DEFRAIL TECHNOLOGIES LIMITED IPO Explain

Defrail Technologies IPO Overview

Faridabad (Haryana)-based rubber and engineered polymer components manufacturer raising ₹13.77 cr (100% fresh issue, no OFS). Price: ₹70-74. Lot: 1,600 shares (₹2,36,800 min investment for 3,200 shares / 2 lots). GMP: ₹0 (flat/no premium as of Jan 2026).

Funds for capital expenditure – machinery purchase (₹7.96 cr for capex, ₹1.73 cr solar panels = ₹9.69 cr total capex, 70.39%), general corporate purposes (₹2.01 cr, 14.62%), IPO expenses (₹2.06 cr, 15%).

Lead: Nexgen Financial Solutions.

Registrar: Maashitla Securities.

Market Maker: Nikunj Stock Brokers.

Incorporated October 2023 (only 15 months old!). Acquired businesses of Impex Hitech Rubber (since 2008) and Vikas Rubber Industries (since 1980) on going-concern basis effective April 1, 2024 via Business Transfer Agreements (BTA). Legacy: 44 years if counting Vikas Rubber roots (1980); 17 years Impex Hitech; but Defrail entity only 15 months.

Products: Rubber hoses and assemblies (92-96% revenue concentration), rubber profiles and beadings, moulded rubber products. Applications: Automotive (major – heavy dependency), railways (RDSO-approved), defence sectors. B2B model supplying large-volume orders to OEMs; B2G segment directly to Indian Railways, defence establishments.

Manufacturing: Faridabad, Haryana facility. Capacity under-utilized (data not fully disclosed). Recent operations transitioned from legacy entities – integration ongoing.

IPO DETAILED INFORMATION

Issue Details

Parameter	Details
IPO Type	SME (BSE SME)
IPO Open Date	09 January 2026 (Thursday)
IPO Close Date	13 January 2026 (Monday)
Anchor Investor Bidding	08 January 2026 (Wednesday) – 5,18,400 shares (27.86%) reserved
Allotment Date	14 January 2026 (Tuesday) – Expected
Credit to Demat	15 January 2026 (Wednesday) – Expected
Refund Initiation	Data not specified
Listing Date	16 January 2026 (Thursday) – Tentative
Price Band	₹70 – ₹74 per share
Face Value	₹10 per share
Lot Size	1,600 shares (minimum lot)
Min Investment (Retail)	₹2,36,800 (3,200 shares / 2 lots at upper band ₹74)
sNII Investment	Data not specified (91,200 shares allocated)
bNII Investment	Data not specified (1,77,600 shares allocated)
Issue Size	₹13.77 crore total
Fresh Issue	₹13.77 crore (100%) – 18,60,800 equity shares
Offer for Sale (OFS)	NIL – No OFS component
Total Shares Offered	18,60,800 equity shares (1.86 million shares)
Listing	BSE SME
Post-Issue Market Cap	Data not fully disclosed

Issue Break-up

Category	Allocation
Anchor Investors	27.86% (5,18,400 shares / ₹3.84 cr)
QIB (Qualified Institutional Buyers – Ex Anchor)	19.09% (3,55,200 shares / ₹2.63 cr)
Total QIB (Including Anchor)	46.95% (8,73,600 shares)
NII (Non-Institutional Investors)	14.45% (2,68,800 shares / ₹1.99 cr)
Retail Individual Investors	33.53% (6,24,000 shares / ₹4.62 cr)
Market Maker	5.07% (94,400 shares / ₹0.70 cr)

Selling Shareholders (OFS ₹0 crore)

No OFS Component – 100% Fresh Issue

Note: This is 100% fresh issue with no Offer for Sale. All proceeds go to company. Promoters not exiting.

