Nexa Defence (I) Limited IPO

01At a glance

What the company does: designs, manufactures, assembles, tests and services ground support equipment, test rigs and test benches, and test equipment for aerospace and defence customers, from two interlinked plants at Panvel and Belavali in Maharashtra (DRHP p.189).

Who pays it: the armed forces and the companies that supply them. In FY26, on the combined figures, 71.69% of revenue came from Air Force stations and Maharatna central public sector enterprises under the Ministry of Defence, 22.50% from the Indian Navy and 5.25% from the Indian Army (DRHP p.206).

Why it is raising money: ₹2,770.00 lakh for working capital and ₹250.00 lakh towards ₹280.83 lakh of machinery, with general corporate purposes capped at 15% of gross proceeds or ₹1,000 lakh, whichever is lower (DRHP p.98, DRHP p.99).

How fast it has grown: on the combined record of the company and the proprietorship, revenue from ₹1,893.82 lakh in FY24 to ₹2,645.45 lakh in FY25 and ₹5,323.92 lakh in FY26, about 67.7% a year, and profit after tax from ₹76.13 lakh to ₹497.15 lakh, about 155.6% a year (our arithmetic, DRHP p.136).

The one thing to understand: this is a proprietorship that became a company eighteen months ago and is now listing. The company was incorporated on March 7, 2025, acquired the business under a transfer agreement dated February 9, 2026 with effect from March 31, 2026, became a public company on February 6, 2026, and issued 78,60,000 bonus shares on August 12, 2026, six weeks before filing (DRHP p.117, DRHP p.188, DRHP p.389).

02The business, in plain words

An air force station needs a trolley that starts a jet engine, a rig that tests a hydraulic actuator, or a bench that checks an instrument before it goes back on an aircraft. Those are built to order, to the customer's drawing or to its specification, and they have to pass the customer's own inspection before an invoice can be raised.

A defence buyer issues a tender or an order → the company procures steel, hydraulic pumps, diesel engines, valves and electricals → it fabricates, assembles and integrates at Panvel and Belavali → the customer or its nominated agency inspects and tests → the equipment is despatched and commissioned, and the invoice follows.

The work is done under three models the document names: build-to-print, where the customer supplies the drawings; build-to-specification, where the company does the design; and indigenisation, replacing an imported item with a locally made one (DRHP p.189, DRHP p.190). The business began in Fiscal 2015 as Nexa Mumbai, a sole proprietorship of Jyothi Kumar Nannat; the company was incorporated in March 2025 and took the business over on March 31, 2026 (DRHP p.190, DRHP p.208). It had 151 employees at August 31, 2026, and an installed capacity of about 240 units a year across the three product categories (DRHP p.189, DRHP p.215).

Earnings equation: Profit ≈ orders executed × contract value − raw materials, components and bought-out items − fabrication and assembly labour − interest on the money tied up between despatch and payment. In FY26, on the combined figures, cost of materials consumed was ₹3,206.70 lakh against revenue of ₹5,323.92 lakh for the company alone reported at ₹2,181.14 lakh, so the two presentations must be read separately (DRHP p.74, DRHP p.136).

03Where the money comes from

Source: DRHP p.206. FY24 and FY25 are the proprietorship, FY26 is the two combined and the quarter is the company alone.

Government and government-related buyers are almost the whole of it: non-government revenue was 0.21% in FY25 and 0.16% in FY26, and the 17.43% shown as non-government in the June 2026 quarter is back-to-back billing to Nexa Mumbai on orders that have not yet been transferred into the company's name (DRHP p.207). Purchases are moderately spread: the largest supplier was 9.84% of FY26 purchases, the top five 37.78% and the top ten 52.90% (DRHP p.209). The number of Air Force stations served fell from 50 in FY24 to 42 in FY26 while revenue nearly trebled, and average revenue for each order rose from ₹1.91 lakh to ₹26.49 lakh (DRHP p.136).

04The growth record

Source: DRHP p.136. FY24 and FY25 are the proprietorship, FY26 combines the company and the proprietorship, and the quarter to June 30, 2026 is the company alone; the quarter's return is not annualised.

Our arithmetic over FY24 to FY26: revenue grew about 67.7% a year, EBITDA about 116.6% and profit about 155.6%; EBITDA margin rose 639 basis points and PAT margin 532 basis points (DRHP p.136). The company itself states revenue growth of 39.69% in FY25 and 101.25% in FY26 (DRHP p.136).

