Jerai Fitness Limited IPO

01At a glance

What the company does: makes strength-training equipment at its factory in Wada, Palghar, Maharashtra, and sources cardiovascular equipment from 12 third-party suppliers in Taiwan, South Korea and China, selling both under its own brand across 11 product series (DRHP p.28, DRHP p.44, DRHP p.125, DRHP p.189). Strength equipment was 77.95% of FY25 revenue (DRHP p.32).

Who pays it: commercial gyms, 60.77% of FY25 revenue, plus fitness chains and real-estate customers, across business, consumer and government sales (DRHP p.32, DRHP p.125). Exports were 7.70% of FY25 sales, to 14 countries (DRHP p.125).

Why it is raising money: it is not. The offer is entirely a sale by Rajesh Ramsukh Rai, Rinku Rajesh Rai and Rajesh Ramsukh Rai HUF, and the company receives no proceeds (DRHP p.29).

How fast it has grown: revenue of ₹1,154 million in FY23, ₹1,085 million in FY24 and ₹1,280 million in FY25 (DRHP p.30).

The one thing to understand: a profitable, lightly indebted maker of equipment that customers rarely replace. The document lists low repeat business among its top ten risks, and it holds large stocks: inventory days were 202 in FY25 and the cash conversion cycle 160 days (DRHP p.33, DRHP p.125).

02The business, in plain words

A gym-equipment maker cuts, welds and machines steel into strength-training equipment at its own factory, sources cardiovascular machines from overseas suppliers, and supplies both under one brand to gyms, fitness chains and real-estate customers.

A new gym orders its equipment → Jerai supplies strength machines from its Wada factory and cardio machines from its suppliers, all under the Jerai brand → the gym pays under a contract that typically carries warranty provisions (DRHP p.33).

The factory has capacity of 21,000 units a year and was used at 69.63% in FY25, when 13,842 strength units were sold (DRHP p.125).

Earnings equation: Profit ≈ units sold × (price − steel, parts and assembly cost) + traded cardio margin − overheads. EBITDA margin was 24.38% in FY25 (DRHP p.125).

03Where the money comes from

Source: DRHP p.32, DRHP p.125.

04The growth record

Source: DRHP p.30, DRHP p.125, DRHP p.271.

05What the growth is made of

Volume in FY25 after a dip in FY24. Strength units sold rose 26% in FY25 and utilisation from 60.22% to 69.63% (our arithmetic, DRHP p.125). EBITDA was about flat over three years while margin eased (DRHP p.125).

06Earnings quality

Operating cash flow was ₹564.96 million over FY23 to FY25 against profit of ₹606.48 million (our arithmetic, DRHP p.30, DRHP p.271). A lot of capital sits in stock: inventory days were 202, 240 and 186 in FY25, FY24 and FY23 (DRHP p.125). Receivable days were 7 (DRHP p.125). The industry report in the filing gives debtor days of 10 in FY23, 10 in FY24 and 7 in FY25 (DRHP p.173). The KPI table's profit figures differ slightly from the summary's, ₹234.01 million against ₹233.33 million for FY25, and ₹179.65 million against ₹180.35 million for FY24 (DRHP p.30, DRHP p.125).

07The balance sheet

Source: DRHP p.30.

08What the money is for

Source: DRHP p.29.

09Who is selling

Source: DRHP p.29. The offer is 25.10% of the company's shares (our arithmetic).

10Promoters

The promoters are Rajesh Ramsukh Rai and Rinku Rajesh Rai (DRHP p.28). The document says some promoter-group disclosures rely on public information because of an estranged promoter group, whose details are not disclosed (DRHP p.32). No proceedings are listed against the promoters (DRHP p.31). Remuneration and salary paid to the two promoters was ₹36.75 million in FY23 and ₹56.23 million in FY25 (DRHP p.34).

11Who already owns it

Source: DRHP p.29.

12What changed just before the IPO

• Volumes: strength units up 26% in FY25 (DRHP p.125).
• Debt: borrowings down to ₹14.85 million (DRHP p.30).
• Exports: fell back to 7.70% of sales, while the number of export countries doubled from 7 in FY23 to 14 (DRHP p.125).
• New plant: under construction next to the existing factory (DRHP p.44).
• Bonus issue: 7,500,000 shares in the ratio 3:4 in April 2022, the last allotment before the offer, at nil consideration (DRHP p.107).
• Auditor: Viren Gandhi & Co was appointed statutory auditor in September 2022, for five consecutive years (DRHP p.96).
• Pre-IPO placement: none is contemplated (DRHP p.37).
• Company form: the company became a public limited company in July 2022 (DRHP p.3).

13Capacity and expansion

One manufacturing facility, at Wada, Palghar, on a plot of 145,530.76 sq. ft., with 21,000 units of annual capacity (DRHP p.44, DRHP p.125). An additional plant next to it, using 107,804.33 sq. ft., is under construction; the company expects it to operate by Fiscal 2027 (DRHP p.44). No expansion is funded by the offer (DRHP p.29).

14Market size and industry structure

The Wazir report cited in the offer document puts India's fitness-equipment market at ₹2,500 crore in 2024 and projects ₹4,600 crore by 2029 (DRHP p.28). Those projections are Wazir's, and newboard has not tested them.

15Competitive position

What the document claims, and what it rests on:

• Its own brand across 11 series (DRHP p.28).
• In-house strength manufacturing (DRHP p.28).

Against that: dependence on one plant, commercial gyms and strength equipment, low repeat business, and product-liability risk (DRHP p.32, DRHP p.33, DRHP p.45).

16Peers the company named

None in India. The document says no Indian listed company is comparable and cites global listed companies such as Peloton Interactive instead (DRHP p.122).

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

17Risks, in plain words

• Brand. Its value depends on the "Jerai Fitness" name (DRHP p.32).
• Strength equipment. 78% of revenue (DRHP p.32).
• Commercial gyms. 61% of revenue (DRHP p.32).
• One plant. Disruption would halt output (DRHP p.33).
• Repeat business. Durable products are rarely replaced (DRHP p.33).

18Litigation and regulatory matters

Source: DRHP p.31.

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:

• Why inventory is held for over 200 days, in the pages read.
• Who the estranged promoter-group members are, which the document withholds (DRHP p.32).
• What the civil and regulatory claims against the company concern, in the pages read.
• Which of the 12 cardio suppliers matter most, and on what terms beyond purchase orders, in the pages read.
• The price band, lot size or issue dates, which is normal at DRHP stage.

21Five questions for management

1. Why does the company hold 200 days of inventory?
2. How exposed is the traded cardio range to tariffs on goods from Taiwan, South Korea and China?
3. Why are the promoters selling a quarter of the company now?
4. What are the six criminal proceedings the company has filed?
5. How does the company find new customers when existing ones rarely return?

1Sources and cited facts

This study was read from 1 document the company filed. The 59 figures it cites are listed under the document each came from, with the page and the sentence as printed.