Objects of the Issue (Fund Utilization)

Fresh Issue Proceeds (₹13.77 crore) will be used for:

1. Capital Expenditure – ₹9.69 crore (70.39%)
   • Machinery Purchase: ₹7.96 crore for new manufacturing equipment
   • Solar Panel Installation: ₹1.73 crore for renewable energy (cost reduction + sustainability)
   • Expanding manufacturing capabilities and capacity
   • Technology upgrades for operational efficiency
2. General Corporate Purposes – ₹2.01 crore (14.62%)
   • Working capital requirements
   • Strategic initiatives
   • Business development
3. IPO Issue Expenses – ₹2.06 crore (15.00%)
   • Lead manager, registrar, legal, printing, marketing costs
   • High 15% expense ratio for ₹13.77 cr issue

Strategic Focus:

• Promoter Vivek Aggarwal: “Capital raised will strengthen manufacturing capabilities, fund capacity expansion, support long-term growth”
• Lead Manager Sanjeev Gupta (Nexgen): “Capex-led growth and operational execution makes this attractive for long-term investors”
• 70% capex allocation indicates focus on expanding production capacity
• Solar panel investment aligns with sustainable manufacturing, operational cost reduction
• RDSO approval enabling railway sector participation
• Defence applications providing diversification

OFS Proceeds:

• NIL – No promoter exit

Note: 100% fresh issue with 70% capex focus. High 15% IPO expenses for small ₹13.77 cr issue raises cost efficiency questions.

Lead Managers & Registrar

Book Running Lead Manager (BRLM):

1. Nexgen Financial Solutions Private Limited
   • Co-Founder & MD: Sanjeev Gupta

Registrar:

• Maashitla Securities Private Limited
  • Address: 451, Krishna Apra Business Square, Netaji Subhash Place, Pitampura, New Delhi – 110034
  • Phone: +91-11-45121795-96
  • Website: www.maashitla.com

Market Maker:

• Nikunj Stock Brokers Limited

Promoters & Management

Key Promoters (Data Limited – Aggarwal Family Mentioned):

Individual Promoters:

1. Mr. Vivek Aggarwal – Promoter (mentioned in press release)
   • Key leadership spokesperson for IPO
   • Oversees strategy and operations

Note: Full promoter list not disclosed in available public documents. Requires RHP/DRHP verification.

Promoter Holding:

• Pre-IPO: Data not fully disclosed
• Post-IPO: Data not fully disclosed

Company History:

• Defrail Technologies Incorporated: October 2023 (only 15 months old!)
• Legacy Businesses Acquired (April 1, 2024):
  • Vikas Rubber Industries: Established 1980 (44 years legacy)
  • Impex Hitech Rubber: Incorporated 2008 (17 years operations)
• Evolution:
  • 1980: Vikas Rubber Industries founded – rubber components manufacturing
  • 2008: Impex Hitech Rubber incorporated – expanded capabilities for B2B customers
  • October 2023: Defrail Technologies Limited incorporated
  • April 1, 2024: Acquired both legacy businesses via Business Transfer Agreements (BTA) on going-concern basis
  • Post-acquisition: Transitioned operations, consolidated manufacturing at Faridabad
  • Built product portfolio: rubber hoses/assemblies, profiles/beadings, moulded products
  • Achieved RDSO approval for railway sector supply
  • Serving automotive, railways, defence sectors
  • FY24-25: Explosive revenue growth ₹0.72 cr to ₹62.21 cr (8,540% growth) post-BTA consolidation
  • FY25: PAT ₹3.42 cr vs. ₹0.11 cr (FY24)
• Workforce: Data not disclosed in available sources
• Milestone:
  • RDSO approval for railway sector
  • Serving automotive OEMs, Indian Railways, defence
  • 44-year legacy (if counting Vikas Rubber roots)
  • Only 15 months as Defrail Technologies entity

Company Contact:

• Registered Office: Plot No. 180, Sector 24, Faridabad, Haryana – 121005, India
• Phone: 0129-487 8760
• Website: www.defrailtech.in

COMPANY DETAILS

Defrail Technologies Limited is a specialized rubber and engineered polymer components manufacturer serving automotive, railways, and defence sectors from its Faridabad facility. While the company was incorporated only in October 2023 (making it just 15 months old), it acquired the established businesses of Vikas Rubber Industries (founded 1980 – 44-year legacy) and Impex Hitech Rubber (incorporated 2008 – 17 years) on April 1, 2024, via Business Transfer Agreements on a going-concern basis. This acquisition-driven structure provides the company with legacy customer relationships, manufacturing expertise, and operational track record, though the consolidated entity under Defrail Technologies has limited independent operating history.

