Zelio E-Moby BSE SME IPO review

•    The company is primarily engaged in the business of manufacturing/assembling and supplying electric two and three wheelers.
•    The company marked growth in its top and bottom lines for the reported periods.
•    Boosted top and bottom lines for FY25 raise eyebrows and concern over its sustainability amidst rising competition.
•    Based on its recent financial data, the issue appears greedily priced.
•    Only well-informed/cash surplus/risk seeker may park moderate funds for medium term.

ABOUT COMPANY:
Zelio E-Mobility Ltd. (ZEL) is primarily engaged in the business of manufacturing, assembling and supplying of electric vehicles, offering a range of electric two-wheelers (“E-2Ws”) and three-wheelers (“3Ws”), available in a variety of design, colour, speed variants etc. It is an ISO 45001:2018, ISO 9001:2015 and ISO 14001:2015 certified company, operating under the brand name "Zelio” for E-2Ws and “Tanga” for 3Ws and focussing exclusively on the production of E-2Ws and 3Ws which serves environmental benefits such as lower emissions, reduced noise, energy sustainability etc. 

The company launched the first range of electric scooters in FY 2021-22 and operates through a network of exclusive and non-exclusive dealers spanning across urban, semi-urban, and rural areas. Currently it is operating business through corporate office and manufacturing unit situated at Khewat No 510, 442, Hisar Road, Ladwa, Hisar- 125006, Haryana, India, spreading in an area of 48 kanal 7 marle (equivalent to 24,458.01 sq. mtrs.). 

It has an installed capacity of producing 72000 units p.a. (electric two-wheelers/three-wheelers) and are equipped with various machines such as Conveyor Line-32 meter long, welding machines, impact wrenches, bolt tightening tools, drilling tools etc. for manufacturing, assembling and supplying of electric vehicles. It manufactures EVs by assembling various parts which are outsourced from suppliers as per the designs conceptualised by the company. The company is registered under the Bureau of Indian Standards and SAE International and also USA has confirmed World Manufacturer identifier (WMI) code for the company.

ZEL operates its business through a wide network of dealers, and at present, its focus is primarily on B2B transactions. It is working with 337 dealers spreading across more than 20 states & union territories in India, thus, selling its products Pan-India. Its E-2Ws portfolio comprises of various models inclusive of EEVA, EEVAZX, Gracy, Legender, Mystery, XMen etc. and E-3Ws comprises of vehicles namely, Tanga and Tanga e-Loader under the Brand name of “Tanga”. E-2Ws has contributed around on an average 96% of its top line for the reported periods. As of August 31, 2025, it had 193 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route combo IPO of 5760000 equity shares worth Rs. 78.33 cr. at the upper cap. The issue comprises 4620000 fresh equity shares (worth Rs. 62.83 cr. at the upper cap), and an Offer for Sale (OFS) of 1140000 equity shares (worth Rs. 15.50 cr. at the upper cap). The company has announced a price band of Rs. 129 – Rs. 136 per share of Rs. 10 each. IPO opens for subscription on September 30, 2025, and will close on October 03, 2025. The minimum application to be made is for 2000 shares and in multiple of 1000 shares thereon, thereafter. Post allotment, shares will be listed on BSE SME. The issue constitutes 27.23% of post-IPO paid-up equity capital of the company. From the net proceeds of the issue, the company will utilize Rs. 8.00 cr. for working capital, Rs. 19.45 cr. for capex on new manufacturing unit, Rs. 20.00 cr. for repayment/prepayment of certain borrowings, and the rest for general corporate purposes.

The IPO is solely lead managed by Hem Securities Ltd., while Maashitla Securities Pvt. Ltd. is the registrar to the issue. HEM group’s Hem Finlease Pvt. Ltd. is the market maker, as well as a syndicate member.

The company has issued initial equity shares at par value, and issued bonus shares in the ratio of 550 for 1 in February 2025. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. 0.02 per share. 

Post-IPO, company’s current paid-up equity capital of Rs. 16.53 cr. will stand enhanced to Rs. 21.15 cr. Based on the upper price band of the IPO, the company is looking for a market cap of Rs. 287.64 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has posted a total income/net profit, of Rs. 51.62 cr. / Rs. 3.06 cr. (FY23), Rs. 94.90 cr. / Rs. 6.31 cr. (FY24), Rs. 173.80 cr. / Rs. 16.01 cr. (FY25). The company has posted growth in its top and bottom lines for the reported periods.

For the last three fiscals, the company has reported an average EPS of Rs. 6.42, and an average RoNW of 61.42%. The issue is priced at a P/BV of 21.09 based on its NAV of Rs. 6.45 as of March 31, 2025, but its post-IPO NAV data is missing from the offer documents. There appears to be some mismatch in its pre-IPO NAV data.

If we attribute its FY25 super earnings on post-IPO expanded equity base, then the asking price is at a P/E of 17.97, and based on its FY24 earnings, the P/E stands at 45.64. Thus, the issue appears greedily priced.

The company has posted PAT margins of 5.96% (FY23), 6.68% (FY24), 9.30% (FY25), and RoCE Margins of 29.61%, 34.84%, 36.86%, respectively for the referred periods. 

DIVIDEND POLICY:
The company has not declared any dividends for the reported periods of the offer document. 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 Delta AutoCorp, Tunwal E-Motors as its listed peers. They are currently trading at a P/E of 11.5, and 16.0 (as of September 30, 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 56th mandate from Hem Securities in the last three fiscals. Out of the last 10 listings, 1 opened at par, and the rest with premium ranging from 3.43% to 61.92% on the date of listing.