Aarvee Engineering Consultants Limited IPO

01At a glance

What the company does: infrastructure consultancy across the project lifecycle: feasibility studies, detailed project reports, pre-bid services, detailed design, project management, supervision, third-party inspection and lenders' engineering (DRHP p.25). It says it has undertaken over 2,750 projects in 20 countries, counting those of a proprietorship it acquired in 2007 (DRHP p.25).

Who pays it: government and government-related entities, 96.13% of FY25 revenue; the top ten clients were 57.40% (DRHP p.29). Railways and metro rail were 48.22% of FY25 revenue and overseas projects 12.50% (DRHP p.29).

Why it is raising money: ₹760.00 million to repay borrowings, ₹219.66 million to invest in the subsidiary SRA OSS, ₹348.10 million and ₹208.82 million to invest in overseas subsidiaries Aarvee Engineering Consultants Pty Ltd and Aarvee Associates Limited, and the rest for general purposes (DRHP p.26).

How fast it has grown: revenue from ₹4,381 million in FY23 to ₹5,170 million in FY24 and ₹5,671 million in FY25 (DRHP p.28).

The one thing to understand: steady, government-funded consulting work with improving margins, but cash tied up in receivables and guarantees. EBITDA margin rose from 11.13% to 16.65% over two years, while operating cash flow was negative ₹53.10 million in FY25 and bank guarantees outstanding were ₹1,670.20 million (DRHP p.30, DRHP p.93, DRHP p.162).

02The business, in plain words

An engineering consultancy is hired, mostly by government agencies, to plan and design infrastructure and then supervise contractors building it, charging fees under each contract.

A metro rail agency tenders general consultancy for a new line → Aarvee wins the contract → its engineers prepare designs and supervise the contractors on site → the agency pays fees as milestones are met, holding back retention money until completion.

It had 485 ongoing projects and 3,225 employees in FY25 (DRHP p.162).

Earnings equation: Profit ≈ fee income − engineer and staff cost − overheads − interest. EBITDA margin was 16.65% in FY25 (DRHP p.162).

03Where the money comes from

Source: DRHP p.29.

04The growth record

Source: DRHP p.28, DRHP p.93, DRHP p.162.

05What the growth is made of

Steady order inflow. New orders were ₹5,779 million in FY23, ₹6,271 million in FY24 and ₹6,771 million in FY25, and the order book grew from ₹14,309 million in FY23 to ₹17,630 million at March 2025 and ₹22,749 million at June 2025 (DRHP p.46, DRHP p.162). Overseas work doubled as a share of revenue over two years (DRHP p.29).

06Earnings quality

Operating cash flow over FY23 to FY25 was ₹504.44 million against profit of ₹1,105.31 million (our arithmetic, DRHP p.28, DRHP p.93). Taxes paid rose to ₹285.23 million in FY25 (DRHP p.93). Debtor days were 104 in FY23, 97 in FY24 and 100 in FY25, and net working capital days rose from 41 in FY23 to 84 in FY25 (DRHP p.162). Return on capital employed was 22.09%, 30.21% and 34.54% (DRHP p.162). Clients retain part of the fees until projects are completed (DRHP p.30).

07The balance sheet

Source: DRHP p.28, DRHP p.162. Contingent liabilities at March 2025 included ₹1,670.20 million of guarantees outstanding and ₹67.32 million of disputed GST input credit (DRHP p.30).

08What the money is for

Source: DRHP p.26. A pre-IPO placement of up to ₹405 million may be made before the RHP (DRHP p.26). SRA OSS India, a Telangana software company, was acquired on 31 December 2024 in exchange for the company's shares (DRHP p.459).

09Who is selling

Source: DRHP p.27, and the cover page. The shares offered are about 15.7% of the company's equity (our arithmetic). The average cost of the seller's shares is ₹0.26 each (DRHP p.32).

