Fractal Industries IPO

Evolution & Growth Journey

• 2020–2022: Setup of manufacturing operations and supplier ecosystem

• 2023–2024: Scale-up phase with revenue expansion and customer diversification

• 2025: Conversion to public limited company, governance restructuring

• 2026: SME IPO to fund working capital and growth initiatives

This relatively short but focused operating history positions Fractal Industries as a young, growth-oriented manufacturing SME, rather than a legacy business.

Products & Services Offered

The company operates on a made-to-order + repeat supply model, allowing better inventory control and margin visibility.

Industry Classification

Fractal Industries operates within India’s industrial manufacturing and engineered products ecosystem, which is closely linked to:

• Infrastructure

• Logistics

• Consumer goods manufacturing

• Industrial supply chains

Indian Industrial Manufacturing Market – Snapshot

(Source: RHP)

Growth Drivers

• Rising domestic manufacturing replacing imports

• Expansion of MSME-led supply chains

• Infrastructure and logistics investments

• Demand for customized, cost-efficient industrial products

Competitive Landscape

The industry is:

• Highly fragmented

• Dominated by SMEs

• Competitive on pricing, delivery timelines, and customization

Fractal Industries competes primarily with regional unlisted manufacturers, rather than large listed conglomerates.

Industry Outlook (Medium Term)

The sector is expected to grow at a steady high-single-digit CAGR, supported by:

• Government manufacturing push

• Capex revival in private sector

• Supply chain localization

What Does Fractal Industries Do?

Fractal Industries is engaged in:

• Manufacturing industrial products

• Supplying engineered solutions to B2B clients

• Maintaining long-term customer relationships

Business Model Explained

This asset-light yet controlled manufacturing model allows scalability without excessive fixed costs.

Target Customers

• Industrial manufacturers

• Logistics & infrastructure-linked businesses

• SME & mid-corporate buyers

The company does not depend on a single customer, reducing concentration risk.

Value Chain Position

Fractal Industries sits in the mid-value segment of the industrial supply chain — balancing:

• Cost competitiveness

• Customization capability

• Delivery reliability

Operating as an Indian manufacturing SME, the company is subject to multiple regulatory frameworks.

Major Applicable Regulations

IPO-Related Compliance

• SEBI ICDR Regulations, 2018

• SME Exchange Listing Regulations

• Continuous disclosure obligations post listing

The company has appointed independent directors, formed statutory committees, and strengthened internal controls in line with IPO norms.

Business Risks

Operational Risks

Financial Risks

These risks are clearly disclosed in the RHP and are typical of manufacturing SMEs at this growth stage

Who Are the Promoters?

The company is promoted by:

• Mr. Pankaj Bishwanath Agrawal

• Mrs. Priti Pankaj Agrawal

They are collectively referred to as the Promoter Group under SEBI regulations.

Promoters’ Role in the Business

The promoters have played a hands-on role since inception, overseeing:

• Business strategy

• Operational scaling

• Financial discipline

• IPO readiness and governance transition

Mr. Pankaj Bishwanath Agrawal currently serves as the Chairman and Managing Director, giving him executive control over both strategic and day-to-day matters.

Promoter Background Snapshot

The promoters have committed to minimum promoter contribution and lock-in requirements as mandated under SEBI ICDR Regulations, which aligns their interests with public shareholders.

Presence of Group Companies

As per disclosures in the Red Herring Prospectus, Fractal Industries Limited does not have subsidiaries.

However, the company has identified group entities based on:

• Past related party transactions

• Common promoter linkage

Nature of Group Relationships

Importantly, no group entity materially controls or influences the company’s operations, reducing governance complexity for investors.

Board of Directors – Overview

The company has constituted a balanced board comprising:

• Executive directors

• Non-executive directors

• Independent directors

This structure is aligned with Companies Act, 2013 and SEBI Listing Regulations applicable to SME-listed entities.

Key Managerial Personnel (KMP)

Management Strength

• Combination of promoter-led execution and professional management

• Dedicated CFO and CS ensure financial discipline and regulatory adherence

• Separation of operational and compliance roles improves transparency

Governance Philosophy

Ahead of the IPO, the company has significantly strengthened its governance framework by:

• Inducting independent directors

• Forming statutory committees

• Adopting internal control and disclosure policies

Statutory Board Committees

These committees function in line with Sections 177 and 178 of the Companies Act, 2013.

