Riddhi Display Equipments Ltd. IPO Review

Riddhi Display Equipments IPO Review| Riddhi Display IPO GMP| Riddhi Display Equipments Financials| SME IPO Analysis 2025| Commercial Kitchen Equipment Industry

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Industry Tailwinds

The company is riding on two massive macro-trends in India:

1. Organized Food Retail: The shift from unorganized street vendors to organized sweet shops, bakery chains, and QSRs (Quick Service Restaurants) is driving demand for professional-grade display and kitchen equipment.
2. Tier-2 & Tier-3 Expansion: As premium food culture spreads to smaller cities, local businesses are upgrading their infrastructure to compete with national chains, directly increasing the addressable market for Riddhi’s affordable, durable equipment.

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3. Financial Performance Analysis

The financial health of Riddhi Display Equipments Ltd. paints a picture of a company in a growth phase, capitalizing on operational efficiencies.

Revenue Growth

• FY 2024: ₹18.90 Crores
• FY 2025: ₹25.09 Crores
• Growth Rate: The company witnessed a robust 33% increase in top-line revenue year-over-year. This growth suggests strong market acceptance of their products and successful expansion of their client base.

Profitability Metrics

• PAT (Profit After Tax) FY 2024: ₹2.02 Crores
• PAT (Profit After Tax) FY 2025: ₹4.14 Crores
• Growth Rate: Net profit more than doubled (105% growth). This indicates not just sales growth, but significant improvement in operating leverage.
• EBITDA Margins: The EBITDA margin expanded to a healthy 27.68% in FY25. This expansion is likely due to better raw material sourcing, higher-value customized orders, and economies of scale.
• PAT Margin: The net profit margin stands at 16.53%, which is impressive for a manufacturing entity where single-digit margins are often the norm.

Balance Sheet Strength

• Debt-to-Equity Ratio: The ratio stands at 1.04, indicating a moderate level of leverage. While not debt-free, the debt is serviceable given the strong cash flow generation and high ROCE.
• Return on Net Worth (RoNW): A stellar 39.94%.
• Return on Capital Employed (ROCE): An exceptional 58.40%.
  • Analysis: These return ratios are the highlight of the financial statement. A ROCE of nearly 60% suggests the management is incredibly efficient at utilizing capital to generate profits. It implies that for every Rupee invested in the business, the company generates 58 paise in earnings before interest and tax.

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4. SWOT Analysis

Strengths

• High Return Ratios: RoNW and ROCE are well above industry averages, signalling superior management efficiency.
• Integrated Manufacturing: In-house fabrication capabilities allow for strict quality control and faster turnaround times for custom orders.
• Niche Expertise: Specialization in “Display” equipment creates a specific brand identity distinct from general kitchen equipment manufacturers.

Weaknesses

• Scale of Operations: With a revenue base of ₹25 Cr, the company is still small. Small caps are inherently more volatile and sensitive to economic shocks.
• Geographical Concentration: A significant portion of revenue is likely derived from Gujarat and neighboring regions. Lack of a pan-India distribution network limits immediate scalability.

Opportunities

• Export Potential: The company has started exploring exports (witnessing a surge in FY25). This is a massive untapped market, especially in developing nations with similar retail structures.
• Plant Expansion: IPO proceeds are dedicated to setting up a new unit in Lucknow, Uttar Pradesh. This strategic move will reduce logistics costs for North Indian clients and open up a massive new market in the Hindi heartland.

Threats

• Raw Material Volatility: The business is raw-material intensive (Stainless Steel, Glass, Compressors). Fluctuations in steel prices can directly impact margins if costs cannot be passed on to customers.
• Competition: The sector is fragmented with many unorganized players offering cheaper, non-standardized alternatives.

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5. Peer Comparison & Valuation

To understand if the IPO is fairly priced, we must compare it with its closest listed peer.

Peer: Ice Make Refrigeration Ltd.

• Ice Make P/E Ratio: ~52x
• Riddhi Display P/E (Pre-IPO): ~14.91x
• Riddhi Display P/E (Post-IPO): ~14.4x

Valuation Verdict

On a standalone P/E basis, Riddhi Display appears attractively valued at roughly 14.4x FY25 earnings, compared to Ice Make Refrigeration which trades at a significantly higher multiple (50x+).

However, a discount is warranted due to the size difference. Ice Make is a much larger, more established player with higher revenue volume. Riddhi Display is smaller and thus carries higher “small-cap risk.” Even factoring in a “liquidity discount” and “size discount,” a P/E of 14-15x for a company growing profits at 100% and boasting 58% ROCE seems reasonable, leaving some room for listing gains if market sentiment holds.

