Laxmi Security (Gujarat) limited IPO

01At a glance

What the company does: supplies security guards, and with them manpower, cleaning and operations and maintenance services, to customer premises, holding private security agency licences under the Private Security Agencies (Regulation) Act, 2005 in Gujarat, Rajasthan, Madhya Pradesh, Haryana, Uttar Pradesh, Delhi and Jharkhand (DRHP p.111, DRHP p.32).

Who pays it: government entities, which were 99.76% of FY26 revenue, 100.00% of FY25 and 99.31% of FY24 (DRHP p.111). The largest customer was 15.12% of FY26 revenue and the top ten 74.47% (DRHP p.27).

Why it is raising money: up to ₹529.60 lakh towards a working capital requirement the company estimates at ₹2,013.42 lakh for FY27, and up to ₹393.13 lakh to repay borrowings (DRHP p.109).

How fast it has grown: revenue from ₹4,654.05 lakh in FY24 to ₹6,421.14 lakh in FY26, a compound rate of 17.5% a year, while profit fell from ₹296.78 lakh to ₹197.50 lakh, a compound rate of minus 18.4%, by our arithmetic (DRHP p.72).

The one thing to understand: the tax demands are large against the earnings. Contingent liabilities were ₹1,320.72 lakh at March 2026, by our arithmetic, including goods and services tax orders of ₹542.44 lakh and ₹552.67 lakh and a service tax demand of ₹122.00 lakh, against FY26 profit after tax of ₹197.50 lakh and net worth of ₹1,511.10 lakh (DRHP p.75, DRHP p.72, DRHP p.71).

02The business, in plain words

A government office, hospital, plant or public body puts out a tender for guards, cleaners or maintenance staff. Laxmi Security bids, posting a deposit of about 3% of the tender value; if it wins, it posts a further security deposit of about 5% to 10%, recruits and deploys the people, pays them monthly, and bills the customer (DRHP p.112). The people are the product: employee benefits expense was ₹5,439.79 lakh in FY26, 84.7% of revenue, by our arithmetic (DRHP p.72).

A government body floats a tender for guards or facility staff → Laxmi Security bids and posts deposits → it recruits and deploys people at the customer's premises → it is billed monthly, and is paid after the customer's process.

The company was incorporated on May 27, 2016 (DRHP p.94). It had 1,858 full-time employees on its payroll at March 31, 2026, split between on-site employees deployed at customer premises and office, business and support staff (DRHP p.170). Offices outside the registered office are held on lease (DRHP p.46).

Earnings equation: Profit ≈ billed man-months × rate per man-month − wages and statutory contributions − branch cost − interest. In FY26 employee benefits expense was ₹5,439.79 lakh and other expenses ₹640.60 lakh against revenue of ₹6,421.14 lakh, with finance cost ₹102.71 lakh (DRHP p.72).

03Where the money comes from

Source: DRHP p.27. No customer is named.

By service, security services were ₹5,135.63 lakh of FY26 revenue (79.98%), manpower services ₹545.99 lakh (8.50%), operations and maintenance ₹377.15 lakh (5.87%) and cleaning ₹361.75 lakh (5.63%); security services had been 50.25% of revenue in FY24 and cleaning 17.32% (DRHP p.31).

By customer type, government entities were 99.76% of FY26 revenue and other customers ₹15.32 lakh (DRHP p.111).

Revenue does depend on a few buyers, and on one buyer type almost entirely. Ten customers were 74.47% of FY26 revenue and, with one small exception, every rupee came from a government entity won through tender (DRHP p.27, DRHP p.111). The prospectus records the services each of the top ten buys, which range from security alone to combinations of security, manpower, cleaning and operations and maintenance (DRHP p.27, DRHP p.28).

04The growth record

Source: DRHP p.71, DRHP p.72, DRHP p.73, DRHP p.74. EBITDA, its margin, the PAT margin, net worth and borrowings are our arithmetic on those statements: EBITDA is profit before tax plus finance cost and depreciation less other income, net worth is share capital plus reserves, and borrowings add the long-term and short-term lines.

