Defrail Technologies IPO: Unpacking the Details of This Upcoming SME Offering
Your comprehensive guide to understanding the Defrail Technologies IPO hitting the BSE SME board.
Introduction to Defrail Technologies Limited
In the dynamic landscape of the Indian SME sector, Defrail Technologies Limited is preparing to launch its Initial Public Offering (IPO). Incorporated in late 2023, the company has quickly established itself as a manufacturer of critical rubber components. Understanding the fundamentals of this offering—from its business model to its financials—is key for any prospective investor looking at SME listings. This book-building issue aims to raise capital primarily for equipment purchases and solar panel installation, marking a strategic move for future expansion.
**Core Business Operations and Strengths**
Defrail Technologies specializes in manufacturing a diverse range of rubber parts and assemblies, including hoses, profiles, and molded components. Its operational roots trace back to 1980 through its predecessors, culminating in the current entity in 2024. The company leverages a robust B2B framework, supplying essential materials across several core sectors.
**Key Business Segments & Manufacturing Footprint**
The company primarily serves the automotive, railways, and defense industries, providing both off-the-shelf items and tailor-made solutions.
- **Product Portfolio:** Includes diesel/petroleum hoses, LPG hoses, nylon tubes, gaskets, grommets, and various rubber profiles.
- **Manufacturing Hub:** Operates two ISO 9001:2015 certified plants located in Faridabad, Haryana.
- **Market Access:** Registered on the Government e-Marketplace (GeM), facilitating participation in government tenders.
**Competitive Advantages**
Several factors contribute to the company's market positioning:
- Management team possesses deep industry insight.
- Approved vendor status with RDSO, allowing access to the Indian Railways supply chain.
- In-house Research & Development and testing capabilities ensure quality control.
- Strong, established relationships with both suppliers and a diverse client base.
**IPO Specification Snapshot**
Defrail Technologies is launching a book-building issue on the BSE SME platform with a total issue size aggregating up to ₹14 Crores. It is an entirely fresh issue of 18.60 Lakhs equity shares.
**Key IPO Timeline (Tentative Schedule)**
| Event | Date |
|---|---|
| IPO Opens for Subscription | Friday, January 9, 2026 |
| IPO Closes for Subscription | Tuesday, January 13, 2026 |
| Finalization of Allotment | Wednesday, January 14, 2026 |
| Initiation of Refunds | Thursday, January 15, 2026 |
| Credit of Shares to Demat Account | Thursday, January 15, 2026 |
| Tentative Listing Date (BSE SME) | Friday, January 16, 2026 |
**Pricing and Investment Details**
- Face Value: ₹10 per share.
- Price Band: Set between ₹70 and ₹74 per share.
- Lot Size: Minimum bid quantity is 1,600 shares.
- Minimum Retail Investment (at upper band): ₹2,36,800 (for 2 lots of 3,200 shares).
- HNI Minimum Investment: ₹3,55,200 (for 3 lots/4,800 shares).
**Subscription Structure and Allocation**
The total issue size of 18,60,800 shares has specific reservations for different investor classes. Note the significant portion reserved for Anchor Investors prior to the public opening.
**Share Allocation Breakdown**
| Investor Category | Shares Offered | Percentage (%) |
|---|---|---|
| Qualified Institutional Buyers (QIB) | 8,73,600 | 46.95% |
| Retail Individual Investors (RII) | 6,24,000 | 33.53% |
| Non-Institutional Investors (NII) | 2,68,800 | 14.45% |
| Anchor Investors | 5,18,400 | 27.86% (of total shares considered before MM reservation) |
| Market Maker Reservation | 94,400 | 5.07% |
**Reviewing Company Financial Health**
Analyzing the restated consolidated financials gives crucial insight into the company's trajectory. The data indicates strong recent growth in key metrics.
