Adroit Industries (India) Ltd

Adroit Industries (India) Limited

Adroit Industries (India) Limited makes propeller shafts, the rotating shafts that carry power from a vehicle's gearbox to its axle, along with the forged and machined parts that go into them. Machined components such as yokes, flanges, stub shafts and universal joints were 67.78% of FY26 product sales and complete shaft assemblies 32.22%, across 5,250 SKUs. Exports were 95.39% of product sales, the United States alone 51.28%, and 62.45% of sales went through distributors. Manufacturing runs across three plants in Madhya Pradesh: forging at Dewas, machining and assembly at Pithampur through the 99.87% subsidiary Adroit Driveshafts Private Limited (ADPL). The Sangla family, which bought control in 2007 and also runs the listed polymer trader and irrigation pipe maker Signet Industries, holds 96.10% before the issue, of which 48.70% sits with the named promoters.

Auditor : Ashok Khasgiwala & Co. LLP (from August 2025; SMAK & Co before that)    BRLM : Choice Capital Advisors Private Limited (sole book running lead manager)    Registrar : Bigshare Services Private Limited

DRHP filed: 30 March 2026    RHP filed: 17 September 2026    Anchor book: 22 September 2026

EBITDA after forex adjustment adds back the net forex losses of ₹5.38 cr in FY24 and ₹3.82 cr in FY25 booked in other expenses; FY26 had no forex loss in expenses, and its ₹0.50 cr forex gain sits in other income, outside EBITDA. PAT% is on total income. Free cash flow is CFO less capex, plus capital subsidy received, less interest paid, and is our calculation.

Disclaimer. Delta Partners (public market division under Dexter Capital) is not a SEBI registered Investment Advisor and this report does not constitute a recommendation but is only prepared for educational purposes. We (our team members including our directors) may or may not apply to IPO.

This note is not reviewed by our CIO, Devendra Agrawal, CFA. It is prepared by our team of Investment Analysts, and is reviewed by our senior team members. Any questions related to the IPO can be directed to shubham@deltainvest.in and we will come back.

Executive Summary:

Skip for listing | Skip for the Long Term | GMP: ~24% (21 September 2026)

Our discomfort here is with the people. The promoter family's record includes an income tax search that brought out ₹12.22 cr of income against ₹16.47 lakh declared, a central excise intelligence case over clandestine removal of goods in which ₹35 lakh of cash was seized, a criminal CENVAT prosecution that is still running, and a promoter group relative whose companies sit on the wilful defaulter list. The RHP's business section says the company is led by Mukesh Sangla; he is the executive Chairman and Managing Director of Signet Industries on ₹10 lakh a month and holds no executive role at Adroit. Adroit meanwhile has ₹31.56 cr, or 24.53% of its net worth, in Signet securities and in unsecured loans to two outside companies. Since the GMP of 24% is not appealing against the quality of business/proceedings, we would skip the issue even for IPO gains.

• Mukesh Sangla declared income of ₹16.47 lakh for assessment year 2010-11. After an income tax search under Section 132 he filed a return under Section 153A disclosing a further ₹12.22 cr, 74.2 times what he had declared. The ₹3.78 cr concealment penalty was set aside by the CIT(A) and the ITAT because the penalty notice was vague and the returned and assessed incomes matched. The department's appeal, filed in 2022, argues the income surfaced only because of the search and is pending before the Madhya Pradesh High Court.

• The Directorate General of Central Excise Intelligence searched the offices, factories and godowns of Signet Overseas Limited, Logic Poly Product and their group companies on intelligence that production was being understated and plastic goods removed without paying excise duty, with inputs drawn from Signet Overseas godowns. It seized documents and ₹35 lakh in cash. The Commissioner of Central Excise, Indore confirmed the duty and imposed penalty in January 2012. The respondents then went to the Settlement Commission, which ruled in their favour, and the department's writ against that order, naming Mukesh Sangla as a respondent, has been pending in the Madhya Pradesh High Court since 2012.

• Yashwant Sangla, Mukesh Sangla's brother and a deemed promoter group member, did not provide the confirmations the regulations require, despite follow-ups by the company. SEBI rejected the company's exemption request on 4 March 2026 and directed disclosure from public records. Those records show a ₹1 lakh SEBI penalty on him for failing to make takeover code disclosures in Linkson International, which was suspended from trading, faced compulsory delisting proceedings and was ordered into liquidation by NCLT Mumbai. Linkson International, Linkson Coal and Minerals and Linkson Ispat and Energies sit in CIBIL's wilful defaulter database with Yashwant Sangla and/or other members of the Sangla family shown as promoter or director, and a DRT Nagpur notice in proceedings brought by Bank of Baroda records a recovery certificate against Linkson entities.