Revenue compounded at 17.5% a year from FY24 to FY26, and profit fell at 18.4% a year, by our arithmetic (DRHP p.72). Earnings per share, adjusted for the bonus issue, were ₹3.31 in FY24, ₹3.49 in FY25 and ₹1.96 in FY26 (DRHP p.73).

The margin, not the revenue, is what moved. Revenue rose 38.2% in FY26 while EBITDA fell 29.5%, by our arithmetic, because other expenses rose from ₹274.52 lakh to ₹640.60 lakh and employee benefits expense from ₹3,888.17 lakh to ₹5,439.79 lakh, and because other income fell from ₹102.86 lakh to ₹66.65 lakh (DRHP p.72). Bad debt expense inside those costs was ₹21.21 lakh in FY24, ₹39.95 lakh in FY25 and ₹96.20 lakh in FY26 (DRHP p.73).

05What the growth is made of

Revenue rose from ₹4,654.05 lakh in FY24 to ₹6,421.14 lakh in FY26, an increase of ₹1,767.09 lakh (DRHP p.72). What the document supports:

One service taking over. Security services went from ₹2,338.81 lakh to ₹5,135.63 lakh, ₹2,796.82 lakh, which is more than the whole increase; manpower services fell from ₹949.06 lakh to ₹545.99 lakh, cleaning from ₹806.26 lakh to ₹361.75 lakh and operations and maintenance from ₹558.48 lakh to ₹377.15 lakh (DRHP p.31).

The same customer base, differently spread. The top ten were 71.69% of revenue in FY24, 61.19% in FY25 and 74.47% in FY26, while the largest fell from 22.26% to 15.12% (DRHP p.27). Government entities stayed at about 100% throughout (DRHP p.111).

The document does not disclose the number of people deployed by contract, the billing rate per person or the number of contracts held, so the increase cannot be separated into more people and higher rates. That sentence is the finding. The only headcount given is the 1,858 full-time employees on the payroll at March 31, 2026, with no comparative for earlier years in the pages read (DRHP p.170).

06Earnings quality

Two lines need explaining. The first is other income at ₹66.65 lakh, which is 24.1% of profit before tax, by our arithmetic, and was ₹102.86 lakh in FY25 against ₹3.39 lakh in FY24; interest income within the cash flow was ₹52.38 lakh in FY26 and ₹79.69 lakh in FY25 against ₹2.98 lakh in FY24 (DRHP p.72, DRHP p.73). A quarter of the year's pre-tax profit therefore does not come from the operating business.

The second is the swing in short-term loans and advances, which rose by ₹874.61 lakh in FY25 and fell back by ₹635.05 lakh in FY26; that movement, with receivables, drove operating cash flow to an outflow of ₹620.72 lakh in FY25 and back to an inflow of ₹57.37 lakh in FY26 (DRHP p.73). The prospectus does not say in the pages read what those advances were.

The document also discloses discrepancies and errors in corporate records filed with authorities, late filing or delayed payment of statutory dues, frequent changes of chief financial officer in the last three financial years, and frequent changes of statutory auditor (DRHP p.36, DRHP p.37, DRHP p.46, DRHP p.42).

07The balance sheet

At March 31, 2026 borrowings were ₹591.68 lakh, of which ₹311.63 lakh were long term and ₹280.05 lakh short term, by our arithmetic, against ₹529.40 lakh a year earlier (DRHP p.71). Cash and cash equivalents were ₹101.99 lakh, of which ₹94.36 lakh was cash in hand, so net debt was ₹489.69 lakh, by our arithmetic (DRHP p.71, DRHP p.74). Net worth was ₹1,511.10 lakh, so the debt to equity ratio was 0.39, by our arithmetic (DRHP p.71).

Trade receivables were ₹1,626.61 lakh, 25.3% of FY26 revenue, by our arithmetic, against ₹867.56 lakh a year earlier (DRHP p.72). Other non-current assets, which the company describes as security deposits placed with customers, were ₹426.95 lakh (DRHP p.71, DRHP p.112). Trade payables were ₹21.81 lakh in total, by our arithmetic, as a manpower business buys little (DRHP p.71). Property, plant and equipment was ₹126.62 lakh (DRHP p.71).