Key Valuation Metrics (Post-Issue):

• Market Cap: ~₹86.40 Crores
• EPS (FY25): ₹6.84
• P/BV: ~6.08x

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6. IPO Objectives: Where is the Money Going?

Investors should always scrutinize the “Objects of the Issue” to ensure funds are used for growth, not just debt repayment. Riddhi Display’s usage plan is growth-centric:

1. New Manufacturing Unit (Lucknow): ₹4.96 Cr. This is a bullish signal. Expanding capacity in a new geography diversifies revenue risk and lowers shipping costs.
2. Upgradation of Gondal Unit: ₹3.79 Cr. Modernizing existing machinery will likely improve margins further through automation and efficiency.
3. New Showroom (Gondal): ₹1.42 Cr. Enhancing brand visibility and customer experience.
4. Working Capital: A portion is allocated for daily operations, which is standard for manufacturing firms with inventory cycles.

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7. Grey Market Premium (GMP) Trends

As of December 8, 2025

The Grey Market Premium serves as an unofficial indicator of market sentiment.

• Current GMP: ₹0 – ₹1
• Estimated Listing Price: ₹100 – ₹101
• Expected Listing Gain: ~0% – 1%

Analysis: The current GMP is muted/flat. This suggests that the unlisted market is cautious. The lack of a high premium doesn’t necessarily mean the company is bad, but it indicates that “listing pop” seekers are staying away. This IPO is currently a play for long-term fundamental investors, not flippers. The flat GMP might also be a result of the overall liquidity crunch in the SME segment recently.

Note: GMP is volatile and can change rapidly based on subscription numbers.

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8. Final Review & Investment Strategy

The Bull Case (Why Apply?)

• Cheap Valuations: P/E of ~14x vs Industry Peer at 50x.
• Superb Efficiency: ROCE of 58% is hard to find in manufacturing.
• Growth Visibility: Doubling profits and a clear roadmap for expansion into North India (Lucknow plant).

The Bear Case (Risks)

Market Bloodbath: Sensex Crashes 600+ Points, Nifty Breaches 26k Support!

• Flat GMP: Indicates low immediate demand; listing could be flat or negative if market sentiment sours.
• Micro-Cap Size: Market Cap of <₹90 Cr means liquidity will be low post-listing. Entry and exit can be difficult.
• Cyclical Industry: Dependent on the capex cycle of the food industry.

Conclusion

Riddhi Display Equipments Ltd. presents a strong fundamental case disguised by weak market sentiment. The financials are robust, the valuation is fair, and the expansion plan is logical. However, the lack of GMP excitement suggests that short-term listing gains are unlikely.

Recommendation:

• For Listing Gain Seekers: Avoid. The current GMP does not justify the risk for a quick flip.
• For Long-Term Investors: Apply with Caution. If you are willing to hold for 1-2 years to let the Lucknow expansion play out, the low entry valuation offers a margin of safety. Monitor the subscription figures on Day 2 and Day 3; if QIB (Qualified Institutional Buyer) interest picks up, it would be a strong validation to enter.

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FAQ Section

Q1: What is the minimum investment amount for Riddhi Display IPO? A: Retail investors need to apply for a minimum of 1 lot (1,200 shares). At the upper price band of ₹100, this amounts to ₹1,20,000.

Q2: Is Riddhi Display Equipments profitable? A: Yes, the company is profitable. It reported a Profit After Tax (PAT) of ₹4.14 Crores in FY25, which was a 105% increase over the previous year.

Q3: Where will Riddhi Display shares be listed? A: The shares will be listed on the BSE SME platform.

Q4: Who is the registrar for this IPO? A: Maashitla Securities Private Limited is the registrar. You can check allotment status on their website.

Q5: What is the PE Ratio of Riddhi Display IPO? A: The post-issue P/E ratio is approximately 14.4x, which is considered reasonable compared to industry peers.

Q6: Can I sell the shares on listing day? A: Yes, but since it is an SME IPO, shares are traded in lots. You cannot sell 10 or 50 shares; you must sell the entire lot of 1,200 shares (or multiples thereof) at once.

Riddhi Display Equipments IPO Review| Riddhi Display IPO GMP| Riddhi Display Equipments Financials| SME IPO Analysis 2025| Commercial Kitchen Equipment Industry

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