Panchratan Steels Limited IPO

01At a glance

What the company does: melts stainless steel scrap into ingots and rolls them into long products (round bars, flats, angles, square and hex bars, channels) at a plant in Ranasan GIDC, Vijapur, Mehsana district, Gujarat (AP p.2, DRHP p.137).

Who pays it: manufacturers, traders, fabricators and industrial users, all business to business and all in India; about 379 customers in FY26 (AP p.2, DRHP p.137). No customer is named. The largest customer was 20.23% of FY26 revenue and the top ten 45.32% (DRHP p.158).

Why it is raising money: ₹2,296.26 lakh for a new 10-inch rolling mill, an upgraded 14-inch mill, furnaces and electrical works inside the existing plant, and ₹838.14 lakh for working capital, out of a ₹3,614.40 lakh fresh issue (DRHP p.87).

How fast it has grown: revenue from ₹14,883.35 lakh in FY24 to ₹18,029.23 lakh in FY26, about 10.1% a year, and profit after tax from ₹237.03 lakh to ₹805.90 lakh, about 84.4% a year (our arithmetic, DRHP p.61).

The one thing to understand: in FY24 and FY25 a large part of revenue went to three promoter-group entities, ₹4,614.08 lakh or 31.0% of FY24 revenue, and in FY26 almost none did (₹2.23 lakh), while revenue still rose (our arithmetic, DRHP p.64).

02The business, in plain words

A fabricator building a railing, a machine shop turning shafts or a trader stocking steel sections needs stainless steel in long shapes. This company buys stainless steel scrap and ferro alloys, melts them in two induction furnaces into ingots, reheats the ingots and rolls them into bars, flats and angles, then pickles, straightens and in some cases peels and polishes them into bright bars (DRHP p.138, DRHP p.148).

A trader or fabricator places a purchase order → the company buys scrap and alloys from domestic suppliers → melts, casts, reheats and rolls them, sending some ingots to outside job workers when the mill is full → it is paid per tonne of product, with customers arranging their own transport (DRHP p.157, DRHP p.158).

There are no long-term contracts; every order is a purchase order (DRHP p.158). The rolling mill has an installed capacity of 11,200 tonnes a year and ran at 97.67% in FY26; a second unit draws wire and bright bar with 840 tonnes of capacity (DRHP p.138). The mill runs one eight-hour shift a day and the melting shop three (DRHP p.147). The company had 64 permanent employees and 75 contract labourers at March 31, 2026 (DRHP p.138). It was incorporated in February 2010 and has one registered trademark (DRHP p.2, DRHP p.279).

Earnings equation: Revenue ≈ tonnes produced (own mill plus job work) × realisation per tonne. In FY26 the mill rolled 10,939 tonnes and outside job workers produced 1,845.03 tonnes (DRHP p.89, DRHP p.157). Raw materials are the dominant cost: purchases of ₹14,713 lakh in FY26 were 85.50% of revenue from manufacturing (DRHP p.156).

03Where the money comes from

Source: DRHP p.143, DRHP p.144. The balance is other manufactured items, scrap and by-products (₹113.87 lakh in FY26) and job work income (₹70.50 lakh) (DRHP p.144). There is one reportable segment (AP p.2).

By state, Gujarat was 54.21% of FY26 revenue, Maharashtra 15.20%, Delhi 8.92% and Tamil Nadu 6.33% (DRHP p.141). The state table accounts for all of revenue, so all of it is domestic (DRHP p.142).

Source: DRHP p.158. Revenue leans on a few customers: one customer was a fifth of FY26 revenue and ten were close to half. Of 379 FY26 customers, 137 bought in each of the last three years and contributed ₹6,371 lakh (DRHP p.137). Suppliers are more spread: the top ten were 38.77% of FY26 purchases (DRHP p.157).

04The growth record

Source: DRHP p.61, DRHP p.62, DRHP p.110, AP p.5.