• Four more criminal proceedings name the promoters, three of them over money not paid. Micro Polypet says a ₹50 lakh Signet cheque dated 31 January 2017, issued for PET chips, was returned marked 'payment stopped by drawer'; Signet says the cheques were security. A former Signet sales manager claims unpaid salary for October 2022 to January 2023 and travel and daily allowances, ₹3.87 lakh in all. A contractor that built at Signet's Pithampur factory says ₹20.36 lakh was withheld and alleges conspiracy, fraud, criminal breach of trust and threats against Mukesh and Saurabh Sangla, and is seeking an FIR. The fourth is a Factories Act prosecution over a worker's severe hand injury on a baling machine at Signet's Pithampur plant in December 2021, allegedly for want of safety guards. All four are pending.

• Over FY24 to FY26 the business turned ₹99.41 cr of reported EBITDA into ₹69.65 cr of operating cash, a conversion of 70.06%. Free cash flow after capex, capital subsidy and interest was ₹47.01 cr against ₹58.83 cr of profit.

• Net working capital runs at 237 days on the RHP's own measure, against 72 days at Hindustan Hardy, 78 at Talbros Engineering and 164 at GNA Axles. Inventory alone is 135 days against 36, 48 and 54 days at the three peers. Balances with government authorities stood at ₹10.31 cr at March 2026, and ₹1.13 cr of bad debts were written off in FY26 against nil in the two earlier years.

• Of the 449 basis point rise in EBITDA margin in FY26, 285 basis points is the absence of the previous year's forex loss. The company does not hedge, and booked forex losses of ₹5.38 cr in FY24 and ₹3.82 cr in FY25 inside other expenses, which reduced EBITDA; the FY26 gain of ₹0.50 cr went to other income. Adding the losses back, EBITDA was ₹35.06 cr in FY24, ₹34.83 cr in FY25 and ₹38.71 cr in FY26, against reported EBITDA of ₹29.69 cr, ₹31.02 cr and ₹38.71 cr, and the margin was 28.16%, 26.02% and 27.66%. On that basis EBITDA fell 0.65% in FY25 and rose 11.13% in FY26, against reported growth of 4.49% and 24.79%.

• Pithampur made 6,71,877 units in FY24 and 6,72,324 in FY26 and ran at 74.70%, yet ₹43.96 cr of the issue goes to doubling its capacity to 18,00,000 units. Sanwer has 5,47,000 units of installed capacity rated at 85,000 effective and ran at 33.45%. Dewas was expanded from 2,400 MT to 3,000 MT in January 2026 and the issue takes it to 5,500 MT. Product sales rose 15.05% over two years while Pithampur's output rose 0.07%.

• On 29 August 2026 promoter group companies Signet Impex and Signet Tradelinks sold 11,11,112 shares to Abakkus Venture Opportunities Fund at ₹90, with Signet Impex selling smaller lots to Chhatisgarh Investments and Sharad Agrawal on 28 and 31 August at the same price. The ₹134 cap price is 48.89% higher.

• Three of the independent directors left between May and November 2025, each citing pre-occupation with personal work, and two of the current three joined in November 2025 and March 2026. The company secretary post has passed through three people since August 2023 with two vacancies in between, and the CFO changed in February 2026. SMAK & Co, which audits Signet, audited Adroit until FY25; Ashok Khasgiwala & Co. LLP took over on 6 August 2025.

• We need to update this as well, looks quite dated.Two earlier attempts to list were withdrawn. Draft offer documents were filed with NSE on 7 February 2011 and 5 June 2017, and both were withdrawn citing unfavourable market conditions.

The Promoter Record

Signet and Adroit: Who Runs What

• Mukesh Sangla was Adroit's Managing Director from 2007 to 2015 and has held no executive role at Adroit since; at Signet he is Chairman and Managing Director. Signet is the larger business by a distance, with ₹1,181.32 cr of income in FY25 against Adroit's ₹139.94 cr of revenue in FY26, and it is the company that pays him.

• Day-to-day operations rest on long-serving second-line managers: Rohidas Dhone in production since January 1998, Anirudha Arya in export marketing since January 2012, Milan Jade in engineering and development since June 2013 and Rahul Laad in plant development and supplier management since October 2016. The finance and secretarial functions, which are where the compliance record broke down, have turned over far more often.

• Kozzby International, a group company in which a director has substantial interest, owed Adroit ₹1.39 cr at March 2026 against FY26 sales to it of ₹0.51 cr, and ₹1.60 cr at March 2025 against FY25 sales of ₹1.63 cr. Risk factor 1 of the RHP also says revenue from Colombia or other export markets may be routed through or associated with related party counterparties.

