IPO Reviews / Adroit Industries

Adroit Industries (India) Limited

What Adroit's cash flow and working capital days show beyond a 27.66% EBITDA margin

Margins earn attention; cash conversion earns trust. Track cash from operations against EBITDA every year, because the filing window shows three.

Platform
BSE and NSE
Status
Listed 30 September 2026
named objects of the fresh issue, before general corporate purposes
Rs 87.98 crore

The business in brief

Adroit Industries (India) Limited makes propeller shafts (the rotating shaft that carries engine power from the gearbox to the axle of a vehicle) and precision-machined torque-transmission components. The offer document described it as a vertically integrated manufacturer (one that does most production steps itself) with over 5,000 SKUs (stock keeping units, meaning distinct products), and in-house forging, machining, heat treatment, assembly, balancing and testing at three facilities in Madhya Pradesh: Dewas, Pithampur and Sanwer Road. It exports to more than 32 countries. Export revenue was 95.39% of revenue from sale of products in FY2026 (86.64% of total revenue from operations, which also includes operating revenue other than product sales), and the United States gave 53.76% of product sales. Part of its operations runs through its subsidiary, Adroit Driveshafts Private Limited. The business began as a partnership firm in 1966 and became a company in 1995.

Before the offer, the promoters (Saurabh Sangla, Mukesh Sangla, Monika Sangla, Swan Irrigation LLP, Shubhangi Trust and Shreya Trust) held 48.70% of the shares and the promoter group held a further 47.40%. The offer had two parts: a fresh issue of new shares and an offer for sale (existing shares sold by a shareholder) by Mukesh Sangla HUF; the company receives no money from the offer for sale. The objects of the issue (the stated uses of the money) were Rs 19.91 crore for machinery and a vehicle at the Dewas facility, Rs 43.96 crore invested in the subsidiary for machinery and a vehicle at Pithampur, Rs 24.12 crore invested in the subsidiary to repay or prepay loans, and the balance for general corporate purposes (capped at 25% of gross proceeds).

This was a main board issue on BSE and NSE, not an SME issue, but with revenue of about Rs 140 crore the business is close in size to many SME companies. The Draft Red Herring Prospectus is dated 30 March 2026 and the Red Herring Prospectus 17 September 2026. Bidding ran from 23 to 25 September 2026, and the shares listed on 30 September 2026.

Four years in numbers

Rs crore unless statedFY23FY24FY25FY26
Revenue from operations (Rs crore)103.55124.53133.89139.94
EBITDA margin13.69%23.84%23.17%27.66%
Profit after tax (Rs crore)6.4214.5318.1426.16
Cash from operations (Rs crore)(23.41)19.9420.3129.41
Inventory days / creditor days106 / 59131 / 51137 / 37135 / 42
Total debt, incl. lease liabilities (Rs crore)93.6282.1165.0352.65
Top 10 customers' share of product sales72.76%68.61%65.91%60.86%
United States share of product salesn.a.71.93%66.68%53.76%

Restated consolidated figures converted from Rs million to Rs crore. FY24 to FY26 from the Abridged Prospectus of the Red Herring Prospectus dated 17 September 2026; FY23 from the Abridged Prospectus of the Draft Red Herring Prospectus dated 30 March 2026, which also had a six-month stub to 30 September 2025 not shown here. Brackets mean a negative figure. n.a.: not disclosed for that year. Inventory and creditor days are the company's own KPI figures.

The deeper read

What most readers miss.

  1. 01

    Cash conversion: 70% of EBITDA after FY23

    On our arithmetic from the abridged prospectus, cash from operations over FY24 to FY26 added up to Rs 69.65 crore against EBITDA of Rs 99.41 crore, a conversion of 70% (69.65 divided by 99.41). The DRHP-stage abridged prospectus, which covered FY23, showed cash from operations of minus Rs 23.41 crore that year against EBITDA of Rs 14.17 crore; by the RHP the three-year window had moved and FY23 was no longer in the main table.

    How an investor reads it. An investor reads profit and cash flow side by side, and reads the year that dropped out of the window together with the three that remain.

    In your company: calculate cash from operations divided by EBITDA for each of the last four years now, and write one line explaining any year below 60%, because the window you file in decides which years an investor sees.

  2. 02

    Inventory days up, supplier credit days down

    Inventory days were 106 in FY23, 131 in FY24, 137 in FY25 and 135 in FY26, while creditor days (how long the company takes to pay suppliers) went from 59 to 51, 37 and 42. So stock was held longer while suppliers financed a smaller part of it.

    How an investor reads it. With over 5,000 SKUs and export shipments, long inventory is part of the model, and an investor checks whether it grows faster than sales and who funds it.