Our arithmetic over FY24 to FY26: revenue grew about 10.1% a year, from ₹148.8 crore to ₹180.3 crore (our arithmetic, DRHP p.61); EBITDA about 81.1% a year; profit after tax about 84.4% a year, from ₹2.4 crore to ₹8.1 crore (our arithmetic, DRHP p.61). The EBITDA margin rose from 2.55% to 6.89% (DRHP p.110), about 434 basis points, and the PAT margin about 288 basis points. The company states the same revenue and profit rates, 10.06% and 84.39% (DRHP p.142).

Operating cash flow in FY26 was ₹272.52 lakh, about ₹2.7 crore (DRHP p.62). Other income was 9.0% of FY26 profit before tax (our arithmetic, DRHP p.61), against 89.4% in FY24. Net debt, borrowings of ₹666.52 lakh less cash of ₹218.93 lakh, was 0.36 times FY26 EBITDA (our arithmetic, AP p.5, DRHP p.60). Return on capital employed was 25.98% in FY26 (DRHP p.110). No year was restated for a change in year end; the restatement moved FY26 profit from ₹765.05 lakh as audited to ₹805.90 lakh (DRHP p.238).

05What the growth is made of

Mostly volume. The rolling mill produced 8,742 tonnes in FY24, 9,013 in FY25 and 10,939 in FY26, up 25.1% over two years, while revenue from manufactured products rose from ₹13,805.62 lakh to ₹17,024.86 lakh, up 23.3% (our arithmetic, DRHP p.89, DRHP p.143).

At FY24 revenue per tonne produced, about ₹1.58 lakh, FY26 output would have fetched about ₹17,275 lakh, a little more than was booked, so revenue per tonne produced slipped to about ₹1.56 lakh (our arithmetic, DRHP p.89, DRHP p.143). Output from outside job workers also rose, from 1,236.87 tonnes to 1,845.03 tonnes (DRHP p.157).

The document gives production, not tonnes sold, and no price per grade, so the split between price and mix cannot be made exactly.

The profit came from cost. Material, traded goods and inventory change together fell from 89.37% of revenue in FY24 to 86.21% in FY26, and other expenses from 8.21% to 5.97%, helped by electricity falling from ₹635.02 lakh to ₹503.48 lakh after the solar plants (our arithmetic, DRHP p.245, DRHP p.224, DRHP p.256).

Read from the filing: the EBITDA figure includes other income. Profit before tax plus depreciation and finance cost gives ₹374.62 lakh in FY24, close to the ₹378.80 lakh stated, and FY24 other income was ₹284.32 lakh; without it, operating profit before depreciation was about ₹90.30 lakh in FY24, 0.61% of revenue, and ₹1,139.57 lakh in FY26, 6.32% (our arithmetic, DRHP p.253, DRHP p.61).

06Earnings quality

Two things need explaining. First, cash: over three years only 31% of reported profit came through as operating cash, because receivables rose by ₹742.90 lakh in FY25 and ₹398.69 lakh in FY26 while the company paid its suppliers faster, cutting trade payables by ₹583.28 lakh, ₹334.28 lakh and ₹245.57 lakh (DRHP p.62). The company says it paid suppliers early to earn discounts (DRHP p.103). Second, other income: in FY24 it was most of profit before tax, and it consists of ₹105.54 lakh of rate differences and ₹89.74 lakh of shortage, excess and quality differences, which the company describes as price settlements after quality inspection of materials (DRHP p.223, DRHP p.255).

07The balance sheet

At March 31, 2026 total assets were ₹5,970.30 lakh: trade receivables ₹2,242.96 lakh, inventories ₹1,591.67 lakh, property plant and equipment ₹1,197.69 lakh, non-current investments ₹457.28 lakh (fixed deposits of ₹362.97 lakh, partly pledged, and mutual funds of ₹94.31 lakh), short-term loans and advances ₹234.99 lakh and cash ₹218.93 lakh (DRHP p.60, DRHP p.216). Against that, trade payables were ₹1,144.30 lakh, of which ₹132.60 lakh was more than three years old (DRHP p.214).

Borrowings of ₹666.53 lakh were an SBI solar term loan of ₹496.85 lakh, a SIDBI solar loan of ₹130.81 lakh, a car loan of ₹9.91 lakh and interest-free loans from promoters of ₹28.96 lakh; a ₹380 lakh Kotak overdraft limit was unused (DRHP p.264, DRHP p.265). Contingent liabilities were ₹630.95 lakh, ₹424.51 lakh income tax and ₹206.44 lakh GST, and there were no capital commitments (DRHP p.63).