10Promoters

The DRHP names Venkatachala Chakrapani Redla and Sneha Redla as promoters (DRHP p.27); the December 2025 addendum adds Redla Nagarjun (addendum, page 2). Venkatachala Chakrapani Redla was paid ₹42.00 million a year in FY23 to FY25 (DRHP p.31). In FY25 the company paid ₹126.38 million to Nirmala Kola, a promoter-group member, as consideration for acquiring subsidiaries, and owed ₹77.09 million to Nirmala Kola in loans at March 2025 (DRHP p.31, DRHP p.32).

11Who already owns it

Source: DRHP p.27. The last row is our arithmetic.

12What changed just before the IPO

• Share allotment: in March 2025 the promoters were allotted 32,408,400, 1,794,000 and 1,008,000 shares at no cost, as share capital rose from ₹60 million to ₹420 million (DRHP p.28, DRHP p.33).
• Acquisitions: SRA OSS acquired in December 2024; subsidiaries acquired from a promoter-group member in FY25 (DRHP p.31, DRHP p.459).
• Promoters: Redla Nagarjun reclassified as a promoter by the December 2025 addendum (addendum, page 2).
• Bonus: the March 2025 allotment was a bonus issue of 36,000,000 shares, six for every one held, on 29 March 2025, and was the last allotment before the offer (DRHP p.117).
• Public company: the company was converted into a public company in February 2025, the registrar issuing a fresh certificate of incorporation on 6 February 2025 (DRHP p.3).
• Auditor: there has been no change of statutory auditor in the three years before the filing (DRHP p.99).

13Capacity and expansion

Capacity is engineers: 3,225 employees in FY25, with attrition down to 12.26% (DRHP p.162). The proceeds fund two overseas subsidiaries and the software subsidiary (DRHP p.26).

14Market size and industry structure

The ICRA report cited in the offer document describes infrastructure capital spending as central to India's growth (DRHP p.25). The summary read gives no market-size figures.

15Competitive position

What the document claims, and what it rests on:

• Full-lifecycle services from feasibility to supervision (DRHP p.25).
• A diversified order book across 485 projects and many states (DRHP p.47, DRHP p.162).

Against that: dependence on government clients, on railways and metro, on tenders, on staff, and on guarantees and retention money (DRHP p.29, DRHP p.30).

16Peers the company named

Source: DRHP p.28, DRHP p.161, DRHP p.162. The company figure is return on equity from the KPI table. The peers' average P/E is 26.58 (DRHP p.160).

No P/E is possible for the company until a price band is set.

17Risks, in plain words

• Government. 96% of FY25 revenue (DRHP p.29).
• Railways and metro. Nearly half of revenue (DRHP p.29).
• Overseas. 12.5% of revenue and growing (DRHP p.29).
• Guarantees. Performance guarantees can be invoked (DRHP p.30).
• Retention. Clients hold back money until completion (DRHP p.30).

18Litigation and regulatory matters

Source: DRHP p.28, DRHP p.29.

19Related-party transactions

Beyond the payments to Nirmala Kola and the promoter's remuneration, a subsidiary, Nag Infrastructure Consulting Engineers, has an unsecured 12% loan of ₹70.00 million from Nirmala Kola (DRHP p.72).

20What the offer document does not say

In the sections read for this study, the document does not give:

• Which subsidiaries were acquired from Nirmala Kola, and how the ₹126.38 million price was set, in the pages read.
• What the overseas subsidiaries will do with ₹556.92 million (our arithmetic), in the pages read.
• Why FY25 operating cash flow turned negative, in the pages read.
• Who the top ten clients are, in the pages read.
• The price band, lot size or issue dates, which is normal at DRHP stage.

21Five questions for management

1. Which subsidiaries were bought from a promoter-group member, and on what valuation?
2. Why does a software subsidiary acquired for company shares need ₹219.66 million?
3. What will the two overseas subsidiaries spend ₹556.92 million on?
4. How much retention money is held back by clients?
5. Why was Redla Nagarjun added as a promoter after filing?

1Sources and cited facts

This study was read from 1 document the company filed. The 56 figures it cites are listed under the document each came from, with the page and the sentence as printed.