Milestone Gears Limited IPO

01At a glance

What the company does: manufactures precision transmission components, bull gears, transmission gears and shafts, rear axles and internal ring gears, for tractors, construction equipment, electric vehicles, locomotives and windmills; those product groups were 91.78% of product sales in the June 2025 quarter (DRHP p.26, DRHP p.30). Its plants are in northern India, largely on leased land (DRHP p.31).

Who pays it: vehicle and equipment makers: tractors were 83.30% of product sales in the June quarter, the top ten customers 92.96% and the top three 46.42% (DRHP p.36, DRHP p.141). The 1Lattice report it cites says it supplied all top nine Indian tractor makers between April 2022 and June 2025 (DRHP p.26). Exports were 10.94% (DRHP p.142).

Why it is raising money: ₹3,568.59 million to repay borrowings and interest, ₹2,964.21 million for a greenfield project, and the rest for general purposes (DRHP p.27).

How fast it has grown: it has not: revenue fell from ₹6,129 million in FY23 to ₹5,333 million in FY24 and ₹5,302 million in FY25, and was ₹1,680 million in the three months to June 2025 (DRHP p.28).

The one thing to understand: a debt-heavy supplier to the tractor industry. Net debt was 3.10 times equity at June 2025 and the cash conversion cycle 199 days; the offer's largest single use is repaying debt (DRHP p.27, DRHP p.141).

02The business, in plain words

A gear maker buys alloy steel and makes it into gears, shafts and axles to each tractor or equipment maker's drawing, and supplies them to the assembly line under purchase orders.

A tractor maker schedules production of a model → it orders bull gears and rear axles from Milestone Gears → the company makes them from alloy steel → it ships them to the tractor plant and is paid on credit.

Raw materials were 48.06% of total expenses in the June quarter, and three suppliers provided 80.00% of purchases (DRHP p.30).

Earnings equation: Profit ≈ components sold × (price − alloy-steel and machining cost) − interest. EBITDA margin was 18.91% in the June quarter (DRHP p.141).

03Where the money comes from

Source: DRHP p.36, DRHP p.141, DRHP p.142. Q1 FY26 is three months.

04The growth record

Source: DRHP p.28, DRHP p.141, DRHP p.393. Q1 FY26 is three months.

RoCE was 12.23% in FY25 (DRHP p.141). Other income was ₹167.20 million in FY25, against profit before tax of ₹265.48 million (DRHP p.88). Trade receivable days were 84 in FY23 and 97 in FY25 (DRHP p.52). Contingent liabilities, all income tax and GST litigation not acknowledged as claims, were ₹67.18 million at June 2025 (DRHP p.31).

05What the growth is made of

Margin, not volume. Revenue fell 13.5% from FY23 to FY25 while EBITDA rose 25% as margin climbed from 12.53% to 18.16% (our arithmetic, DRHP p.141). The document itself lists falling revenue alongside rising profit among its top ten risks (DRHP p.31). Exports fell from 15.06% of product sales to 9.43% (DRHP p.142).

06Earnings quality

Operating cash flow has been positive each year, ₹1,492.96 million from FY23 to June 2025 against ₹522.10 million of profit, but capital spending of ₹1,952.93 million over the same period absorbed it (our arithmetic, DRHP p.28, DRHP p.142, DRHP p.393). The cash conversion cycle lengthened from 132 days in FY23 to 223 days in FY25 (DRHP p.141). Cash and equivalents were ₹0.39 million at June 2025 (DRHP p.393).

07The balance sheet

Source: DRHP p.28, DRHP p.29, DRHP p.141.

08What the money is for

Source: DRHP p.27. The company has already spent ₹82.65 million on land for the greenfield project (DRHP p.27).

