BSE SME IPO: Shayona Engineering: A 22 person foundry seeks Rs 56 cr Valuation

Shayona Engineering Ltd. entered the customized casting business in 2010, carving out a niche in an industry where specialization typically trumps breadth. The company manufactures precision metal, rubber, and plastic parts across a wide weight spectrum—from components weighing just a few grams using lost wax investment casting to single-piece castings of up to 1,500 kilograms through sand and centrifugal casting methods.

Operating from its Ahmedabad base, Shayona serves multiple industrial sectors including automobiles, pumps, valves, mining equipment, and power plants. Through strategic alliances with partner foundries, the company positions itself as a “one-stop shop” capable of handling diverse casting requirements that would normally require customers to work with multiple specialized vendors.

The business model extends beyond pure casting. Shayona offers machining services from basic turning and milling to advanced CNC operations, along with capabilities in dies and moulds, industrial automation, heavy fabrication, and reverse engineering. For the PVC pipe and tyre industries specifically, it provides turnkey solutions and professional consultation.

As of the offer document date, the company operates with 22 employees on its payroll—a notably lean structure for an operation claiming expertise across such varied manufacturing processes.

Financial Trajectory

The numbers show consistent upward movement. Total revenue climbed from ₹12.63 crore in FY23 to ₹15.28 crore in FY24, then jumped to ₹23.18 crore in FY25—a cumulative growth of 84% over two years. Net profit followed a steeper curve: ₹0.61 crore in FY23, ₹1.71 crore in FY24, and ₹2.42 crore in FY25.

The eight-month period ending November 2025 showed continued momentum, with revenues of ₹19.15 crore and net profit of ₹2.45 crore. Annualized, that projects to roughly ₹28.70 crore in revenue and ₹3.68 crore in profit for FY26—though such extrapolations assume seasonality doesn’t play a role.

Profitability metrics improved markedly. PAT margins expanded from a thin 4.81% in FY23 to 12.80% in the eight months through November 2025. Return on capital employed peaked at 37.92% in FY24 before moderating to 13.05% in the recent eight-month period. Average return on net worth over three years stood at 43.33%, suggesting efficient capital deployment when measured purely by accounting returns.

The company has paid no dividends across all reported periods, instead retaining earnings to fund growth and service debt.

The Leverage Question

Here’s where the narrative gets complicated. Shayona’s debt-to-equity ratio stands at 1.83 as of November 2025, while net debt to EBITDA sits at 5.52. For every rupee of equity, the company owes Rs 1.83 to lenders. More concerningly, it would take more than five years of current operating profits just to clear the net debt, assuming those profits weren’t needed for working capital, capex maintenance, or any other business requirement.

Shayona seeks to raise ₹14.86 crore by issuing 10.32 lakh equity shares at a price band of ₹140-144 per share. The issue represents 26.51% of post-IPO capital with promoters owning nearly three-quarters of equity.

Proceeds allocation reveals the company’s immediate priorities: Rs 3.79 crore for purchasing plant and machinery, ₹Rs 4 crore for working capital, and Rs 2.17 crore for debt prepayment or repayment. The remaining amount goes toward general corporate purposes.

Note that Rs 2.17 crore earmarked for debt reduction represents just 14.6% of gross proceeds—barely a meaningful reduction given the overall leverage levels.

At the upper price band, Shayona’s post-IPO market capitalization would be ₹56.05 crore, with paid-up equity capital expanding from ₹2.86 crore to ₹3.89 crore.

Valuation Metrics

The asking price yields a P/E ratio of 23.15 based on FY25 earnings of ₹2.42 crore. Using annualized FY26 numbers brings the multiple down to 15.25, though such annualization assumes the first eight months accurately represent the full year’s performance

Price-to-book value stands at 3.33 times pre-IPO NAV of ₹43.21, or 2.06 times post-IPO NAV of ₹69.93 per share. These multiples place Shayona at the upper end of typical valuations for small-cap manufacturing companies, particularly those carrying significant debt.

The offer document notes no listed peers for direct comparison.

Promoters acquired their shares at an average cost between Rs 7.50 and Rs 10 per share, representing a 14-19x markup to the IPO price. A pre-IPO placement in September 2024—just four months before the public offering—priced shares at Rs 90 making the IPO price a 60% premium over that recent transaction.

Risk Factors

Beyond leverage, several concerns merit attention. The company provides no visibility into customer concentration, despite mentioning long-term contracts with “major customers.” In B2B manufacturing, revenue concentration with one or two large buyers can create significant vulnerability.

Working capital dynamics remain opaque. The ₹4 crore allocation for working capital from IPO proceeds equals 27% of gross funds raised

The expansion plan’s success depends on factors beyond management’s control: customer contracts materializing as expected, new capacity ramping up efficiently, no quality issues during scale-up, and competitive dynamics remaining favorable. Any stumble on these fronts could undermine the growth thesis while debt service obligations remain fixed.

Capital intensity is inherent to the foundry business. The Rs 3.79 crore for machinery represents just one round of capex.

Issue Details