Source: DRHP p.267. The arithmetic is the issue itself: 75,30,000 shares at ₹10 face value add ₹753.00 lakh of capital and at ₹38 premium ₹2,861.40 lakh of reserves, before issue expenses of ₹105.00 lakh (our arithmetic, DRHP p.76, DRHP p.87).

08What the money is for

Source: DRHP p.87, DRHP p.105. The machinery list names a new 10-inch rolling mill, conversion of the 12-inch mill to 14-inch, two oil-fired reheating furnaces, induction melting power units, electrical works, cranes and finishing machines, all on vendor quotations dated July and August 2026 (DRHP p.90, DRHP p.91).

Commercial production is scheduled for July 31, 2027, deployment is ₹1,279.34 lakh in FY27 and ₹2,230.06 lakh in FY28, and no purchase order has been placed (DRHP p.87, DRHP p.95). The working capital figure rests on the company's own projection of revenue of ₹19,544.19 lakh for FY27 and ₹26,854.45 lakh for FY28, as the company states it (DRHP p.99).

No bank or agency has appraised the objects and there is no monitoring agency (DRHP p.69, DRHP p.106).

Into the business ₹3,614.40 lakh, the whole issue (DRHP p.58). To selling shareholders nothing: there is no offer for sale (AP p.1).

09Who is selling

No one. The issue is a fresh issue of up to 75,30,000 shares at ₹48, ₹3,614.40 lakh or about ₹36.1 crore, of which 3,78,000 shares are reserved for the market maker (DRHP p.58). There is no offer for sale (AP p.1). The promoters and promoter group will not apply in the issue (DRHP p.86).

10Promoters

The promoters are Rameshkumar Shah, Jagdish Amrutlal Shah, Jayesh Babulal Shah and Mahendrakumar Babulal Shah (DRHP p.188).

Rameshkumar Shah, 56, is Managing Director, has been with the company since incorporation in 2010 and has completed matriculation; Jagdish Amrutlal Shah, 39, holds an MBA, joined in 2015 and has been Executive Director since 2020 and Chief Financial Officer since August 18, 2025; Jayesh Babulal Shah, 43, a commerce graduate, joined the board in February 2020 after sales roles at two steel trading firms; Mahendrakumar Babulal Shah, 49, was a director from 2010 to 2020 and is not on the board now (DRHP p.179, DRHP p.188).

The document states that Jayesh Babulal Shah and Mahendrakumar Shah are brothers (DRHP p.189). Three independent directors joined on June 27, 2025 (DRHP p.181).

Other businesses: Mahendrakumar Babulal Shah owns J.K. Steels, Amritlal Shivlal Shah of the promoter group owns Amrit Sales Corporation, and Akshaynidhi Steels Private Limited is a promoter group company; all three trade in similar products, and the company has signed non-compete agreements with them (DRHP p.190). Akshaynidhi Steels had revenue of ₹4,596.52 lakh in FY25 (DRHP p.280).

Pay: remuneration to the three promoter directors was ₹45.90 lakh in FY24 and ₹39.59 lakh in FY26, including ₹5.59 lakh of CFO salary (our arithmetic, DRHP p.64), about ₹0.5 crore and ₹0.4 crore. The Managing Director's salary is ₹18,00,000 a year (DRHP p.180). Promoters have given personal guarantees for the bank loans and lent ₹28.96 lakh interest free (DRHP p.265). No promoter share is pledged (DRHP p.83).

Litigation: there is no criminal case, regulatory action or civil case against the promoters or directors, and four tax proceedings (AP p.7). The largest is a reassessment of Rameshkumar Shah's income for assessment year 2018-19, in which the tax officer treated ₹127.79 lakh of purchases as paper transactions; a demand of ₹132.98 lakh plus interest is under appeal (DRHP p.272, DRHP p.273).