Two cautions belong with the table. First, the entities differ by year, so the record is not a like-for-like series of one reporting entity. Second, the company's own statutory accounts for FY26 show revenue of ₹2,181.14 lakh and profit of ₹220.90 lakh, against ₹5,323.92 lakh and ₹497.15 lakh on the combined basis (DRHP p.74, DRHP p.136).

05What the growth is made of

Bigger orders, from fewer places. Average revenue for each order rose from ₹1.91 lakh in FY24 to ₹11.31 lakh in FY25 and ₹26.49 lakh in FY26, while customers served fell from 60 to 55 to 51 and Air Force stations served from 50 to 45 to 42 (DRHP p.136). Units produced went the same way: 33 units in FY24 on a 60-unit capacity, then 134 and 82 units on a 240-unit capacity in FY25 and FY26 (DRHP p.215). So FY26's revenue doubled on fewer units, which is the product mix moving towards larger equipment.

Within that, the Indian Navy is the single change: navy revenue went from ₹63.93 lakh in FY25 to ₹1,197.82 lakh in FY26, 22.50% of the combined total, and army revenue from ₹46.60 lakh to ₹279.60 lakh (DRHP p.206). Revenue from defence research organisations fell the other way, from ₹206.07 lakh in FY24 to ₹19.97 lakh in FY26 (DRHP p.206).

Repeat business is high and steady: 85.00%, 81.82% and 86.27% of customers across FY24 to FY26 were repeat customers (DRHP p.136). The document does not disclose realisation for each unit by product category, so the change cannot be separated further into price and specification.

06Earnings quality

The item that needs explaining is the June 2026 quarter. Trade receivables rose ₹1,172.74 lakh in three months, which is more than the quarter's revenue, and short-term borrowings rose from ₹20.75 lakh to ₹837.31 lakh to fund it, turning operating cash flow to an outflow of ₹527.50 lakh on a reported profit of ₹229.49 lakh (DRHP p.73, DRHP p.75).

The company's own explanation of its working-capital object describes exactly this cycle: upfront spending on materials and manufacture, then inspection and acceptance by the customer before an invoice can be raised (DRHP p.100). The predecessor's record shows the other side: liquidated damages and bad debts of ₹182.23 lakh across three years, on revenue of ₹10,039.34 lakh (our arithmetic, DRHP p.77, DRHP p.78).

07The balance sheet

At June 30, 2026 total assets were ₹2,823.11 lakh: trade receivables ₹1,522.58 lakh, cash ₹329.33 lakh, inventories ₹213.45 lakh, other bank balances ₹206.20 lakh, property plant and equipment ₹147.64 lakh, other current assets ₹144.95 lakh, short-term loans and advances ₹109.33 lakh, other non-current assets ₹79.96 lakh, deferred tax assets ₹19.50 lakh, intangible assets ₹22.96 lakh and long-term loans and advances ₹26.33 lakh (DRHP p.73). Against that, short-term borrowings were ₹837.31 lakh, trade payables ₹699.04 lakh, other current liabilities ₹136.12 lakh and provisions ₹161.94 lakh, leaving equity of ₹988.70 lakh (DRHP p.73).

There is no long-term debt at any of the three dates shown (DRHP p.73). Net asset value a share, adjusted for the bonus, was ₹9.80 at March 2026 and ₹12.67 at June 2026 (DRHP p.134). The predecessor carried more debt than the company does: Nexa Mumbai had ₹329.81 lakh of long-term and ₹763.44 lakh of short-term borrowings at March 2025, all repaid during FY26 (DRHP p.76, DRHP p.79). Contingent liabilities are bank guarantees of ₹444.75 lakh, which have grown each year from ₹325.31 lakh at March 2024 (DRHP p.80).

After the issue: the fresh issue is up to 33,64,000 shares against 89,08,000 in issue, so the count would rise to 1,22,72,000 and the promoters' 88.00% would fall to about 63.9%; the price is not set, so the money raised cannot be stated (our arithmetic, DRHP p.116, DRHP p.264).

08What the money is for

Source: DRHP p.98, DRHP p.99. The working-capital case is set out at length and is specific to the business: orders are won by tender, materials and manufacture are paid for upfront, the customer or its nominated agency then inspects and tests, and payment follows milestones and acceptance, so there is a lag between outflow and realisation (DRHP p.100). The fund requirement has not been appraised by any bank, financial institution or independent agency, though the schedule is certified by the statutory auditor (DRHP p.99).

Into the business the whole issue: up to 33,64,000 new shares, not priced at draft stage (DRHP p.116). To selling shareholders nothing: there is no offer for sale (DRHP p.1).

