26, 2025). However, they are not truly comparable on an apple-to-apple basis. This comparison appears to be an eyewash.

MERCHANT BANKER’S TRACL RECORD:
This is the 31st mandate from Unistone Capital in the last three fiscals. Out of the last 10 listings, 2 opened at discount, and the rest with premium ranging from 0.52% to 105% on the listing date.