Promoter economics: the stated average cost of the promoters' shares is ₹1.10 for Rameshkumar Shah, ₹1.55 for Mahendrakumar Babulal Shah, ₹0.10 for Jayesh Babulal Shah and ₹0.05 for Jagdish Amrutlal Shah (AP p.7). Their holdings were built from subscriptions at ₹10 to ₹50 between 2010 and 2013, purchases at ₹36 in 2011 and ₹50 in February 2024, gifts from family members in February 2025, and a 21:1 bonus issue in February 2025 (DRHP p.78, DRHP p.82, DRHP p.83). Jagdish Amrutlal Shah received 44,00,000 shares, 25.54% of the company, by gift from Amritlal Shah on May 11, 2026 (DRHP p.83, DRHP p.84).

11Who already owns it

Source: DRHP p.80, DRHP p.81. The promoters hold 91.41% before the issue and 63.62% after it, on 2,47,60,800 shares (DRHP p.81). There is no fund, institution or company among the shareholders; all 46 holders are individuals (DRHP p.80, DRHP p.86). The public holders came in through rights issues at ₹60 a share: 6,30,800 shares to 36 people on July 10, 2025 and 1,00,000 shares to Shah Prinal, classified in the promoter group, on August 10, 2025, the last allotment before the IPO (DRHP p.77, DRHP p.79). The issue price of ₹48 is below that ₹60. The promoters' 49,71,000 shares are locked in for three years (DRHP p.85).

12What changed just before the IPO

• Related-party sales stopped. Sales to Akshaynidhi Steels, Amrit Sales Corporation and J.K. Steels were ₹4,614.08 lakh in FY24 and ₹3,391.47 lakh in FY25, and ₹2.23 lakh in FY26 (our arithmetic, DRHP p.64). All related-party transactions came to ₹126.26 lakh in FY26, about ₹1.3 crore (our arithmetic, DRHP p.64).
• A new largest customer. The largest customer rose to 20.23% of FY26 revenue from 11.68%, and the top ten to 45.32% (DRHP p.158).
• A 21:1 bonus issue on February 24, 2025 took the share count from 7,50,000 to 1,65,00,000 (DRHP p.77, DRHP p.78).
• The company became a public company, with a fresh certificate dated April 23, 2025 (DRHP p.174).
• Rights issues at ₹60 a share in July and August 2025 raised ₹430.23 lakh; the last allotment was on August 10, 2025 at ₹60 (DRHP p.62, DRHP p.77).
• The plant filled up. Rolling mill utilisation went from 78.05% in FY24 to 97.67% in FY26 (DRHP p.89).
• Customers took longer to pay and suppliers were paid sooner. Receivable days went from 27 in FY24 to 45 in FY26 and payable days from 49 to 27 (DRHP p.99).
• Capital spending on solar. ₹566.74 lakh went into solar plant in FY26, funded by a ₹505 lakh SBI loan (DRHP p.220, DRHP p.264).
• Contingent liabilities rose from ₹254.85 lakh at March 2024 to ₹630.95 lakh at March 2026, about ₹6.3 crore (DRHP p.63).
• Board and officers changed. Three independent directors joined in June 2025, a company secretary and a CFO were appointed in February 2025 and both left in August 2025, when Richa Jain and Jagdish Amrutlal Shah took those posts (DRHP p.181, DRHP p.186).
• The auditor did not change. M S D P & Co was re-appointed in September 2025 for FY26 to FY30, and the table of auditor changes in the last three years shows none (DRHP p.70).
• Plot No. 39 next to the plant was leased on November 26, 2025 for ₹85,00,000, to store finished goods after the expansion (DRHP p.161).

13Capacity and expansion

Source: DRHP p.138, certified by an independent chartered engineer.

The expansion adds 8,000 tonnes a year of rolling capacity, taking it to 19,200 tonnes, inside the existing plant and with no new land; commercial production is scheduled for July 31, 2027 (DRHP p.89, DRHP p.95). The Gujarat Pollution Control Board consent already covers 19,200 tonnes (DRHP p.96). The company says the new capacity will replace part of the job work it now sends out, which cost ₹204.28 lakh in FY26 (DRHP p.95, DRHP p.157). The document gives no expected utilisation for the added capacity, so the chain from capacity to revenue stops at capacity.