09Who is selling

No one. The issue is a fresh issue of up to 33,64,000 shares by the company, with no offer for sale (DRHP p.1, DRHP p.71). Part of the issue is reserved for the market maker, in a quantity not yet stated (DRHP p.116).

10Promoters

The promoters are Jyothi Kumar Nannat, Chairman and Managing Director, and Sunitha J Kumar, Whole Time Director (DRHP p.264). Jyothi Kumar Nannat holds 72,15,140 shares, 81.00% of the capital, and Sunitha J Kumar 6,23,560 shares, 7.00%, 88.00% between them; Athira T Nair, in the promoter group, holds a further 3.00% (DRHP p.123, DRHP p.264). The document records over 20 years of experience in aerospace and defence support equipment for Jyothi Kumar Nannat, who started the predecessor proprietorship Nexa Mumbai in Fiscal 2015 and travels with industry delegations to explore joint ventures abroad (DRHP p.189, DRHP p.190).

Promoter economics, all of it recent (DRHP p.117, DRHP p.118, DRHP p.119): the company issued 5,00,000 shares at ₹10 on incorporation in March 2025, of which Jyothi Kumar Nannat took 3,75,000; then 4,11,000 shares at ₹125 on March 31, 2026 to Jyothi Kumar Nannat alone, for consideration other than cash, as the price of acquiring the Nexa Mumbai business under the transfer agreement; then 1,37,000 shares at ₹125 for cash on August 6, 2026 across all twelve shareholders; and then 78,60,000 bonus shares in the ratio of 75 for every 10 held on August 12, 2026. The bonus multiplied every holding by 8.5 times six weeks before the filing.

The relationship between the company and the promoter's former business continues: the company bought ₹298.00 lakh of goods from Nexa Mumbai in FY26 and ₹14.59 lakh in the June 2026 quarter, was reimbursed ₹64.87 lakh of expenses paid on its behalf, and ₹1,842.10 lakh of the order book still stands in Nexa Mumbai's name and is executed by the company on a back-to-back basis (DRHP p.81, DRHP p.207). The promoter also takes rent from the company, ₹7.50 lakh in the June 2026 quarter (DRHP p.81). The prospectus records no criminal, civil, regulatory or tax proceeding against either promoter (DRHP p.383, DRHP p.386).

11Who already owns it

Source: DRHP p.122, DRHP p.123. The register is twelve people: the two promoters, one promoter-group member and the nine others who subscribed to the memorandum in March 2025 and hold exactly 1.00% each (DRHP p.118, DRHP p.123). There is no private equity, no venture capital, no institution, no employee stock option scheme and no convertible instrument (DRHP p.117, DRHP p.120).

The securities premium account is nil before the issue, because the only cash raised above par was ₹157.55 lakh of premium on the August 2026 allotment, which the bonus then capitalised (our arithmetic, DRHP p.116, DRHP p.118). On full allotment the count rises to 1,22,72,000 shares and the promoters would hold about 63.9%, the promoters with the promoter group about 66.1% (our arithmetic, DRHP p.116, DRHP p.123).

12What changed just before the IPO

• The company was created. Incorporated on March 7, 2025 as a private company (DRHP p.117).
• It became a public company on February 6, 2026, eleven months later (DRHP p.389).
• It bought the promoter's business. A business transfer agreement dated February 9, 2026 moved Nexa Mumbai's operations, customers, suppliers and orders into the company with effect from March 31, 2026, paid for with 4,11,000 shares at ₹125 issued to Jyothi Kumar Nannat (DRHP p.117, DRHP p.208).
• Authorised capital was raised twice, from ₹50,00,000 to ₹5,00,00,000 in February 2026 and to ₹15,00,00,000 in July 2026 (DRHP p.117).
• A cash allotment at ₹125 on August 6, 2026 brought in ₹171.25 lakh across the twelve shareholders (our arithmetic, DRHP p.118).
• A 75 for 10 bonus issue on August 12, 2026 turned 10,48,000 shares into 89,08,000, six weeks before the filing (DRHP p.117, DRHP p.119).
• The navy became a major customer, from ₹63.93 lakh of revenue in FY25 to ₹1,197.82 lakh in FY26 (DRHP p.206).
• The predecessor's debt was cleared. Nexa Mumbai repaid ₹763.44 lakh of short-term and ₹329.81 lakh of long-term borrowings during FY26 (DRHP p.79).
• Receivables and borrowings jumped in one quarter, receivables from ₹349.82 lakh to ₹1,522.58 lakh and short-term borrowings from ₹20.75 lakh to ₹837.31 lakh between March and June 2026 (DRHP p.73).
• A second plant is in use. Two interlinked units at Panvel and Belavali, with capacity assessed at 240 units against 60 units in FY24 (DRHP p.215).