Contingent liabilities were ₹1,320.72 lakh at March 2026, by our arithmetic on the document's own table: a goods and services tax order of ₹552.67 lakh for July 2017 to March 2018; goods and services tax orders for 2020 to 2024 totalling ₹542.44 lakh, which the company describes as a single section 74 demand of ₹542.45 lakh for April 2019 to March 2024; a service tax demand of ₹122.00 lakh for FY17 and FY18; and bank guarantees of ₹103.61 lakh (DRHP p.75). Each tax matter is under appeal (DRHP p.75).

If the offer proceeds, up to ₹393.13 lakh of borrowings would be repaid out of ₹479.28 lakh outstanding on the company's own statement, leaving little debt (DRHP p.109). Unsecured loans can be recalled by lenders at any time, and one loan is secured by a promoter's personal guarantee (DRHP p.45, DRHP p.50).

08What the money is for

Source: DRHP p.109. General corporate purposes cannot exceed 15% of the fresh issue proceeds or ₹1,000 lakh, whichever is lower, and both objects are scheduled for deployment in the year to March 2027 (DRHP p.109). The fund requirements have not been appraised by any bank or financial institution (DRHP p.49).

Working capital is the constraint the company describes. Winning government work requires a tender deposit of about 3% of the tender value, refunded about 1.5 to 2 months after the formalities, and on award a security deposit of about 5% to 10% that stays with the authority for the length of the contract (DRHP p.112). Meanwhile wages are paid monthly and the customer pays later: receivables were ₹1,626.61 lakh at March 2026 (DRHP p.72). Of the ₹2,013.42 lakh the company estimates it needs for FY27, ₹529.60 lakh would come from the offer and the rest from internal accruals and borrowings (DRHP p.111).

Debt repayment would remove most of a finance cost that was ₹102.71 lakh in FY26, 37.1% of profit before tax, by our arithmetic (DRHP p.72).

Into the business the fresh issue of up to 41,01,000 equity shares, before offer expenses (DRHP p.92). To selling shareholders the proceeds of up to 8,99,000 shares offered by six shareholders; at draft stage that is a share count, not an amount (DRHP p.108).

The company will receive no proceeds from the offer for sale (DRHP p.53).

09Who is selling

Source: DRHP p.108, and our arithmetic on the percentages. None of the six is a promoter; each took shares in the rights issue of May 2024 by renunciation and received bonus shares in June 2024 (DRHP p.95). Each has confirmed holding the offered shares for at least one year before the filing (DRHP p.108). No promoter is selling.

10Promoters

The promoters are Ashok Dulichand Dinodiya and Premlata Ashok Dinodiya (DRHP p.1). Ashok Dulichand Dinodiya is managing director and chairman; Premlata Ashok Dinodiya was a non-executive director until May 31, 2024 (DRHP p.77). The promoters and promoter group hold 72.32% of the capital before the offer (DRHP p.50).

Promoter economics. The company was incorporated in May 2016 with 10,000 shares of ₹10, held equally by Ashok Dulichand Dinodiya and Bhavarsinh Dayanand Bholiyan (DRHP p.94). On May 22, 2024 a rights issue of 11,10,000 shares at ₹60 each was made in the ratio 111:1, in which the two original holders renounced much of their entitlement to family members and to outside individuals; on June 3, 2024 a bonus issue of 89,60,000 shares in the ratio 8:1 took the count to 1,00,80,000 (DRHP p.94, DRHP p.95).

The shareholding then moved. Two years before the filing the largest holders were Ashok Dulichand Dinodiya with 35,51,040 shares (35.23%) and Bhavarsinh Dayanand Bholiyan with 25,07,400 shares (24.88%) (DRHP p.100). At the date of the filing Ashok Dulichand Dinodiya holds 60,58,440 shares (60.10%) and Bhavarsinh Dayanand Bholiyan does not appear among holders of 1% or more (DRHP p.99). Bhavarsinh D Bholiyan was a whole-time director until December 19, 2024 (DRHP p.77).