Governance Takeaway for Investors

For an SME IPO, Fractal Industries demonstrates:

• Early governance readiness

• Compliance-first approach

• Promoter accountability through structured oversight

Litigation Status

According to the RHP disclosures:

• The company

• Promoters

• Directors

do not face any material litigations that could materially impact business operations or financial position.

Legal Risk Assessment

This clean legal slate is a positive governance indicator for prospective investors.

Key Licenses & Approvals

Fractal Industries holds all approvals required to conduct its business lawfully.

Statutory Compliance Snapshot

IPO-Specific Approvals

• In-principle listing approval from BSE SME

• SEBI ICDR compliance filings completed

• Registrar, merchant banker, and monitoring agency appointed

Fractal Industries Limited has demonstrated strong growth and sharp improvement in profitability, particularly in FY25 and H1 FY26. The company transitioned from a low-margin phase to a high-margin operating profile, driven by scale efficiencies and better cost control.

Summary of Restated Financial Performance

(₹ in lakhs)

*H1 FY26 refers to period ended 30 September 2025

Investor Insight

• Margins have expanded sharply over three years

• FY25 marked a step-change in profitability

• H1 FY26 margins indicate sustainability of improved performance

Fractal Industries operates a working-capital-intensive business, which reflects in its borrowing profile. However, leverage has reduced significantly over time.

Borrowings Snapshot

(₹ in lakhs)

Investor Insight

• Debt-equity reduced from 2.68x (FY24) to 1.04x (H1 FY26)

• Indicates improving balance sheet strength

• IPO proceeds are expected to further ease working capital pressure

While the company is profitable, cash flows have been volatile, mainly due to inventory and receivables movement — common in manufacturing and supply-chain-linked businesses.

Cash Flow Summary

(₹ in lakhs)

Investor Insight

• Negative OCF in FY24 & FY25 due to working capital expansion

• H1 FY26 shows positive operating cash flow

• Cash flows expected to stabilize post-IPO

Fractal Industries shows strong improvement in profitability and returns, supported by operating leverage.

Key Financial Ratios

Investor Interpretation

• High ROE driven by margin expansion and leverage

• Improving ROCE shows better capital efficiency

• Declining debt ratios reduce financial risk

The management of Fractal Industries Limited highlights that the recent improvement in financial performance is the result of:

• Better capacity utilization

• Focus on higher-margin orders

• Tighter control over operating and finance costs

• Rationalisation of customer mix

Management Outlook

• Continue scaling operations without aggressive capex

• Improve working capital efficiency

• Strengthen balance sheet post-IPO

• Maintain margin discipline

Investor takeaway:
Management is prioritizing profitability-first growth, which is critical for SME IPO sustainability.

The IPO is a 100% fresh issue, meaning all proceeds go to the company.

Proposed Use of IPO Proceeds

Why this matters:
No promoter exit → strong confidence signal.

The issue price is determined through the book-building process, considering:

• Earnings growth

• Net worth

• Return ratios

• Comparable SME peers

Key Valuation Anchors

Investor note:
Valuation reflects growth-stage SME pricing, not mature large-cap multiples.

Equity Capital Snapshot

Lock-in:
Promoter shares are subject to SEBI-mandated lock-in, aligning interests with investors.

The company has not declared dividends in the last three years.

Dividend Approach

• Focus on reinvestment during growth phase

• Dividend decisions will depend on:

  • Cash flows

  • Capex needs

  • Financial condition

This is a growth stock, not a dividend yield play (for now).

Capital Gains Tax (Indicative)

Taxes depend on:

• Investor category

• Holding period

• Applicable tax laws at the time of sale

The company has disclosed related party transactions, primarily involving:

• Group entities

• Promoter-linked parties

Key Points

• Transactions are at arm’s length

• No material adverse impact identified

• Fully disclosed in financial statements

Major IPO-Related Agreements

Issue Snapshot

Investor Allocation

Equity shareholders are entitled to:

• Voting rights

• Dividend rights (if declared)

• Participation in corporate actions

• Share in surplus on liquidation

Rights are proportional to shareholding.

The company confirms compliance with:

• Companies Act, 2013

• SEBI ICDR Regulations

• SME Listing Regulations

No material omissions or misleading disclosures reported as per RHP.