13Capacity and expansion

Source: DRHP p.215, certified by Garg & Associates, chartered engineers. Capacity is stated at the final output stage, after allowing for the interlinked processes between the two units, to avoid double counting (DRHP p.215).

Capacity quadrupled between FY24 and FY25 and has been under-used since, at 82 units in FY26 against 240. The company's own caution is that production volumes vary with product mix, specification, complexity and execution timelines, so unit counts are not a clean measure for this business (DRHP p.215). Against that, average revenue for each order rose from ₹11.31 lakh in FY25 to ₹26.49 lakh in FY26, so the same plant is producing fewer, larger items (DRHP p.136). The ₹280.83 lakh of machinery in the objects is the only stated addition, and the document does not say what it adds in units or in capability.

14Market size and industry structure

As claimed: the industry report the company cites describes a policy push towards strengthening domestic manufacturing capability, reducing import dependence and expanding indigenous design and development across the defence sector (DRHP p.100). The prospectus gives no market size figure for ground support equipment or test rigs in the pages read.

The part that is addressable: ground support equipment, test rigs and test benches and test equipment bought by Indian Air Force stations, the Navy, the Army, defence research organisations and the public sector enterprises under the Ministry of Defence. The document does not size that part.

What the company is today: ₹5,323.92 lakh of FY26 revenue on the combined basis, an order book of ₹5,453.69 lakh at June 30, 2026, 51 customers served in FY26 and 42 Air Force stations (DRHP p.136, DRHP p.207).

On structure, the barriers the company names are technical qualification and vendor approval requirements, specialised design and engineering, testing infrastructure, and long qualification and procurement cycles (DRHP p.132). Those cut both ways: they keep new entrants out and they keep working capital in, because nothing is invoiced until the customer's nominated agency has inspected it (DRHP p.100).

15Competitive position

Source: DRHP p.135. The company's figures are the combined ones for FY26 and are stated after the bonus issue.

What the company offers, on its own account: over a decade of design and manufacture inherited from the proprietorship, vendor approvals and technical qualifications with defence buyers, integrated design, manufacture, testing and after-sales service, in-house testing infrastructure, and a focus on indigenisation aligned with government procurement policy (DRHP p.132). The repeat-customer rate of 86.27% in FY26 is the measure in the document that supports it (DRHP p.136). Against that, the company is eighteen months old as a legal entity, the order book is partly in someone else's name, and capacity utilisation was 34.16% in FY26 (DRHP p.207, DRHP p.215).

16Peers the company named

Peers named in the offer document: TechEra Engineering (India) Limited (DRHP p.133).

One peer, and the company says so plainly: it has identified one company in a similar line of business for broad comparison, and notes differences in product portfolio, scale and operating history such that the comparison should not be read as like-for-like (DRHP p.133, DRHP p.135).

TechEra Engineering traded at 93.30 times FY26 earnings at ₹156.75 on September 11, 2026, which the document reports as the industry highest, lowest and average alike, because it is the only one (DRHP p.133, DRHP p.134).

On the FY26 figures the peer is slightly smaller by revenue, ₹4,849.78 lakh against ₹5,323.92 lakh, but earns a far lower return on net worth, 5.26% against 65.48%, and carries a much larger book value a share, ₹31.84 against ₹9.80 (DRHP p.135). A single peer, on a single day's price, is a thin basis, and the document says as much.

17Risks, in plain words

A record that is not one entity's: FY24 and FY25 are a proprietorship, FY26 is a combination and the June 2026 quarter is the company (DRHP p.136) → the three-year series cannot be read as one company's history → the company's own FY26 accounts show ₹2,181.14 lakh of revenue against ₹5,323.92 lakh combined (DRHP p.74).

Getting paid: receivables rose from ₹349.82 lakh to ₹1,522.58 lakh in the June 2026 quarter, more than that quarter's revenue (DRHP p.73) → nothing is invoiced until the customer's agency has inspected and accepted the equipment → borrowings rose from ₹20.75 lakh to ₹837.31 lakh in the same three months (DRHP p.73).