The prospectus records that the promoters are associated with entities engaged in a business similar to the company's: Chirag Security Services, a proprietorship of Ashok Dulichand Dinodiya, and Ganesh Corporation, a proprietorship of Premlata Ashok Dinodiya, among others (DRHP p.48, DRHP p.77). It also records that a loan availed by the company is secured by the personal guarantee of one of the promoters, and that the company relies heavily on the promoters and directors (DRHP p.50, DRHP p.49). A separate risk factor is headed lack of specialised training in leadership (DRHP p.49).

11Who already owns it

Source: DRHP p.99, DRHP p.100. Holders of 1% or more account for 99.51% of the capital before the offer (DRHP p.100). There is no private equity, no venture capital and no institutional holding, and the securities premium account is nil before the offer (DRHP p.92).

Every holder above took shares either in the rights issue of May 2024 at ₹60 or through renunciation in it, and then received bonus shares in June 2024 (DRHP p.94, DRHP p.95). The shareholding after the offer is blank ([●]), because the offer price is not set (DRHP p.92).

12What changed just before the IPO

• February 5, 2024: authorised capital raised from ₹1,00,000 to ₹25,00,00,000 (DRHP p.93).
• April 15, 2024 and August 20, 2024: three independent directors appointed (DRHP p.77).
• May 22, 2024: rights issue of 11,10,000 shares at ₹60 in the ratio 111:1, much of it taken up by renunciation to outside individuals, raising ₹666.00 lakh of capital and premium (DRHP p.94, DRHP p.74).
• May 31, 2024: Premlata Ashok Dinodiya ceased to be a non-executive director (DRHP p.77).
• June 3, 2024: bonus issue of 89,60,000 shares, eight for one (DRHP p.94).
• FY25: operating cash flow turned to an outflow of ₹620.72 lakh, as short-term loans and advances rose by ₹874.61 lakh (DRHP p.73).
• December 19, 2024: Bhavarsinh D Bholiyan ceased to be a whole-time director; a successor was appointed the same day (DRHP p.77).
• Between two years before the filing and the filing: Ashok Dulichand Dinodiya's holding rose from 35,51,040 shares to 60,58,440, and Bhavarsinh Dayanand Bholiyan's 25,07,400 shares left the list of holders of 1% or more (DRHP p.100, DRHP p.99).
• FY26: revenue rose 38.2% while profit fell 43.0%, by our arithmetic, as other expenses rose from ₹274.52 lakh to ₹640.60 lakh (DRHP p.72).
• FY26: security services reached 79.98% of revenue, from 50.25% two years earlier (DRHP p.31).
• August 25, 2025: the third chief financial officer in three years took office (DRHP p.77).
• February 20, 2026 and June 19, 2026: the company secretary changed (DRHP p.77).
• July 10 and August 7, 2026: the board and the shareholders approved the offer (DRHP p.93).

13Capacity and expansion

This is a manpower business, so there is no plant and the prospectus states no installed capacity. What stands in its place is licences, people and deposits.

What the offer funds is not capacity but the ability to hold more contracts at once: a tender deposit of about 3% of tender value to bid, and a security deposit of about 5% to 10% held for the contract period once won, both of which grow with the number and size of contracts (DRHP p.112). The company states that the strengthening of its financial position after the offer is expected to let it undertake larger and higher-value contracts, and that this in turn raises upfront spending on mobilising manpower (DRHP p.112).

The prospectus does not state how many contracts the company holds, their average value or their remaining term.

14Market size and industry structure

As claimed: the prospectus carries an industry chapter and a risk factor stating that it has included certain non-GAAP financial measures and certain other industry data (DRHP p.54). It does not name a commissioned industry report in the pages read, and this study therefore quotes no market size from it.

The part that is addressable: security, manpower, cleaning and operations and maintenance contracts put out to tender by government entities in the seven states where the company holds PSARA licences (DRHP p.111).