14Market size and industry structure

As claimed: the industry chapter is drawn from public sources, mainly the India Brand Equity Foundation and the World Bank, and not from a commissioned report (DRHP p.121, DRHP p.126, DRHP p.136). It states that India produced 153.6 million tonnes of crude steel and 146.8 million tonnes of finished steel in April 2025 to February 2026, that steel capacity was 200.33 million tonnes in FY25, and that secondary producers including small firms held 47% of crude steel capacity in FY25 (DRHP p.130).

The part that is addressable: stainless steel long products sold to traders, fabricators and manufacturers, mostly in western India. The document gives no size for stainless steel long products or for that regional market.

What the company is today: ₹18,029.23 lakh of FY26 revenue and 10,939 tonnes of FY26 rolling output (DRHP p.61, DRHP p.89).

On structure, the company says it competes with both organised and unorganised producers, some with larger capacities and wider distribution (DRHP p.158). Its raw material is scrap bought in India; imports were 0.13% of FY26 raw material (DRHP p.229).

15Competitive position

Source: DRHP p.110, DRHP p.111, FY26 figures, revenue converted from ₹ lakh (our arithmetic). The document does not say which products the peers overlap in.

The company's own list of strengths is a product range in several grades and sizes, presence across Indian states, custom orders, promoter-led management and long customer relationships (DRHP p.107). The evidence the document offers for them is the state-wise revenue table, the repeat customers and the capacity table (DRHP p.137, DRHP p.141). It holds ISO 9001:2015 certification (DRHP p.278). It names no cost advantage beyond solar power and early payment discounts on raw material (DRHP p.97, DRHP p.256).

16Peers the company named

Peers named in the offer document: Mangalam Worldwide Limited and Mangalam Alloys Limited (DRHP p.109).

Both are listed stainless steel companies. Mangalam Worldwide had FY26 revenue of ₹1,20,798.06 lakh, about 6.7 times Panchratan's, and Mangalam Alloys ₹43,791.11 lakh, about 2.4 times (our arithmetic, DRHP p.109). Both carry far more debt, 1.51 and 1.66 times equity against 0.19 (DRHP p.111). Mangalam Alloys' EBITDA margin was 13.35% against Panchratan's 6.89% (DRHP p.110). The document itself says the peers are not strictly comparable given the company's nature and size (DRHP p.109). The basis for issue price chapter puts the issue at 10.14 times FY26 earnings a share against the peers' 24.56 and 5.39, using peer prices of August 21, 2026 (DRHP p.107, DRHP p.109).

17Risks, in plain words

Customers: the largest customer was 20.23% of FY26 revenue and the top ten 45.32% (DRHP p.158) → there are no long-term contracts, only purchase orders (DRHP p.158) → losing one account could remove a fifth of revenue.

Related parties: in FY24, sales to three promoter-group entities were ₹4,614.08 lakh, 31.0% of revenue, and they fell to ₹2.23 lakh in FY26 (our arithmetic, DRHP p.64) → those entities trade in similar products and are bound only by non-compete agreements (DRHP p.190) → the document does not say where that volume went.

Tax: income-tax officers have treated purchases as paper or accommodation entries in three assessment years, ₹190.87 lakh for 2018-19, ₹98.27 lakh alleged for 2019-20 and ₹117.38 lakh for 2020-21 (DRHP p.269, DRHP p.270) → the 2018-19 demand stands at ₹327.38 lakh with interest and penalty proceedings are open (DRHP p.269) → separate GST intimations for FY23 propose ₹457.35 lakh and ₹117.44 lakh over input tax credit from suppliers said to be non-genuine, not yet adjudicated (DRHP p.271).

Capacity and execution: the mill ran at 97.67% in FY26 (DRHP p.89) → growth in own output waits on the new mill, scheduled for July 2027 with no order placed (DRHP p.95) → cost overruns are to be met from internal accruals (DRHP p.93).

Raw material: purchases were 85.50% of FY26 revenue from manufacturing (DRHP p.156) → scrap and alloy prices move with markets (DRHP p.249) → the PAT margin is 4.47% (DRHP p.110), so a small cost change moves profit a lot.