**Financial Performance Snapshot (Amount in ₹ Crore)**
| Metric | 30 Sep 2025 (Interim) | 31 Mar 2025 | 31 Mar 2024 |
|---|---|---|---|
| Total Income | 39.08 | 62.22 | 0.72 |
| Profit After Tax (PAT) | 1.51 | 3.42 | 0.11 |
| Total Borrowing | 11.78 | 11.56 | 0.41 |
**Key Financial Ratios (KPIs as of Mar 31, 2025)**
Efficiency and Return Metrics:
- Return on Equity (ROE): 73.72%
- Return on Capital Employed (ROCE): 24.43%
- PAT Margin: 5.49%
Leverage and Valuation Metrics:
- Debt/Equity Ratio: 1.27 (Indicates moderate leverage)
- Price to Book Value: 4.19
**Valuation Comparison (Pre vs. Post IPO)**
Post-IPO figures reflect an increase in Equity per Share (EPS) based on projected earnings dilution:
- Pre-IPO EPS: ₹6.62
- Post-IPO EPS: ₹4.29
- Pre-IPO P/E Ratio: 11.18x
- Post-IPO P/E Ratio: 17.25x
**Ownership Structure and Fund Deployment**
**Promoter Stake Evolution**
The promoter group, comprising key individuals, is set to dilute their stake through this fresh issue.
| Holding Status | Percentage |
|---|---|
| Pre-Issue Promoter Holding | 100% |
| Post-Issue Promoter Holding | 73.52% |
The core promoters are Mr. Vivek Aggarwal, Mr. Abhishek Aggarwal, Ms. Ashi Aggarwal, and Mr. Dinesh Aggarwal.
**Objectives of the Fresh Issue**
The capital raised is earmarked for specific capacity augmentation and operational improvements:
| Purpose | Estimated Amount (₹ Cr.) |
|---|---|
| Purchase of Equipment/Machineries | 7.96 |
| Purchase and Installation of Solar Panel | 1.73 |
| General Corporate Purposes | To be Specified |
**Navigating the IPO Intermediaries**
The successful execution of the IPO relies on the roles played by the Lead Manager, Registrar, and Market Maker.
**Lead Manager and Registrar Details**
- Book Running Lead Manager: NEXGEN Financial Solutions Pvt. Ltd.
- Registrar to the Issue: Maashitla Securities Pvt.Ltd. (Contact: +91-11-45121795-96, investor.ipo@maashitla.com)
- Market Maker: Nikunj Stock Brokers Ltd. (Responsible for ensuring liquidity post-listing.)
**SWOT Analysis for Defrail Technologies**
A balanced view of the company's inherent capabilities and potential challenges is essential before making an investment decision.
Strengths (S)
- Strong vendor approval (RDSO) for Railways.
- Diversified product range serving multiple industrial clients.
- Experienced management team.
- In-house R&D capability.
Weaknesses (W)
- Relatively high total borrowing (Debt/Equity 1.27).
- Relatively small paid-up equity base post-IPO, potentially slowing migration path.
- Relatively recent incorporation of the current entity structure (2024).
Opportunities (O)
- Growth potential in infrastructure and defense sectors requiring rubber components.
- Investment in solar power aligns with sustainability trends.
- Expanding B2B relationships into higher volume contracts.
Threats (T)
- Volatility in raw material (rubber) prices.
- Competition from established players in the rubber component industry.
- Dependency on government procurement cycles (B2G segment).
**Key Takeaways for Investors**
The Defrail Technologies IPO presents an opportunity to invest in a specialized manufacturing firm with proven client relationships in critical sectors. While the recent financial performance shows positive momentum, careful consideration of the current valuation—which appears fully priced based on initial assessment—is necessary.
- This is an SME listing, implying higher inherent risk compared to Mainboard IPOs.
- The primary deployment of funds is aimed at enhancing manufacturing capacity.
- Investors should thoroughly review the Red Herring Prospectus (RHP) for the latest risk factors.
- For long-term wealth creation, assessing the company's ability to manage its existing debt while capitalizing on new machinery funded by this IPO will be vital.
**Contact Information**
Defrail Technologies Ltd. Corporate Address: Plot no 180, Sector 24, Sector 22, Faridabad, Haryana, 121005
Phone: 0129 - 487 8760
Email: cs@defrailtech.com