Shayona Engineering IPO

Shayona Engineering Limited is an engineering and manufacturing company incorporated in 2017 and subsequently converted into a public limited company in 2024. The company operates from its manufacturing facility located at Makarpura Industrial Estate, Vadodara, Gujarat. Shayona Engineering is engaged in precision engineering and industrial manufacturing, offering customised solutions to clients across diverse industrial sectors.

The company's operations span precision castings, CNC machining, heavy fabrication, industrial automation, dies and moulds, forging, reverse engineering, and turnkey engineering solutions. Over the years, Shayona Engineering has focused on building in-house capabilities to execute complex engineering jobs that require tight tolerances, customised designs, and consistent quality standards.

Its customer base includes manufacturers in automotive components, pumps and valves, infrastructure equipment, power and energy, and general engineering industries. The company positions itself as a solution-driven engineering partner rather than a commodity supplier, enabling it to undertake specialised and repeat business.

Shayona Engineering operates within India's capital goods and precision engineering sector, a critical backbone of the country's manufacturing ecosystem. This industry supports infrastructure development, industrial expansion, automotive production, energy projects, and machinery manufacturing. Growth in this segment is closely linked to capital expenditure cycles, government infrastructure spending, and industrial investment activity.

Initiatives such as "Make in India", increased focus on domestic manufacturing, import substitution, and rising exports of engineering goods have supported long-term industry growth. However, the sector remains cyclical and exposed to fluctuations in raw material prices, global economic conditions, and customer demand cycles.

Investment in Shayona Engineering Limited is subject to several risks, as outlined in the Red Herring Prospectus:

• Dependence on a limited number of customers for a significant portion of revenue, which may expose the company to order concentration risk.
• Exposure to cyclical demand from infrastructure and industrial sectors, which can impact order flow and margins.
• Working capital-intensive operations that may lead to cash flow volatility.
• Risks related to quality compliance, specification adherence, and potential rejection of manufactured components.
• Competitive pressure from larger and more established engineering companies.
• Regulatory, environmental, and statutory compliance risks associated with manufacturing operations.

The promoters of Shayona Engineering Limited are Vipul Bhikhabhai Solanki, Kinnariben Vipulbhai Solanki, and Gaurav Ratukumar Parekh. The promoters have been instrumental in establishing the company's operational foundation, customer relationships, and strategic direction.

Prior to the IPO, the promoters collectively hold a majority stake in the company. Post issue, while promoter shareholding will dilute, they will continue to retain management control and play an active role in business operations.

The company is managed by an experienced leadership team supported by qualified professionals:

• Vipul Bhikhabhai Solanki – Chairman and Managing Director, responsible for overall strategy and business development.
• Gaurav Ratukumar Parekh – Whole-Time Director, overseeing operations, finance, and execution.
• Kinnariben Vipulbhai Solanki – Whole-Time Director, involved in administration and strategic planning.
• Geetaben Pravinchandra Parekh – Chief Financial Officer.
• Arti Ankitkumar Singh – Company Secretary and Compliance Officer.

As disclosed in the RHP, the company, its promoters, and directors are involved in certain legal and regulatory proceedings arising in the ordinary course of business. These primarily relate to taxation and statutory compliance matters. None of the disclosed litigations are considered material enough to threaten the company's business continuity; however, adverse rulings could impact financial performance.

Key Financial Ratios (FY 2025)

Cash Flow Analysis

Historically, Shayona Engineering's cash flows have reflected the working capital-intensive nature of engineering manufacturing. While earlier periods witnessed negative operating cash flows, recent financial periods show improvement driven by higher profitability and better receivable management.

The net proceeds from the IPO are proposed to be utilised for the following objectives:

• Purchase of plant and machinery to expand production capacity.
• Repayment or prepayment of certain outstanding borrowings.
• Funding incremental working capital requirements.
• General corporate purposes.

Offer Structure

Valuation

At the upper price band, the IPO is valued at approximately 15–16 times FY25 earnings. Considering the company's growth trajectory, improving profitability, and return ratios, the valuation appears reasonable for an SME engineering company. Investors should, however, factor in SME-specific risks such as lower liquidity and higher volatility.

Capital Structure

Post IPO, the company's paid-up equity capital will increase due to the fresh issue of shares. The proceeds are expected to strengthen the balance sheet by reducing debt and supporting capacity expansion, while promoter shareholding will dilute but remain at controlling levels.

Corporate Governance

Following listing, Shayona Engineering Limited will comply with SEBI (LODR) Regulations applicable to SME-listed entities. The company has constituted an Audit Committee, Nomination and Remuneration Committee, and Stakeholders' Relationship Committee with independent directors to ensure governance oversight.

Management Discussion

The management expects future growth to be driven by rising demand for precision-engineered components, capacity expansion, increased automation, and diversification of the customer base. Focus areas include operational efficiency, quality enhancement, margin improvement, and disciplined capital allocation while managing industry cyclicality and cost pressures.

Disclaimer: This content is for informational purposes only and does not constitute investment advice.