Cash Flow and Balance Sheet

Free cash flow is cash flow from operations less purchase of property, plant and equipment, plus capital subsidy received, less interest paid, and is our calculation. Interest paid sits in financing activities in the company's cash flow statement. Cumulative CFO over FY24 to FY26 was ₹69.65 cr against cumulative reported EBITDA of ₹99.41 cr, and cumulative free cash flow ₹47.01 cr against cumulative PAT of ₹58.83 cr. Core working capital and its days are our calculations; the RHP's own net working capital days are 237, 238 and 237. Figures may not add due to rounding.

• Net debt fell from ₹80.68 cr to ₹50.90 cr over two years. Bank borrowings of the company and ADPL were back up at ₹63.21 cr by 31 July 2026, ₹10.81 cr above the March 2026 consolidated figure, with ₹46.87 cr of it in working capital and cash credit lines, and ₹24.12 cr of the issue goes to repaying ADPL debt. Mukesh and Saurabh Sangla guarantee all of it personally, and Adroit has given ₹76.18 cr of corporate guarantees for ADPL.

• Inventory of ₹55.23 cr is 39.47% of revenue and receivables of ₹45.28 cr another 32.36%. The stock register behind that inventory had no audit trail in FY24 and FY25, per the auditors.

Business

• A propeller shaft is the rotating steel tube under a truck, SUV or heavy machine that takes power from the gearbox to the axle, with a universal joint at each end to handle misalignment and a slip yoke to let the length change as the suspension moves. Adroit's largest product group is yokes at 1,950 SKUs, followed by complete shaft assemblies at 1,355 and accessories such as U-bolts, strap kits and seals at 1,001.

• Dewas forges the steel, Pithampur machines, hardens, assembles and balances it, and Sanwer, some of whose machines were moved to Pithampur in FY23, now runs a finishing line. Steel billets and bars, steel tubes and universal joint crosses are the inputs. FY26 purchases of ₹40.35 cr were 85.70% domestic; the largest supplier was 28.36% of purchases and the top ten 75.97%, all on purchase orders.

• The company served 185 customers in FY26: 153 distributors, 13 Tier-1 driveline makers and 22 OEMs, although the three add to 188. The largest customer was 20.92% of product sales and the top ten 60.86%, none of them named. The customers the RHP does name, such as BEML, VE Commercial Vehicles and Sandvik Mining, are domestic, while domestic sales are 4.61% of the total. There are no long-term contracts.

Figures may not add due to rounding. Miscellaneous sales of ₹7.45 cr in FY26 compare with sales of ₹6.01 cr to Signet and ₹0.51 cr to Kozzby in the same year; the RHP does not say what goods were sold to either.

End-use shares are based on the intended application of products sold to distributors and Tier-1 suppliers, as stated in the RHP.

• There are three subsidiaries. ADPL, 99.87% owned with Mukesh and Saurabh Sangla holding 5,000 shares each, runs Pithampur and earned ₹22.19 cr of profit in FY26. It was incorporated by the two of them in October 2019, owned 50:50, and Adroit subscribed to 99.87% through a preferential allotment in 2022 for ₹7.50 cr. Adroit Driveshafts Canada Limited, set up in March 2022, imports and distributes in North America and had ₹7.01 cr of FY26 revenue. Adroit Driveshafts USA LLC was incorporated in Texas in April 2026 and has no financials yet. There are no associates or joint ventures.

Promoters and Leadership

• Saurabh Sangla, 45, is Chairman and Managing Director, with a Bachelor of Science from the University of California, and has been a director since March 2007. His remuneration is ₹0.84 cr a year. He was appointed to the Governing Council of the Fluid Control Research Institute, Palakkad in March 2026 for two years.

• Mukesh Sangla, 71, is a non-executive director and Saurabh Sangla's father. The RHP states he has no formal education and over 40 years in polymer trading and plastic products. He was Managing Director from March 2007 to March 2015.

• Monika Sangla, 67, is a promoter with a Bachelor of Arts from the University of Indore. The RHP accepts that she does not have experience in the company's industry. The two family trusts that hold 30.22% between them, Shreya Trust and Shubhangi Trust, were formed in July 2023 with Mukesh and Monika Sangla as trustees.

• The board has five members: the two promoters and three independent directors. Surabhi Agrawal, 32, is a practising company secretary with five years of experience and has been on the board since June 2021. Anirudha Chauhan, 42, joined in November 2025 and also sits on ADPL's board. Narendra Kumar Maheshwari, 69, a retired Assistant General Manager of State Bank of India, joined in March 2026. 

Financials