Apollo Techno Industries IPO Review: Digging Deep into Value?

Apollo Techno Industries IPO Review| Apollo Techno Industries IPO GMP| Apollo Techno Industries SME IPO| Apollo Techno Industries Price Band| Construction Equipment IPO

The Indian infrastructure story continues to churn out interesting plays in the SME segment, and the latest entrant is Apollo Techno Industries Limited. As the country pushes for smarter cities and underground utility networks, the demand for specialized drilling equipment has skyrocketed. Apollo Techno Industries, a Gujarat-based manufacturer of Horizontal Directional Drilling (HDD) rigs, is positioning itself to capitalize on this trenchless technology boom.

But is this engineering company a solid foundation for your portfolio, or will it hit a bedrock of valuation concerns?

In this Apollo Techno Industries IPO Review, we will conduct a forensic deep dive into their business model, dissect their financials, analyze the Grey Market Premium (GMP), and evaluate whether this SME IPO is worth the bid.

Critical Dates & Details

Event	Date / Detail
IPO Open Date	Tuesday, December 23, 2025
IPO Close Date	Friday, December 26, 2025
Allotment Date	Monday, December 29, 2025
Refunds Initiation	Tuesday, December 30, 2025
Shares Credit	Tuesday, December 30, 2025
Listing Date	Wednesday, December 31, 2025
Face Value	₹10 Per Equity Share
Price Band	₹123 – ₹130 per share
Lot Size	1,000 Shares
Issue Size	₹47.96 Crores (Fresh Issue)

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Part 1: Deep Dive Analysis

1. The Business Model: Drilling for Moats

To understand Apollo Techno Industries, you must first understand the shift in Indian infrastructure construction. Traditional “open-cut” trenching—where roads are dug up to lay cables—is becoming obsolete in crowded cities. This is where Trenchless Technology comes in.

What They Do:

Apollo Techno Industries Limited manufactures specialized construction equipment. They are not just an assembler; they have in-house engineering and design capabilities. Their core product portfolio includes:

• Horizontal Directional Drilling (HDD) Rigs: Their flagship product. These machines allow utilities (optical fiber, gas pipelines, electric cables) to be laid underground without digging up the surface.
• Diaphragm Wall Drilling Rigs: Used for deep foundation work, crucial for Metro projects and high-rise basements.
• Rotary Drilling Rigs: Used for piling in bridges and heavy infrastructure.
• Spare Parts & Services: They provide after-sales support, which is a high-margin recurring revenue stream.

The “Make in India” Edge:

Historically, India imported a significant volume of HDD rigs from China and the US (brands like Vermeer or Ditch Witch). Apollo Techno positions itself as an indigenous alternative, offering cost advantages in both initial purchase price and maintenance. By manufacturing locally in Mehsana, Gujarat, they reduce the lead time for spares—a critical pain point for construction contractors who cannot afford machine downtime.

Customer Concentration Risk:

While the product is sticky, the client base is concentrated. The company relies heavily on a network of contractors who execute government tenders. If infrastructure spending slows down due to policy paralysis or monsoon delays, their order book could face immediate compression.

2. Financial Performance: A Quantum Leap?

The most eye-catching aspect of this IPO is the financial growth reported in the Red Herring Prospectus (RHP). The numbers show a company shifting gears from “survival” to “growth.”

• Revenue Growth:The company reported revenue from operations of ₹99.66 Crores for FY25, a significant jump of roughly 44% over the previous year. This suggests strong traction for their products and potentially higher utilization of their manufacturing capacity.
• Profitability Explosion:The Profit After Tax (PAT) for FY25 stood at ₹13.79 Crores, compared to just ₹3.23 Crores in FY24. This is a massive 327% increase.
  • Analysis: Investors need to ask—is this sustainable? A 3x jump in profit often comes from operating leverage (fixed costs staying the same while revenue rises). However, it can also be due to one-off large orders. The EBITDA margin improved significantly to 18.31%, indicating better pricing power or reduced raw material costs (steel prices).
• Return Ratios:
  • ROE (Return on Equity): An astounding 74.75% for FY25. This is incredibly high and usually indicates a low equity base or high leverage.
  • ROCE (Return on Capital Employed): Stood at 30.98%. The gap between ROE and ROCE suggests the company is leveraging debt effectively to generate returns for shareholders.

The Debt Factor:

The company is capital intensive. The proceeds of the IPO (₹47.96 Cr) are primarily for Working Capital (₹38.5 Cr). This confirms that as they grow, their money gets stuck in inventory (machines take time to build) and receivables (contractors pay late). High working capital needs are typical for this sector but remain a cash-flow risk.