What the company is today: revenue of ₹6,421.14 lakh, 99.76% of it from government entities, with 1,858 people on the payroll (DRHP p.72, DRHP p.111, DRHP p.170).

Structure, as far as the document supports it: work is won through tender, so price competes directly and a bid must be backed by deposits (DRHP p.112). Operating requires PSARA licences that must be obtained, maintained and renewed state by state (DRHP p.32). The business is manpower intensive and exposed to work stoppages and wage demands, and to the Contract Labour (Regulation and Abolition) Act, 1970 (DRHP p.35, DRHP p.48). The company competes with organised and unorganised providers (DRHP p.50). Serving government customers brings its own payment risk, which the prospectus flags in a risk factor about servicing contracts with public sector undertakings and governmental customers (DRHP p.51).

15Competitive position

The prospectus does not print a comparison of accounting ratios against named listed peers in the pages read, so this study sets none out; going outside the offer document for one is not what this format does.

What the document offers as the basis on which the company competes: PSARA licences in seven states; a record of executing government contracts that it says it uses to secure further business; the ability to bundle security with manpower, cleaning and operations and maintenance for the same customer, which the top-ten table shows it does for several of them; and a workforce of 1,858 (DRHP p.111, DRHP p.112, DRHP p.27, DRHP p.170).

What it does not show: contract renewal rates, tender win rates, any measure of market share, or the billing rate per person. The prospectus also notes that the promoters are associated with other entities in a similar business, which a reader should weigh against the company's own tendering (DRHP p.48). Brand is named as a factor, with a risk factor on maintaining the popularity of the "Laxmi Security (Gujarat) Limited" name (DRHP p.51).

16Peers the company named

Peers named in the offer document: none appear in the pages of the basis for the offer price read for this study (DRHP p.124).

Because no peer set is set out at this stage, there is no peer price to earnings ratio and no peer return on net worth to set against the company's own. Its own FY26 figures are earnings per share of ₹1.96 after the bonus issue, against ₹3.49 in FY25 and ₹3.31 in FY24 (DRHP p.73).

A reader should note that this is a fixed-price offer, so the price will be stated in the prospectus rather than discovered in a book, and the document's own comparison will be completed at that stage (DRHP p.92). The absence of a peer comparison here is stated rather than filled in.

17Risks, in plain words

Tax demands: goods and services tax orders of ₹552.67 lakh and ₹542.44 lakh and a service tax demand of ₹122.00 lakh are under appeal (DRHP p.75) → paying them would take more than five years of FY26 profit → together with bank guarantees they are ₹1,320.72 lakh of contingent liability, by our arithmetic, against net worth of ₹1,511.10 lakh (DRHP p.75, DRHP p.71).

Margin: revenue rose 38.2% in FY26 while profit after tax fell 43.0%, by our arithmetic (DRHP p.72) → volume in a tendered manpower business does not carry margin with it → EBITDA margin went from 10.49% to 5.31%, by our arithmetic, as other expenses rose from ₹274.52 lakh to ₹640.60 lakh (DRHP p.72).

One customer type: government entities were 99.76% of FY26 revenue (DRHP p.111) → budget cycles, payment delays and tender rules govern the whole business → the prospectus carries a separate risk factor on servicing contracts with public sector and governmental customers (DRHP p.51).

Customers: ten customers were 74.47% of FY26 revenue and the largest 15.12% (DRHP p.27) → a tender not renewed removes a visible share of revenue → there is no disclosure of contract terms or renewal rates.

Collection: trade receivables were ₹1,626.61 lakh at March 2026, 25.3% of revenue, by our arithmetic (DRHP p.72) → wages are paid monthly whether or not the customer has paid → bad debt expense rose from ₹21.21 lakh to ₹96.20 lakh over two years, and the prospectus carries a risk factor on delays in collecting receivables (DRHP p.73, DRHP p.43).

Licences: PSARA licences must be obtained, maintained and renewed in each state (DRHP p.32) → a lapsed licence stops work in that state → the company holds licences in seven states (DRHP p.111).