Cash: operating cash flow was 31% of profit over three years and negative ₹15.22 lakh in FY24 (our arithmetic, DRHP p.62) → the working capital plan cuts payable days further to 17 by FY28 (DRHP p.99) → more of the issue money goes into receivables and early payments.

Compliance: provident fund returns were filed late up to 106 days, ROC forms late, and two penalty adjudication applications were made (DRHP p.35, DRHP p.38, DRHP p.46).

Issue-specific: the objects are not appraised, there is no monitoring agency, and ₹375.00 lakh is general corporate purposes (DRHP p.69, DRHP p.87, DRHP p.106).

18Litigation and regulatory matters

The tax amounts exclude interest and demands not yet quantified (DRHP p.269). The company's matters all concern purchases or input tax credit: the income-tax reassessments allege accommodation entries or paper purchases, and the GST cases allege credit taken on goods not received or from suppliers whose registrations were not valid (DRHP p.269, DRHP p.270). Three GST intimations at the stage before a show cause notice propose ₹6.46 lakh, ₹117.44 lakh and ₹457.35 lakh including interest and penalty; these are proposals, not demands (DRHP p.271). Two material creditors are owed ₹301.03 lakh (DRHP p.275).

19Related-party transactions

Source: DRHP p.64. The purchase, remuneration and loan rows are our arithmetic on the lines the table gives.

Read from the filing: the company's largest customer in FY24 was ₹2,090.85 lakh and in FY25 ₹1,819.16 lakh (DRHP p.158), the same amounts as sales to Akshaynidhi Steels in those years (DRHP p.64); and the top three customers in FY24 came to ₹4,614.09 lakh (DRHP p.158), the same as sales to the three related parties together. The document does not say these were the same customers. What appeared or disappeared in the two years before filing: related-party sales stopped in FY26, the company secretary's pay appeared from FY25 and CFO salary from FY26, and the promoters' interest-free loan of ₹28.94 lakh stayed unchanged (DRHP p.64, DRHP p.65).

20What the offer document does not say

Sales volume in tonnes and realisation per tonne by product are not disclosed; only production is. No customer or supplier is named. The document does not say who bought the volume that went to the three related parties in FY24 and FY25, or whether they are the unnamed largest customers. It gives no size for the stainless steel long products market and no commissioned industry report. The expected utilisation of the added 8,000 tonnes is not stated. Gross margin by product is not disclosed. The names of the two material creditors are on the company's website, not in the document (DRHP p.275).

Four document matters: the capacity increase is stated as 71.43% and elsewhere as 65.40% (DRHP p.89, DRHP p.95); the 137 recurring customers' ₹6,371 lakh is stated as 26.79% of FY26 revenue, while on the stated revenue it is 35.3% (our arithmetic, DRHP p.137); a restated note gives the bonus as 15,75,000 shares against 1,57,50,000 in the capital history (DRHP p.77, DRHP p.210); and Plot No.

39 is described as leased from GIDC in the objects chapter but from an individual in the property schedule (DRHP p.94, DRHP p.161). The directors are stated to be unrelated to each other (DRHP p.178), while the promoter group table lists Amrutlal Shah as a brother of Rameshkumar Shah and as the father of Jagdish Amrutlal Shah (DRHP p.190); the document does not reconcile the two.

21Five questions for management

1. Who are the largest customer and the top three customers in FY24, FY25 and FY26, and how much of each year's revenue came from Akshaynidhi Steels, Amrit Sales Corporation and J.K. Steels directly or through them?
2. How many tonnes were sold in each year, by product, and at what average realisation per tonne?
3. What is the basis of the ₹284.32 lakh of FY24 other income from rate and quality differences, and with which counterparties?
4. What share of FY26 purchases came from suppliers named in the GST intimations proposing ₹457.35 lakh, and what did the company pay them?
5. What utilisation does the expanded 19,200-tonne mill need to cover its own depreciation and the extra working capital?

2Sources and cited facts

This study was read from 2 documents the company filed. The 103 figures it cites are listed under the document each came from, with the page and the sentence as printed.