    In your company: track inventory, debtor and creditor days every quarter and set a target for each; on Rs 140 crore of revenue, each 10 days of inventory is roughly Rs 3.8 crore of cash (140 x 10 divided by 365).

  3. 03

    95% or 87%: the denominator decides

    The document says over 95% of product sales were exports, and both figures are correct: FY26 export revenue of Rs 121.24 crore was 95.39% of sale of products (Rs 127.11 crore, export plus domestic Rs 5.87 crore) but 86.64% of revenue from operations (Rs 139.94 crore). The gap of Rs 12.83 crore is operating revenue other than product sales, 9.2% of revenue and about a third of FY26 EBITDA of Rs 38.71 crore; the abridged prospectus does not break it down.

    How an investor reads it. A careful reader recomputes every percentage on total revenue and then asks what the remaining operating revenue is and whether it repeats.

    In your company: state the denominator next to every percentage in your MIS (management information system) and split other operating revenue (export incentives, scrap, services) by line, so the bridge is ready before an analyst asks.

  4. 04

    Diversification happened below the top five

    The United States share of product sales fell from 71.93% in FY24 to 53.76% in FY26, the top 10 customers' share fell from 72.76% in FY23 to 60.86%, and customers served rose from 130 in FY24 to 185 in FY26. But the top 5 customers still gave 48.91% in FY26 against 47.33% in FY24, and repeat customers were 59.46% of the base in FY26 against 66.89% in FY25 as new customers came in.

    How an investor reads it. An investor reads concentration at three levels, top 5, top 10 and country, and here sees that the widening came from mid-sized accounts and new geographies rather than from the largest buyers.

    In your company: report concentration at all three levels every year and set a separate target for each, because a falling top 10 share alone can hide an unchanged dependence on the top five.

Use it in your company

Three things to do before your own filing.

  1. Refresh object costs before the RHPThe three named objects added up to Rs 74.00 crore in the DRHP and Rs 87.98 crore in the RHP, 18.9% higher by the RHP stage. Get machinery quotations with validity dates that cover your expected RHP date, and refresh them before the final document.
  2. Keep a live tax litigation registerThe RHP listed 25 tax matters involving the company (Rs 2.00 crore) and 6 involving the subsidiary (Rs 2.58 crore), together 3.6% of FY26 net worth of Rs 128.63 crore on our arithmetic; the company count was 23 at the DRHP stage. Keep one register of every notice, its amount and its stage, and resolve small matters before filing.
  3. Show which entity spends the moneyOf the Rs 87.98 crore of named objects, Rs 68.08 crore (77%) went into the subsidiary for its plant and its loans. Draw a one-page chart of which company owns each plant, loan and contract, and simplify it before filing so the uses of the money are easy to follow.

How the document presented it

  • A narrow niche, defined preciselyThe document described the company in one line as a maker of propeller shafts and torque-transmission components, then supported that line with the SKU count, the in-house processes and the three facilities.
  • The customer base as a KPIIt reported customers served and repeat customers for each year, so a reader could see the base grow from 130 to 185 customers over three years.
  • Export reliance stated in numbersIt gave domestic and export revenue separately and the United States share of product sales, and listed reliance on exports, especially to the United States, first among its risk factors.

The offer document put vertical integration at the centre, showing forging, machining, heat treatment, assembly, balancing and testing done in-house, and export reach across more than 32 countries. It reported operating KPIs (key performance indicators) next to profit: customers served, repeat customers, export and domestic revenue, and inventory, debtor and creditor days.

Sources: Abridged Prospectus of the Red Herring Prospectus dated 17 September 2026, hosted on the SEBI website (sebi.gov.in, common documents, September 2026): business description, shareholding, offer structure, objects, restated financial summary including cash flows, KPIs, customer concentration, United States share and litigation summary. Abridged Prospectus of the Draft Red Herring Prospectus dated 30 March 2026, hosted on the SEBI website (sebi.gov.in, common documents, April 2026): FY23 figures, the six-month stub and the objects as first filed. Draft Red Herring Prospectus dated 30 March 2026, NSE archives (nsearchives.nseindia.com): company history and industry report reference (CareEdge Research, 30 March 2026). The full Red Herring Prospectus could not be read beyond its opening pages for this review. The listing date of 30 September 2026 was located through press reports (Chittorgarh, Groww) and should be checked against the BSE and NSE listing notices.

This review is general commentary for promoters on how a company's offer document presented its business. It is not a research report, not investment advice and not a recommendation to buy, sell or hold any security. Mansukhbhai Management Services Pvt. Ltd. is not registered with SEBI as a research analyst or investment adviser. Company names are used only to identify the issuer; no connection with, or endorsement by, the company is implied.

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