People: the business is manpower intensive, with 1,858 employees deployed largely at customer premises (DRHP p.35, DRHP p.170) → work stoppages, wage demands or claims arising at customer sites fall on the company → employee benefits expense was 84.7% of FY26 revenue, by our arithmetic (DRHP p.72).

Governance and records: the prospectus discloses discrepancies and errors in corporate records filed with authorities, late filing or delayed payment of statutory dues, three chief financial officers in three years and frequent changes of statutory auditor (DRHP p.36, DRHP p.37, DRHP p.46, DRHP p.42).

Related businesses: the promoters are associated with entities in a similar line, including two proprietorships (DRHP p.48, DRHP p.77).

18Litigation and regulatory matters

Source: DRHP p.75. The table in the document lists the section 74 demand as five annual orders under one reference number, for 2020 to 2024, totalling ₹542.44 lakh; the note describes the same order as ₹542.45 lakh for April 2019 to March 2024 (DRHP p.75). There are no claims against the company not acknowledged as debt beyond these (DRHP p.75).

The prospectus states that the company, its promoters and its directors are involved in certain legal proceedings, and that the company is involved in claims and disputes arising in the ordinary course of business (DRHP p.32, DRHP p.75).

19Related-party transactions

The document lists the related parties and the nature of each relationship: the managing director and promoter Ashok Dulichand Dinodiya, the promoter Premlata Ashok Dinodiya, two whole-time directors in succession, three independent directors, three chief financial officers in succession, two company secretaries in succession, a relative of a key manager, and five enterprises in which key managers or their relatives can exercise significant influence (DRHP p.77).

Those five enterprises are Chirag Security Services, a proprietorship of Ashok Dulichand Dinodiya; National Security Services, a proprietorship of Dayanand Bholiyan; National Security Service Partnership Firm; Phoenix Corporation, a proprietorship of Sarita Bholiyan; and Ganesh Corporation, a proprietorship of Premlata Ashok Dinodiya (DRHP p.77). Several of these are in the same line of business as the company, which the prospectus flags as a risk (DRHP p.48).

The prospectus states that the company has entered into related party transactions and may continue to do so, and that there can be no assurance about their terms (DRHP p.41). The amounts by counterparty are set out in the financial information chapter rather than in the summary pages read for this study (DRHP p.77).

20What the offer document does not say

• No customer is named in the concentration tables (DRHP p.27).
• The number of contracts held, their average value and their remaining term are not disclosed (DRHP p.112).
• The number of people deployed by contract and the billing rate per person are not disclosed, so growth cannot be split into headcount and rate (DRHP p.31).
• Contract renewal rates and tender win rates are not disclosed (DRHP p.112).
• The composition of the short-term loans and advances that rose by ₹874.61 lakh in FY25 and fell back in FY26 is not explained in the pages read (DRHP p.73).
• No comparison with named listed peers is set out at this stage (DRHP p.124).
• No market size for private security or facility management in the states served is quoted from a named report (DRHP p.54).
• The offer price is blank at this stage (DRHP p.92).

21Five questions for management

1. Why did profit after tax fall from ₹346.73 lakh to ₹197.50 lakh while revenue rose 38.2%, and which line inside other expenses of ₹640.60 lakh accounts for most of the increase (DRHP p.72)?
2. What is the company's assessment of the ₹552.67 lakh and ₹542.45 lakh goods and services tax demands, and what has been deposited against each (DRHP p.75)?
3. How many contracts were held at March 31, 2026, what was their aggregate annual value, and how many come up for renewal in FY27 (DRHP p.112)?
4. What did the short-term loans and advances of ₹878.61 lakh at March 2025 consist of, and to whom were they advanced (DRHP p.72)?
5. Why have there been three chief financial officers and frequent changes of statutory auditor in three years (DRHP p.46, DRHP p.42)?

1Sources and cited facts

This study was read from 1 document the company filed. The 146 figures it cites are listed under the document each came from, with the page and the sentence as printed.