Vruddhi Engineering Works Limited IPO
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Vruddhi Engineering Works IPO

Vruddhi Engineering Limited is coming up with an IPO worth INR 4.76 crores, consisting of a fresh issue of 6.80 lakh shares. The company plans to use the funds raised to meet the working capital requirements and general corporate purposes.

Vruddhi Engineering Works Limited IPO – Important Dates

Vruddhi Engineering IPO DateMarch 26, 2024 to March 28, 2024
Vruddhi Engineering IPO Listing DateApril 3, 2024
Vruddhi Engineering IPO PriceINR 66 to 70 per share
Vruddhi Engineering IPO Lot Size2000 Shares
Vruddhi Engineering IPO Total Issue SizeINR 4.76 crores
Vruddhi Engineering IPO Basis of AllotmentApril 1, 2024
Vruddhi Engineering IPO Initiation of RefundsApril 2, 2024
Vruddhi Engineering IPO Credit of Shares to DematApril 2, 2024
Vruddhi Engineering IPO Issue TypeBook Built Issue IPO
Vruddhi Engineering IPO Listing AtBSE SME

Vruddhi Engineering IPO – Company Profile

The company mainly offers mechanical splicing solutions to the real estate, construction, and infrastructure industries by designing, engineering, and supplying rebar couplers. The company’s offering under this vertical includes 

(a) supply of rebar couplers as per the customer’s needs; 

(b) on-site threading services of the couplers and 

(c) trading in threading machines and spares. 

The company believes it offers end-to-end mechanical splicing solutions from design, manufacturing, testing, logistics, and rebar threading. The company believes that the rebar couplers offered by the company are an alternative to the conventional splicing methods followed in the construction industry.

Vruddhi Engineering Works IPO Review

ParticularAs of 31 March 2021As of 31 March 2022As of 31 March 2023
Revenue (₹ in lakhs)0.44220.651,307.69
Equity (₹ in lakhs)0.129.56212.12
Expenses (₹ in lakhs)1.32208.051,208.19
Profit and Loss After Tax (₹ in lakhs)(0.88)9.4475.53
Diluted EPS only (₹)(0.55)5.9015.17
Return on Net Worth (%)(733.33%)98.74%35.51%
NAV per Equity Share (₹)1.2095.62683.34
Total Assets (in lakhs)3.03100.14782.33
Total Liabilities (in lakhs) 2.9090.58570.21
Debt Equity Ratio (in times) 1.0041.489.12
Current Ratio (in times) 4.491.411.26
Inventory Turnover Ratio (in times) (0.02)104.5655.33

Vruddhi Engineering IPO Fundamental Analysis

Vruddhi Engineering Works witnessed substantial growth from 2021 to 2023. Revenue surged from ₹0.44 lakhs to ₹1,307.69 lakhs, while equity expanded from ₹0.12 lakhs to ₹212.12 lakhs. Expenses rose gradually, and profitability saw significant improvement, reflecting enhanced operational efficiency and investor confidence.

Revenue Growth

The company experienced significant revenue growth over the three-year period. Starting at ₹0.44 lakhs in 2021, revenue surged to ₹220.65 lakhs in 2022 and then to ₹1,307.69 lakhs in 2023, indicating consistent and substantial expansion in income.

Expense Management

Expenses grew alongside revenue but at a slower rate. In 2021, expenses were ₹1.32 lakhs, rising to ₹208.05 lakhs in 2022, and further to ₹1,208.19 lakhs in 2023. This indicates the need for effective cost-management strategies to maintain profitability amidst revenue expansion.

Profitability Enhancement

The company’s profitability improved significantly over the three years. It started with a loss of ₹0.88 lakhs in 2021, turned to a profit of ₹9.44 lakhs in 2022, and then rose substantially to ₹75.53 lakhs in 2023, reflecting enhanced operational efficiency and revenue generation.

Earnings Per Share Growth

Diluted EPS showed consistent growth throughout the period. It began at (0.55) in 2021, increased to 5.90 in 2022, and then further to 15.17 in 2023, indicating improved shareholder earnings potential.

Return on Net Worth (RoNW) Improvement:

RoNW exhibited significant improvement over the three years. It started with a negative percentage (-733.33%) in 2021, then increased to 98.74% in 2022, and further to 35.51% in 2023, showcasing enhanced profitability relative to shareholder equity.

Net Asset Value (NAV) Increase

NAV per equity share saw substantial growth. Starting at ₹1.20 in 2021, it rose to ₹95.62 in 2022, and further to ₹683.34 in 2023, indicating increased asset value and potential investor returns.

Asset and Liability Expansion

Both total assets and liabilities experienced significant growth from 2021 to 2023. Total assets increased from ₹3.03 lakhs to ₹782.33 lakhs, while total liabilities rose from ₹2.90 lakhs to ₹570.21 lakhs, suggesting overall expansion and increased financial activity within the organization.

Debt Management

The debt-equity ratio fluctuated notably, from 1.00 in 2021 to 41.48 in 2022, and then to 9.12 in 2023, reflecting changes in the company’s debt financing strategies and financial leverage.