3. Industry Landscape & Peer Comparison

The construction equipment sector is cyclical. Apollo competes with:

1. Global Giants: Vermeer, Ditch Witch, XCMG (China).
2. Domestic Listed Peers: While there are no direct listed peers solely focused on HDD rigs, we can compare them to broader engineering/construction equipment SMEs like Action Construction Equipment (ACE) or Escorts Kubota (though these are much larger).

Compared to general engineering SMEs, Apollo’s P/E ratio (Pre-IPO ~9.43x, Post-IPO ~41.16x based on diluted equity) appears aggressive if you look at the post-issue valuation, but reasonable if the growth rate of FY25 continues.

4. SWOT Analysis

Strengths:

• Niche Product: Only a few domestic players manufacture HDD rigs with this level of customization.
• Government Push: Schemes like “Digital India” (fiber optics) and “Jal Jeevan Mission” (water pipelines) directly drive demand for their machines.
• High Margins: 13.84% Net Profit Margin is healthy for a manufacturing heavy industry.

Weaknesses:

• Working Capital Heavy: The business eats cash. If they don’t manage receivables well, they can grow broke (profit on paper, no cash in bank).
• Single Location Risk: Manufacturing is concentrated in a single facility in Gujarat.
• Raw Material Volatility: Steel prices directly impact their bottom line.

Opportunities:

• Export Markets: They have started exporting to select markets. Expanding this could hedge against domestic cyclicality.
• Refurbishment Market: As the installed base of machines grows, servicing and refurbishing old rigs becomes a lucrative revenue stream.

Threats:

• Chinese Dumping: If import duties are lowered, cheaper Chinese rigs could flood the market.
• Technological Obsolescence: If a newer trenchless technology emerges, their inventory could become obsolete.

5. Valuation and GMP Analysis

The Valuation Math:

At the upper price band of ₹130, the company is asking for a market capitalization of roughly ₹178 Crores.

• EPS (FY25): ₹13.79 (Basic).
• P/E (Pre-issue): ~9.4x.
• P/E (Post-issue): The dilution will increase the P/E significantly. If we adjust for the increased number of shares, the valuation looks steeper. However, compared to the industry average of 15x-25x for high-growth engineering firms, the pricing seems to have left some money on the table, but not a lot.

Grey Market Premium (GMP) Trends:

As of late December 2025, the GMP is hovering around ₹5 to ₹18.

• Premium: ~4% to 14%.
• Interpretation: The market is cautious. A GMP of <15% for an SME IPO is considered “risky” or “flat”. It indicates that the street is not expecting a bumper listing. The recent volatility in the broader SME index has likely dampened enthusiasm.

The Verdict:

Apollo Techno Industries is a high-risk, high-reward bet. The “reward” comes from the massive growth in FY25—if they repeat that in FY26, the stock is cheap. The “risk” is that FY25 was a peak cycle year, and the working capital crunch could slow them down.

• For Listing Gains: The current GMP suggests limited upside.
• For Long Term: This is a play on the “Capex Cycle”. If you believe the Indian government will continue aggressive infrastructure spending for the next 5 years, this company is a direct beneficiary.

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FAQ Section

1. What is the minimum investment for the Apollo Techno Industries IPO?

Retail investors need to apply for a minimum of 1 lot (1,000 shares). At the upper price band of ₹130, this amounts to ₹1,30,000. (Note: Some sources indicate ₹2,60,000 for 2 lots minimum in certain SME categories, please verify with your broker portal as standard SME lots are often ₹1L+, but this specific issue has a 1000 share lot).

2. Is Apollo Techno Industries a mainboard IPO?

No, this is an SME IPO and the shares will be listed on the BSE SME platform. Liquidity in SME stocks is generally lower than Mainboard stocks.

3. What is the current GMP of Apollo Techno Industries?

As of December 26, 2025, the GMP is reported to be between ₹5 and ₹18, implying a potential listing price of ₹135–₹148.

4. Can I sell the shares on listing day?

Yes, but since it is an SME IPO, the shares are traded in lots. You cannot sell 50 shares; you must sell the entire lot of 1,000 shares at once. This makes exit slightly more difficult during low-volume days.

5. What is the primary use of the IPO funds?

Approximately 80% of the net proceeds (₹38.5 Crores) will be used to fund Working Capital requirements. This is crucial for their manufacturing cycle.

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Disclaimer: This post is for educational purposes only and does not constitute financial advice. Please consult your financial advisor before investing in SME IPOs, which carry high risk.

Apollo Techno Industries IPO Review| Apollo Techno Industries IPO GMP| Apollo Techno Industries SME IPO| Apollo Techno Industries Price Band| Construction Equipment IPO

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by Mirae Asset (m,Stock)