Sundrex Oil NSE SME IPO review (Not Rated)

•    The company is engaged in manufacturing and whole-selling lubricants, and other industrial oils primarily on B2B model.
•    It has marked growth in its top and bottom lines for the reported periods.
•    Surge in margins from FY25 onwards (in a pre-IPO periods) surprises all. 
•    Based on its recent financial data, the issue appears aggressively priced.
•    Only well-informed/cash surplus/risk seekers may park moderate funds for medium term.

ABOUT COMPANY:
Sundrex Oil Co. Ltd. (SOCL) is a manufacturer and wholesaler of lubricants, greases, and a wide range of industrial products, serving both B2B and B2C markets across India. The company’s revenue profile is predominantly concentrated in the Business-to-Business (B2B) segment, which accounts for approximately 99% of the total revenue whereas the remaining 1% of revenue is generated from the Business-to-Customer (B2C) segment. Its portfolio includes the production of industrial lubricant, automotive lubricant, and specialty products (co). the company is the manufacturer of high-performance lubricants, greases, metalworking fluids, bituminous products, IS: 335 Certified Transformer Oils, and other specialized formulations.

SOCL’s lubricant business focuses primarily on the production and sale of various industrial lubricants including hydraulic oils, transmission oils, and gear oils, which are essential for various industrial machinery applications. These products contribute significantly to its revenue, reflecting the breadth and demand for its offerings.

In addition to manufacturing products under own brand, it offers contract manufacturing services, including toll blending and contract packaging. These services allow businesses to outsource the production of lubricants and oils tailored to their specific formulations, removing the need for investments in blending facilities, raw materials, and operational overheads.

The company also provides private labeling services, enabling companies to market and sell premium-quality products under their own brand name. This approach offers a cost-effective way for businesses to expand their product portfolios without investing in in-house product development, manufacturing infrastructure, or inventory management. By utilizing its expertise and facilities, clients can focus on their branding and distribution strategies while ensuring high-quality and consistent products for their customers.

Over the past decade, the company has expanded its operations to meet the lubrication needs of various industries in India and neighboring regions. It has focused on pricing, maintaining quality, and addressing customer requirements. This has led to the company establishing a stable presence in industrial and automotive sectors. As of June 30, 2025, it had 73 employees on its payroll.

ISSUE DETAILS/ CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of 3750400 equity shares of Rs. 10 each to mobilize Rs. 32.25 cr. at the upper cap. The company has announced a price band of Rs. 81 – Rs. 86 per share. The minimum application to be made is for 3200 shares and in multiples of 1600 shares thereon, thereafter. The issue opens for subscription on December 22, 2025, and will close on December 24, 2025. The IPO constitute 28% of the post-IPO paid-up capital of the company. The shares will be listed on NSE SME Emerge. From the net proceeds of the IPO, it will utilize Rs. 0.73 cr. for capex on additional machineries, Rs. 2.58 cr. for prepayment/repayment of certain borrowings, Rs. 20.87 cr. for working capital, and the rest for general corporate purposes. 

The IPO is solely lead managed by Affinity Global Capital Market Pvt. Ltd., and Cameo Corporate Services Ltd. is the registrar to the issue. Sunflower Broking Pvt. Ltd. is the market maker. The issue is underwritten to the tune of 15% by Affinity Global Capital Market Pvt. Ltd., and 85% by Prabhat Financial Services Ltd.

The company has issued entire initial equity capital at par value, and has also bonus shares in the ratio of 41 for 101 in November 2024. The average cost of acquisition of shares by the promoters is Rs. 0.79, Rs. 7.04, and Rs. 7.11 per share.

Post-IPO, company’s current paid-up equity capital of Rs. 9.64 cr. will stand enhanced to Rs. 13.39 cr. Based on the upper band of the IPO pricing, the company is looking for a market cap of Rs. 115.20 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted total income / net profit, of Rs. 27.79 cr. / Rs. 0.40 cr. (FY23), Rs. 49.19 cr. / Rs. 2.57 cr. (FY24), Rs. 69.12 cr. / Rs. 5.44 cr. (FY25). For Q1 of FY26 ended on June 30, 2025, it earned a net profit of Rs. 1.94 cr. on a total income of Rs. 19.18 cr. 

For the last three fiscals, the company has reported an average EPS of Rs. 6.51, and an average RoNW of 44.20%. The issue is priced at a P/BV of 4.82 based on its NAV of Rs. 17.86 per share as of June 30, 2025, and at a P/BV of 2.33 based on its post-IPO NAV of Rs. 36.94 per share (at the upper cap).

If we attribute FY26 annualized super earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 14.83, and based on FY25 earnings, the P/E stands at 21.18. The issue appears aggressively priced. 

For the reported periods, the company has posted PAT margins of 1.45% (FY23), 5.31% (FY24), 8.10% (FY25), 10.38% (Q1-FY26), and RoCE margins of 13.28%, 27.91%, 27.03%, 8.78%, respectively, for the referred periods.

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. 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 Arabian Petroleum, as its listed peer. It is currently trading at a P/E of 6.76 (as of December 19, 2025). However, they are not truly comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACL RECORD:
This is the 8th mandate from Affinity Global in the last three fiscals. Out of the last 7 listings, 1 listed at discount, 2 at par, and the rest with premium ranging from 5.88% to 51.79% on the date of listing. The lead manager has an average track record.