Aggcon Equipments International Limited IPO

01At a glance

What the company does — an infrastructure equipment rental company with more than 22 years of operations, renting a fleet of 337 units at March 2025 across 27 states and five union territories, with logistics and ancillary services; contracts are typically short to medium term (DRHP p.27).

Who pays it — EPC contractors and infrastructure developers in roads, metro, industrial, irrigation and power projects (DRHP p.27). The top five customers were 45.92% of FY25 revenue and the largest 13.49% (DRHP p.42).

Why it is raising money — ₹1,680.03 million to repay borrowings, ₹840.35 million to acquire equipment, and the rest for general purposes (DRHP p.28).

How fast it has grown — revenue from ₹1,110 million in FY23 to ₹1,373 million in FY24 and ₹1,640 million in FY25 (DRHP p.29).

The one thing to understand — high operating margins, but a fleet doubled on borrowed money while utilisation and rental yields fell. The fleet grew from 166 to 337 units in two years, borrowings from ₹1,724.00 million to ₹3,815.78 million, and net debt to 3.79 times EBITDA, while average utilisation fell from 87.09% to 82.74% and the monthly rental yield from 3.76% to 3.22% (DRHP p.29, DRHP p.126).

02The business, in plain words

An equipment-rental company buys construction machines and rents them, often with logistics and support, to contractors who need them for a project but do not want to own them. It earns a monthly rent that must cover the machine's financing, depreciation and upkeep.

A road contractor wins a highway package → it rents excavators and pavers from Aggcon for the months of work → Aggcon moves the machines to site and supports them → the contractor pays monthly rent.

Earnings equation: Profit ≈ fleet value × monthly yield × utilisation × months − maintenance and logistics − depreciation − interest. The average blended monthly yield was 3.22% and utilisation 82.74% in FY25 (DRHP p.126).

03Where the money comes from

Source: DRHP p.42, DRHP p.126.

04The growth record

Source: DRHP p.29, DRHP p.76, DRHP p.126.

05What the growth is made of

A bigger fleet. Units rose 103% in two years while revenue rose 48%, as utilisation and yields fell (our arithmetic, DRHP p.126). Revenue grew 21.56% a year from FY23 to FY25 (DRHP p.27).

06Earnings quality

Operating cash flow of ₹1,607.41 million over FY23 to FY25 was above profit of ₹812.83 million, but the company spent ₹2,721.83 million on equipment and other fixed assets and ₹569.02 million on investment property in the same years (our arithmetic, DRHP p.76). Trade receivables doubled from ₹456.58 million to ₹913.32 million, more than 200 days of FY25 revenue (our arithmetic, DRHP p.74).

07The balance sheet

Source: DRHP p.29, DRHP p.126. Investment property on the balance sheet rose from ₹1.14 million to ₹244.23 million (DRHP p.74).

08What the money is for

Source: DRHP p.28.

09Who is selling

Source: DRHP p.28, DRHP p.71. The shares offered are about 10.4% of the company (our arithmetic). No shares were transacted in the year before the filing (DRHP p.36).

10Promoters

The promoters are Jitender Aggarwal and Renu Aggarwal, who hold 99.81% (DRHP p.28). In September 2020, SEBI imposed a penalty of ₹0.2 million on both for creating artificial volume in the shares of Focus Industrial Resources Ltd; the penalty has been paid (DRHP p.30). One criminal proceeding and one civil proceeding are pending against the promoters (DRHP p.30).

11Who already owns it

Source: DRHP p.28. The last row is our arithmetic.

12What changed just before the IPO

• Fleet — 92 units added in FY25 (DRHP p.126).
• Customers — top-five share down from 78% to 46% in two years (DRHP p.42).
• Share capital — up from ₹12.91 million to ₹90.34 million in FY25 after a split and bonus shares (DRHP p.29).

13Capacity and expansion

Capacity is the fleet: 337 units at March 2025 (DRHP p.126). The proceeds fund ₹840.35 million of new equipment (DRHP p.28).

14Market size and industry structure

The industry report cited in the offer document sizes India's construction-equipment rental industry at ₹398.2 billion in FY2025, up from ₹237.6 billion in FY2019, and projects ₹643.8 billion by FY2030 (DRHP p.27). Those projections are the report's, and newboard has not tested them.

15Competitive position

What the document claims, and what it rests on:

• Track record — more than 22 years in equipment rental (DRHP p.27).
• Reach — operations in 27 states and five union territories (DRHP p.27).
• Margins — EBITDA margin above 59% in each year (DRHP p.126).

Against that: rising leverage, falling yields and utilisation, slow collections and short rental contracts (DRHP p.27, DRHP p.74, DRHP p.126).

16Peers the company named

Source: DRHP p.125. The peers' average P/E is 16.38 (DRHP p.124).

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

17Risks, in plain words

• Debt. Net debt 3.79 times EBITDA (DRHP p.126).
• Yields. Monthly rental yield down from 3.76% to 3.22% (DRHP p.126).
• Collections. Receivables of ₹913 million against ₹1,640 million of revenue (DRHP p.29, DRHP p.74).
• Customers. Top five were 46% of FY25 revenue (DRHP p.42).
• Promoter record. A SEBI penalty for artificial trading volume in another company's shares (DRHP p.30).

18Litigation and regulatory matters

Source: DRHP p.30. One civil case is counted against both the company and the promoters (DRHP p.30).

19Related-party transactions

Not read in detail for this study.

20What the offer document does not say

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

• What the investment property is, or why ₹569.02 million was spent on it, in the pages read.
• How much of the receivables are overdue, in the pages read.
• What the 96 criminal cases filed by the company concern, in the pages read.
• What the criminal proceeding against the promoters concerns, in the pages read.
• The price band, lot size or issue dates, which is normal at DRHP stage.

21Five questions for management

1. Why have rental yields fallen for two years?
2. What is the investment property, and how does it serve the rental business?
3. How much of the ₹913 million of receivables is more than six months old?
4. How much debt will remain after ₹1,680 million is repaid?
5. What controls prevent a repeat of the conduct penalised by SEBI in 2020?

1Sources and cited facts

This study was read from 1 document the company filed. The 27 figures it cites are listed under the document each came from, with the page and the sentence as printed.