Lalbaba Engineering Limited IPO

01At a glance

What the company does: develops and makes high-performance seamless tubes, precision forgings and integrated rail systems for railways, automotive, energy and industrial customers (DRHP p.28). The CRISIL report it cites ranks it India's largest maker of cold-finished seamless tubes by installed capacity as of August 2025 (DRHP p.28).

Who pays it: wagon builders, rail system integrators, automotive tier-1 suppliers and public-sector undertakings; the railway sector was 62.96% of FY25 revenue and Indian Railways and its entities directly 23.18% (DRHP p.28, DRHP p.32). The top ten customers were 41.92% (DRHP p.32).

Why it is raising money: ₹2,711.96 million to expand the Haldia facility, ₹2,090.00 million to repay borrowings, and the rest for general purposes (DRHP p.29).

How fast it has grown: revenue from ₹3,433 million in FY23 to ₹5,995 million in FY24 and ₹7,716 million in FY25 (DRHP p.30).

The one thing to understand: fast growth from railways funded largely by debt. The rail systems vertical rose from 29.18% to 45.19% of revenue in two years, while operating cash flow totalled ₹259.31 million against ₹833.14 million of profit and net debt reached 1.41 times equity (DRHP p.32, DRHP p.145, DRHP p.402, our arithmetic).

02The business, in plain words

An engineering manufacturer makes precision steel tubes and forged components and assembles rail systems, selling to vehicle and wagon makers and to the railways under orders and contracts.

A wagon builder winning a railway order needs rail systems → it orders them from Lalbaba → Lalbaba makes and assembles them → it delivers to the wagon plant and is paid on credit.

Earnings equation: Profit ≈ tonnes and units supplied × (price − steel and processing cost) − interest. Gross margin was 41.80% and EBITDA margin 12.63% in FY25 (DRHP p.145).

03Where the money comes from

Source: DRHP p.32.

04The growth record

Source: DRHP p.30, DRHP p.145, DRHP p.146, DRHP p.402.

05What the growth is made of

Railway demand. Rail-systems revenue rose from about ₹1,002 million in FY23 to about ₹3,487 million in FY25, while tubular revenue grew more slowly (our arithmetic, DRHP p.30, DRHP p.32). EBITDA nearly tripled over the two years (DRHP p.145).

06Earnings quality

Operating cash flow was ₹259.31 million over FY23 to FY25 against ₹833.14 million of profit (our arithmetic, DRHP p.30, DRHP p.402). The cash conversion cycle was 82 days in FY25 (DRHP p.145). Trade receivable days were 38 in FY23, 48 in FY24 and 63 in FY25 (DRHP p.60). "Other matters" include joint applications with directors before the Registrar of Companies, West Bengal, for adjudication of penalties (DRHP p.32).

07The balance sheet

Source: DRHP p.30. Net debt was 1.41 times equity and 2.67 times EBITDA at March 2025 (DRHP p.145).

08What the money is for

Source: DRHP p.29.

09Who is selling

Source: DRHP p.29. The last row is our arithmetic. Together they offer shares worth up to ₹3,700 million; the split was not read for this study (DRHP p.28).

10Promoters

The promoters are LBIC Engineering Private Limited, Kishan Dhanuka, Amit Dhanuka, Nikunj Dhanuka and Nishit Dhanuka (DRHP p.28). The promoters and promoter group own all the shares (DRHP p.30).

11Who already owns it

Source: DRHP p.29. The second row is our arithmetic.

12What changed just before the IPO

• Share split: ₹10 shares split into two ₹5 shares in July 2025 (DRHP p.31).
• Railways: Indian Railways' direct share up from 6% to 23% in two years (DRHP p.32).
• Debt: borrowings more than doubled from FY23 (DRHP p.30).
• Last allotment: shares allotted in March 2025 under the Composite Scheme of Arrangement, for consideration other than cash (DRHP p.116).
• Auditor: Surana Naveen Vikash & Co resigned in December 2022 and Singhi & Co was appointed statutory auditor (DRHP p.100).
• Pre-IPO placement: the company may undertake one before the red herring prospectus, at a price not yet decided (DRHP p.2).
• Company form: the company became a public limited company in February 2025 (DRHP p.420).

13Capacity and expansion

The proceeds fund an expansion of the Haldia facility (DRHP p.29). Capacity figures were not read for this study.

14Market size and industry structure

The CRISIL report cited in the offer document estimates India's cold-finished tube market at 3.0 million tonnes in FY2025 and projects 4.1 to 4.6 million tonnes by FY2030, and expects rolling-stock demand to rise to about 520,000 units by FY2030 (DRHP p.28). Those projections are CRISIL's, and newboard has not tested them.

15Competitive position

What the document claims, and what it rests on:

• Scale in cold-finished seamless tubes, citing CRISIL (DRHP p.28).
• A higher gross margin than most listed peers in FY25 (DRHP p.145).

Against that: dependence on two verticals and on railway spending, quality penalties, and debt (DRHP p.32, DRHP p.33).

16Peers the company named

Source: DRHP p.145. The table also lists Tube Investments of India, Good Luck India and Frontier Springs (DRHP p.145). The peers' P/E ranges from 21.73 to 96.42, average 44.16 (DRHP p.141).

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

17Risks, in plain words

• Two verticals. Tubes and rail systems are 87% of revenue (DRHP p.32).
• Railways. 63% of revenue from one sector (DRHP p.32).
• Government contracts. Budget cuts could hit orders (DRHP p.32).
• Customers. Ten customers were 42% of revenue (DRHP p.32).
• Quality. Penalties and recalls for failures (DRHP p.33).

18Litigation and regulatory matters

Source: DRHP p.31, DRHP p.32.

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 LBIC Engineering is and who owns it, in the pages read.
• Why operating cash flow is so far below profit, in the pages read.
• What the ROC penalty applications concern, in the pages read.
• Haldia capacity before and after expansion, in the pages read.
• The price band, lot size or issue dates, which is normal at DRHP stage.

21Five questions for management

1. Why has operating cash flow been a third of profit?
2. How much of the railway revenue depends on wagon-building orders that could slow?
3. What will the Haldia expansion add, and for which products?
4. Who owns LBIC Engineering, and why is it selling?
5. What are the ROC penalty matters involving directors?

1Sources and cited facts

This study was read from 1 document the company filed. The 61 figures it cites are listed under the document each came from, with the page and the sentence as printed.