One buyer, in effect: government and government-related customers were 99.84% of FY26 revenue (DRHP p.207) → orders come through tenders and are subject to defence procurement policy and budget timing → the number of Air Force stations served fell from 50 in FY24 to 42 in FY26 (DRHP p.136).

An order book partly in another name: ₹1,842.10 lakh of the ₹5,453.69 lakh order book at June 30, 2026 stands in the name of Nexa Mumbai, the promoter's proprietorship, and is executed by the company on a back-to-back basis (DRHP p.207) → the transfer of those orders is still in process → Nexa Mumbai raises the invoices to the end customers on that work (DRHP p.207).

A plant well below capacity: utilisation was 34.16% in FY26 and 10.83% in the June 2026 quarter on a 240-unit capacity (DRHP p.215) → fixed costs are carried whether or not the plant is full → the company's own caution is that unit counts vary with product mix and complexity (DRHP p.215).

Guarantees: bank guarantees furnished to customers were ₹444.75 lakh at June 30, 2026, rising each year from ₹325.31 lakh at March 2024 (DRHP p.80) → a called guarantee is an immediate cash liability → they are the whole of the contingent liability.

Ownership and recency: the promoters hold 88.00%, the company is eighteen months old, it became a public company in February 2026 and issued a 75 for 10 bonus in August 2026 (DRHP p.117, DRHP p.264, DRHP p.389) → almost every structural feature of the issuer dates from the last year.

Issue-specific: the fund requirement has not been appraised by any bank or independent agency, the general corporate purposes amount is left blank, and there is no price band (DRHP p.98, DRHP p.99).

18Litigation and regulatory matters

The litigation section is otherwise empty: no criminal proceeding, no material civil proceeding and no action by any statutory or regulatory authority against the company, the promoters, the directors, the key managerial personnel or the group companies, and no SEBI or exchange action against the promoters in the last five fiscal years (DRHP p.382, DRHP p.383, DRHP p.384).

The one matter listed is a personal recovery suit filed by the company secretary against a third party, which does not involve the company. The materiality threshold used is ₹15.18 lakh, being 2% of net worth (DRHP p.382). Trade payables at June 30, 2026 were ₹699.04 lakh, and creditors owed more than ₹34.95 lakh are treated as material (DRHP p.386).

19Related-party transactions

Source: DRHP p.81. The company had no related-party remuneration or rent in FY26 and FY25 as reported, and a ₹0.51 lakh loan from Sunitha J Kumar remains outstanding.

The relationship that matters is not in the table but around it. The company bought its entire business from its promoter's proprietorship, paid for it in shares at ₹125, still buys goods from that proprietorship, and executes ₹1,842.10 lakh of orders that remain in the proprietorship's name while the proprietorship invoices the end customers (DRHP p.117, DRHP p.207). What appeared in the two years before the filing is everything: the company did not exist before March 2025, and its first remuneration and rent payments to the promoters are in the June 2026 quarter (DRHP p.81, DRHP p.117).

20What the offer document does not say

Customer concentration by name or by share is not disclosed on the pages read: the revenue tables split by customer category, not by customer, and names are withheld for want of consent or for confidentiality. Realisation for each unit by product category is not given, so the shift to larger orders cannot be priced. The order book is not split into how much is expected to convert in FY27.

The terms on which the Nexa Mumbai business was valued at ₹513.75 lakh, being 4,11,000 shares at ₹125, are not explained. The timetable for transferring the ₹1,842.10 lakh of orders still in Nexa Mumbai's name is not given. What the ₹280.83 lakh of machinery adds, in units or capability, is not stated. The general corporate purposes amount and the issue expenses are left blank, and there is no price band.

No market size figure for the company's own products appears in the pages read.

21Five questions for management

1. How was the Nexa Mumbai business valued at 4,11,000 shares at ₹125, and who certified that valuation?
2. When will the ₹1,842.10 lakh of orders in Nexa Mumbai's name transfer to the company, and what happens to the margin on them until then?
3. Which customer or order drove receivables from ₹349.82 lakh to ₹1,522.58 lakh in the June 2026 quarter, and when is it due?
4. Why did capacity utilisation fall from 55.83% in FY25 to 34.16% in FY26 while revenue doubled, and what does 240 units mean in rupees at today's mix?
5. What were the liquidated damages of ₹61.25 lakh, ₹81.69 lakh and ₹39.29 lakh in the predecessor's accounts for, and what is the position on those contracts now?

1Sources and cited facts

This study was read from 1 document the company filed. The 81 figures it cites are listed under the document each came from, with the page and the sentence as printed.