Liquidity Analysis

The current ratio declined gradually over the three years, from 4.49 in 2021 to 1.26 in 2023, indicating a slight decrease in liquidity. However, it remained above the critical threshold of 1, suggesting overall adequate liquidity.

Inventory Efficiency

The inventory turnover ratio improved significantly over the period, from (0.02) in 2021 to 104.56 in 2022, and then to 55.33 in 2023, indicating better management of inventory and operational efficiency.

Vruddhi Engineering Works Limited IPO Peer Comparison

Vruddhi Engineering Works Limited demonstrated strong financial performance, with a total revenue of ₹1,307.69 lakhs, EPS of ₹242.66, RoNW of 35.51%, and NAV per Equity Share of ₹683.30.

CompanyTotal Revenue (₹ in lakhs)Face Value (₹)EPS  (₹)RoNW (%)NAV per Equity Share (Basic) (₹)
Vruddhi Engineering Works Limited1307.6910242.6635.51%683.30
Shiv Aum Steels Limited49,592.701010.5314.95%70.40
SRU Steels Limited1,671.64100.875.26%11.09

Vruddhi Engineering IPO Objective

The main objective of Vruddhi Engineering’s IPO is to meet the working capital requirement by allocating INR 4 crores for incremental business needs in FY 2024. The remaining funds will support general corporate goals and initiatives, including strategic partnerships, branding, marketing, and client referral fees.

  1. To meet the working capital requirement: To support the incremental business requirements, the company requires additional working capital to fund its incremental working capital requirements in the Financial Year 2024. The company proposes to utilise INR 4 crores for the said purpose.
  1. General Corporate Purpose: The Company plans to deploy the balance funds towards the general corporate goals, including but not restricted to strategic initiatives, partnerships, joint ventures and strategic entity/business acquisitions, branding, marketing, and new client referral fees meeting exigencies.

Vruddhi Engineering Works IPO Risks And Challenges

Vruddhi Engineering’s risks include legal proceedings against the director, potentially impacting business and financial health. Limited expansion in Mumbai may hinder growth. Competitive product segments pose margin and profitability risks as operations scale.

  1. There is a direct and indirect case pending against the director of the company. The sum involved is INR 216.85 crores. Any adverse decision in such proceedings may have a material adverse effect on the business, results of operations, and financial condition.
  1. The operations of the company are significantly located in and around Mumbai and failure to expand the operations may restrict the growth and adversely affect the growth. 
  1. All of the product verticals are extremely competitive segments and the company faces the risk of competition affecting the margins and profitability.

Vruddhi Engineering IPO – Industry & Market Potential

By 2040, the real estate market will grow to ₹ 65,000 crore (US$ 9.30 billion) from ₹ 12,000 crore (US$ 1.72 billion) in 2019. The real estate sector in India is expected to reach US$ 1 trillion in market size by 2030, up from US$ 200 billion in 2021, and contribute 13% to the country’s GDP by 2025. Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for India’s growing needs.

India’s real estate sector saw over 1,700 acres of land deals in top eight cities in the first nine months of FY22. Foreign investments in the commercial real estate sector were at US$ 10.3 billion from 2017-2021. As of February 2022, developers expect demand for office spaces in SEZs to shoot up after the replacement of the existing SEZs act.

Vruddhi Engineering Works Limited IPO – Type of Offer

Vruddhi Engineering Limited is launching an IPO valued at INR 4.76 crores, comprising 6.80 lakh new shares. The company intends to allocate the proceeds towards meeting working capital requirements and general corporate purposes.

Vruddhi Engineering Works IPO Offer Size

The offer size of Vruddhi Engineering Limited’s IPO is INR 4.76 crores.  The net proceeds will be used to meet the working capital requirement.

Vruddhi Engineering IPO  Allotment Structure

Vruddhi Engineering’s allocation will be as follows: 50% for Qualified Institutional Buyers (QIB), 15% for Non-Institutional Investors (NII), and 35% for Retail Individual Investors (RII) according to SEBI regulations. A portion of the offer is reserved for market makers.

Qualified Institutional Buyers (QIB): As per SEBI regulations, 50% of the shares offered through the IPO will be reserved for Qualified Institutional Buyers. These include entities such as banks, mutual funds, and insurance companies.

 ● Non-Institutional Investors (NII): 15% of the shares will be reserved for Non-Institutional Investors. These typically include corporate bodies or individuals investing more than Rs.2 lakhs.

Retail Individual Investors (RII): The remaining 35% of the shares will be allotted to Retail Individual Investors. These individual investors apply for shares with a total value of less than Rs.2 lakhs. 

 ● Market Makers Reservations: A portion of the issue is reserved for market makers.

How to apply for a Vruddhi Engineering Works Limited IPO?

To apply for the Vruddhi Engineering IPO through Alice Blue, you would typically follow these steps:

Open a Demat and Trading Account: If you don’t have one already, you must