Stanbik Agro BSE SME IPO review (Not Rated)

•    The company is currently engaged in contract farming and wholesaling agri commodities.
•    The company is operating in a highly competitive and fragmented segment.
•    Its outperforming industry average margins may not sustain going forward.
•    Though the issue appears lucratively priced based on its recent financial data, it needs caution before investment.
•    Only well-informed/cash surplus/risk seekers may park moderate funds for medium term.

ABOUT COMPANY:
Stanbik Agro Ltd. (SAL) is carrying on the business of contract farming, wholesaling and supplying of agricultural commodities. The Company was founded with a clear mission: to bring the fresh fruits and vegetables directly from the farm to the table while promoting sustainable farming practices. It has earned a reputation as the reliable supplier of these products. Its experience, expertise, and commitment to core values of freshness and quality has led to consistency & customer satisfaction.

Historically, its operations included trading in pulses and cereals under the management of the previous promoters. After the induction of the current promoters, who have expertise in trading of fruits and vegetables, the company has shifted its focus to these segments. This strategic change allows it to concentrate on higher-margin products and leverage the promoters’ experience in production and distribution. The Company undertook a phased expansion by discontinuing trading of cereals and pulses in FY 2023-24 and commencing the fruits trading vertical in FY 2024-25 to focus on long-term sustainability. The Company undertook a phased expansion by discontinuing trading of cereals and pulses in FY 2023-24 and commencing the fruits trading vertical in FY 2024-25 to focus on long-term sustainability. As on the date of the Prospectus, the Company is engaged in the trading of both fruits and vegetables.

The Company finalizes contract farming agreements only after ensuring key conditions are favourable, such as assessment of the land’s past yield, availability of adequate water resources, presence of proper boundaries or demarcation, verification of soil quality suitable for cultivation, and securing rights for production and sale of the produce. Under the contract farming arrangement, the Company takes the land on lease from the farmer and undertakes all cultivation and production activities. In consideration, 10% of the agricultural produce from the leased land is provided to the land owners. 

All risks and rewards associated with the agricultural operations and output belong entirely to the Company. The Company undertakes year-round cultivation, and in case of loss due to rain or natural calamities, such loss is borne by the Company, though no such instance has occurred in the past. The Company has exclusive rights to use the leased land, and the agreement is renewed annually based on mutual consent and prevailing conditions. The company follows B2B model of business and caters to wholesalers, traders. The Company also supplies products through various large e-commerce B2B platforms, enhancing our distribution capabilities and ensuring greater accessibility. 

As of November 30, 2025, the Company has an order book amounting to Rs. 16+ cr. comprising of confirmed purchase orders received from customers, which are expected to be fully realized within the current financial year itself. In our B2C operations, we prioritize direct engagement with consumers which also include some medium and small-scale businesses through our seven retail outlets and godowns. As of the date of the offer document, it had 18 employees on its payroll, it also hires contract labour as and when needed.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden IPO of 4092000 equity shares at a fixed price of Rs. 30 per share to mobilize Rs. 12.28 cr. The IPO opens for subscription on December 12, 2025, and will close on December 16, 2025. The minimum application to be made is for 8000 shares and in multiple of 4000 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 30.71% of post-IPO paid-up equity capital of the company. The company is spending Rs. 0.55 cr. for this IPO process, and from the net proceeds of the issue, the company will utilize Rs. 3.58 cr. for launching new outlets, Rs. 0.19 cr. for brokerage charges, Rs. 0.37 cr. for deposits, Rs. 6.39 cr. working capital, and Rs. 1.20 cr. for general corporate purpose.

The IPO is solely lead managed by Grow House Wealth Management Pvt. Ltd., while Purva Sharegistry India Pvt. Ltd. is the registrar to the issue. MNM Stock Broking Pvt. Ltd., is the market maker. 

After issuing initial equity shares at par value, it has issued further equity shares at a fixed price of Rs. 14 per share in July 2024, and also issued bonus shares in the ratio of 199 for 1 in March 2024. The average cost of acquisition of shares by the promoters is Rs. 9.22, and Rs. 11.95 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 9.23 cr. (9230847 equity shares) will stand enhanced to Rs. 13.32 cr. (13322847 equity shares). Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 39.97 cr. The company has shown post-IPO paid-up equity capital of Rs. 1.33 cr. on page no. 69 of the offer document.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total revenue/net profit, of Rs. 19.96 cr. / Rs. 1.02 cr. (FY23), Rs. 26.55 cr. / Rs. 1.85 cr. (FY24), Rs.  52.49 cr. Rs. 3.74 cr. (FY25). For H1- FY26 ended on September 30, 2025, it earned a net profit of Rs. 2.22 cr. on a total revenue of Rs. 35.55 cr. The boosted profits from FY25 onwards (i.e., pre-IPO period) raises eyebrows and concern over its sustainability as it is operating in a highly competitive and fragmented segment. 

For the last three fiscals, the company has reported an average EPS of Rs. 6.47 (basic), and an average RoNW of 48.94%. The issue is priced at a P/BV of 1.46 based on its NAV of Rs. 20.55 as of September 30, 2025, and at a P/BV of 1.28 based on its post-IPO NAV of Rs. 23.45 per share. 

If we attribute its FY26 super annualized earnings on post-IPO expanded equity base, then the asking price is at a P/E of 8.98, and based on its FY25 earnings, the P/E stands at 10.68. Thus, the issue appears lucratively priced, but needs caution as the margins reported are not sustainable in long term.

The company has posted PAT margins of 5.08% (FY23), 6.97% (FY24), 7.12% (FY25), 6.26% (H1-FY26), and RoCE Margins of 105.24%, 66.25%, 27.02%, 14.73%, respectively for the referred periods. The outperforming numbers against industry average raises eyebrows.

DIVIDEND POLICY:
The company not paid any dividends for the reported periods of the offer document. It has adopted a dividend policy in December 2024, based on its financial performances and future prospects. 

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Prime Fresh, City Crops Agro, as its listed peers. They are currently trading at a P/E of 31.9, and NA (as of December 10, 2025, 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 Grow Housel in the current fiscal. It has no track record for past mandates.