Behari Lal Engineering IPO: Forged Fundamentals, Fair Price?
A 30-year-old Punjab forging house is opening its books at ₹271–285 a share. Here's the honest read on the numbers, the peers, and whether this one is worth a lot — for a flip or for the long haul.
What Behari Lal Actually Makes
Founded in 1995, this Punjab-based outfit is a specialised steel and engineering manufacturer — the kind of unglamorous, load-bearing business that keeps heavier industries running. Its product line includes metal rolls, engineering castings, alloy steel products, forging ingots, and forged shafts and blocks, built to order for clients in steel, mining, power, sugar, automotive, aerospace, oil & gas and energy.
Three decades in a capital-intensive, relationship-driven industry is a real moat — this isn't a business you spin up overnight to chase an IPO cycle.
The GMP Gauge
₹285 issue price + ₹74 GMP ≈ ₹359 implied listing price — roughly a 26% premium. GMP has climbed steadily from ₹0 to ₹74 over the last eight sessions.
Who's Running the Show
The Garg family holds every key post, which is typical for a promoter-led industrial business of this size. Continuity is a plus; concentration of control is the trade-off worth noting.
| Name | Role |
|---|---|
| Parkash Chand Garg | Chairman & Non-Executive Director |
| Rajesh Garg | Vice Chairman & Non-Executive Director |
| Dinesh Garg | Managing Director |
| Lovlish Garg | Whole-time Director |
| Bhuvnesh Garg | CEO |
| Kanav Garg | COO |
| Sanjeev Kumar Sehgal | Company Secretary & Compliance Officer |
Management score: 8/10 — deep, decades-long sector experience, offset by a fully family-held leadership bench.
How The Issue Is Structured
| Particular | Details |
|---|---|
| Issue size | ₹301.62 Cr |
| Fresh issue | ₹93 Cr |
| Offer for sale (OFS) | ₹208.62 Cr |
| Minimum retail investment | ₹14,820 |
Roughly two-thirds of this issue is an Offer for Sale — money going to existing shareholders cashing out, not into the company. The fresh issue portion (₹93 Cr) is earmarked mainly for new machinery, capacity expansion, and rooftop solar.
Fundamentals — The Strongest Chapter
Revenue growth is steady, not spectacular. What stands out is how much faster profitability is compounding underneath it.
EBITDA margin, FY24 → FY26
| ₹ Crore | FY24 | FY25 | FY26 |
|---|---|---|---|
| Revenue | ~450 | ~516 | ~547 |
| PAT | ~35.8 | ~53.0 | ~64.6 |
PAT nearly doubled in two years while revenue grew more modestly — a sign of a business shifting toward higher-value products and tighter operating discipline, not just volume.
Balance Sheet — Genuinely Clean
Net debt has been shrinking fast:
For a capital-intensive forging and casting business, this is an unusually light debt load — it gives management room to fund growth without leaning hard on leverage.
Valuation vs. The Peer Set
At ₹285, the issue prices in at roughly 18.7x FY26 earnings. Here's how that sits next to the comparable companies named in the company's own DRHP:
| Company | P/E |
|---|---|
| Behari Lal Engineering (IPO) | ~18.7x |
| Steelcast | ~5.8x* |
| IFGL Refractories | ~20.3x |
| Vardhman Special Steels | ~24.4x |
| AIA Engineering | ~27.5x |
| RHI Magnesita India | ~48x |
| Jayaswal Neco | ~59.9x |
*DRHP peer multiples are pegged to a fixed reference period and can drift materially from where the market prices these names today.
Behari Lal isn't the cheapest name on the list, but it lands well below the pricier end of the peer set — a fair, not a bargain, entry point.
The Case For and Against
What I like
- EBITDA margin climbing steadily toward 19%
- Very low, and falling, net debt
- Diversified across steel, mining, power, auto, aerospace and energy customers
- Fresh capital funding real capacity expansion, including rooftop solar
- Strong early demand — 3.59x subscribed by Day 2 midday, retail leading at 4.51x
What gives me pause
- Revenue growth is steady, not explosive
- Customer concentration flagged as a real risk
- Unhedged foreign-exchange exposure
- ~₹209 Cr of the ₹302 Cr issue is OFS — existing holders cashing out
Is It a Long-Term Hold?
My rating: 7.5/10. This reads as a steady industrial compounder story — low debt, improving margins, an established client base, real capacity expansion — rather than a high-growth rocket. An order book of about ₹178.57 crore as of end-May 2026 gives some near-term revenue visibility, but I wouldn't bank on a five-year multibagger purely off the IPO pitch.
Things worth tracking after listing:
- Revenue growth trajectory
- EBITDA margin trend
- Order book size
- Customer concentration
- Export growth
- ROCE
- Working capital cycle
Scorecard
| Business | ★★★★☆ |
| Management | ★★★★☆ |
| Financials | ★★★★☆ |
| Balance sheet | ★★★★★ |
| Growth | ★★★☆☆ |
| Valuation | ★★★★☆ |
| GMP / listing sentiment | ★★★★★ |
| Long-term potential | ★★★★☆ |
How It Stacks Up Against Other Recent IPOs
Against two other names on the current calendar — Ardee Industries and Milky Mist — Behari Lal comes out with the best combination of valuation comfort and balance-sheet strength, while Milky Mist carries the stronger consumer growth story but a much richer price tag.
Apply For The Lot, Hold Judgment On The Rest
If I were applying today, I'd take one retail lot for the listing pop. For a meaningful long-term position, I'd rather watch the listing settle and let two or three quarters of results confirm the margin story before committing serious capital.
No comments:
Post a Comment