09Who is selling

Source: DRHP p.27, DRHP p.28. Together they offer shares worth up to ₹3,000 million; the split was not read for this study (DRHP p.26). The cover page gives it: ₹1,750.00 million by Ashok Kumar Tandon, ₹500.00 million by Aman Tandon, and ₹250.00 million each by Amit Tandon, Aradhna Tandon and Gagandeep Kaur Chawla, beside a fresh issue of up to ₹8,000.00 million (DRHP p.3).

10Promoters

The promoters are Ashok Kumar Tandon and Aman Tandon (DRHP p.26). Two tax proceedings involving ₹14.03 million are pending against directors (DRHP p.29). The same two direct-tax proceedings are listed against the promoters (DRHP p.409). Managerial remuneration to Ashok Kumar Tandon and Aman Tandon was ₹28.02 million in FY23 and ₹16.32 million in FY25 (our arithmetic, DRHP p.31).

11Who already owns it

Source: DRHP p.27, DRHP p.28.

12What changed just before the IPO

• Share structure: a five-for-one split and a five-for-one bonus issue, approved in September 2025 (DRHP p.29).
• Margins: EBITDA margin above 18% since FY25 (DRHP p.141).
• Capex: ₹755.94 million spent in FY25 (DRHP p.142).
• Split and bonus: the ₹10 shares were sub-divided into ₹2 shares, and bonus shares in the ratio 5:1 were allotted on 15 September 2025 (DRHP p.102).
• Public company: converted from a private limited company, with a fresh certificate dated 7 October 2025 (DRHP p.3).
• Auditor: there was no change in the statutory auditors in the three years before the filing (DRHP p.95).

13Capacity and expansion

Manufacturing is concentrated in northern India on largely leasehold land (DRHP p.31). The proceeds fund a greenfield project (DRHP p.27).

14Market size and industry structure

The 1Lattice report cited in the offer document puts India's tractor market at ₹1,250.8 billion in FY2025 and projects ₹2,060.8 billion by FY2030, and construction equipment at ₹898.9 billion rising to ₹1,732.5 billion (DRHP p.26). Those projections are 1Lattice's, and newboard has not tested them.

15Competitive position

What the document claims, and what it rests on:

• Supplier to every top-nine tractor maker in India, citing 1Lattice (DRHP p.26).
• End-to-end manufacturing with a flexible production set-up (DRHP p.26).

Against that: dependence on tractors and ten customers, no binding purchase commitments, three steel suppliers for most purchases, and export-scheme obligations (DRHP p.30, DRHP p.31).

16Peers the company named

The document gives the listed peers' P/E range as 23.67 to 69.93, average 43.37, using prices on 11 November 2025 (DRHP p.139). The peer names were not read for this study.

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

17Risks, in plain words

• Customers. Ten customers were 93% of product sales (DRHP p.30).
• Products. Four product groups were 92% (DRHP p.30).
• Suppliers. Three suppliers provide 80% of purchases, without long-term contracts (DRHP p.30).
• Tractors. 83% of product sales, a seasonal market (DRHP p.30).
• Exports. Tariff and scheme risks (DRHP p.30, DRHP p.31).
• Revenue. Down since FY23 (DRHP p.31).

18Litigation and regulatory matters

Source: DRHP p.29.

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 revenue fell from FY23 to FY24, in the pages read.
• What the greenfield plant will make and what capacity it adds, in the pages read.
• Why the cash conversion cycle reached 223 days, in the pages read.
• The share capital figure in consistent units: the summary table shows "30,000,000" in a column headed ₹ million (DRHP p.28).
• The price band, lot size or issue dates, which is normal at DRHP stage.

21Five questions for management

1. Why did revenue fall 13% in FY24, and which customers bought less?
2. What lifted EBITDA margin from 13% to 18% in FY25?
3. What will the greenfield plant make, and for which customers?
4. Why has the cash conversion cycle lengthened to over 200 days?
5. What happens to interest cost after ₹3,569 million of debt is repaid?

1Sources and cited facts

This study was read from 1 document the company filed. The 63 figures it cites are listed under the document each came from, with the page and the sentence as printed.