Key Highlights:

• Recent Entity: Incorporated October 2023 – only 15 months old as Defrail Technologies
• Legacy Acquisition: Vikas Rubber (1980) + Impex Hitech (2008) acquired April 2024 providing 44-year roots
• Product Concentration: Rubber hoses/assemblies dominate 92-96% of revenue – extreme concentration risk
• End-Markets: Automotive (major), railways (RDSO-approved), defence (B2G segment)
• Explosive Post-Acquisition Growth: Revenue ₹0.72 cr (FY24) → ₹62.21 cr (FY25) = 8,540% growth reflecting BTA consolidation
• Manufacturing: Faridabad, Haryana facility with capacity under-utilization (specifics not disclosed)
• B2B/B2G Model: Large-volume orders to OEMs (automotive) + direct supply to Indian Railways, defence

Growth Trajectory:

• Revenue Explosion (FY24-25): 8,540% growth (₹0.72 cr to ₹62.21 cr) – reflects Business Transfer Agreement consolidation post-April 2024
• PAT Growth (FY24-25): 3,009% growth (₹0.11 cr to ₹3.42 cr) – thirty-fold increase
• Margin Compression: PAT margin declined from 15.28% (FY24) to 5.50% (FY25) despite revenue surge – integration costs or pricing pressure?
• Sep 2025 Balance Sheet: Total assets ₹37.22 cr, equity ₹10.62 cr

CRITICAL: Hypergrowth entirely due to BTA consolidation (April 2024), NOT organic growth. Pre-acquisition Defrail had minimal operations.

Company Strengths

1. 44-Year Legacy via Acquisition – Vikas Rubber (1980) + Impex Hitech (2008):
   • Acquired established businesses with 44-year (Vikas) and 17-year (Impex) track records
   • Inherited customer relationships, manufacturing expertise, operational know-how
   • Legacy businesses provide credibility and proven market presence
2. RDSO Approval – Railway Sector Participation Enables B2G Revenue:
   • RDSO (Research Designs and Standards Organisation) approval for supplying Indian Railways
   • Opens opportunities in India’s expanding railway modernization (Vande Bharat, electrification)
   • B2G segment provides revenue stability vs. volatile automotive market
3. Capex-Led Growth Strategy – 70% IPO for Machinery & Solar:
   • 70.39% (₹9.69 cr) allocated to capital expenditure (₹7.96 cr machinery + ₹1.73 cr solar)
   • Capacity expansion addressing current under-utilization
   • Solar installation reducing energy costs, improving sustainability
4. Automotive & Defence Exposure – Diversified End-Markets:
   • Automotive OEMs providing large-volume orders
   • Defence applications offering premium pricing and strategic importance
   • Multi-sector presence reducing single-industry dependency
5. Low-Debt Balance Sheet – Clean Financials (Sep 2025):
   • Total assets ₹37.22 cr with equity ₹10.62 cr (Sep 2025)
   • Borrowings data not disclosed but appears manageable
   • IPO proceeds strengthening balance sheet for growth investments
6. India’s Manufacturing Boom – Auto, Railways, Defence Growth:
   • Government’s PLI schemes, Make in India driving auto component demand
   • Railway modernization (₹2.65 lakh crore FY25 budget) creating opportunities
   • Defence indigenization push benefiting domestic suppliers

Key Risks & Challenges

1. ONLY 15 MONTHS OLD – Incorporated Oct 2023, Minimal Independent Track Record:
   • Defrail Technologies incorporated October 2023 – just 15 months old!
   • Acquired businesses April 2024 via BTA – limited time to prove integration success
   • 44-year legacy (Vikas Rubber) provides credibility but Defrail entity unproven
   • Start-up risk extremely high despite legacy acquisitions
2. Explosive 8,540% Growth Due to BTA Consolidation, NOT Organic:
   • Revenue ₹0.72 cr (FY24) → ₹62.21 cr (FY25) = 8,540% growth reflects BTA consolidation post-April 2024
   • NOT organic growth – merely accounting consolidation of acquired businesses
   • True organic growth trajectory unknown
   • Sustainability of consolidated operations unproven
3. Extreme Product Concentration – 92-96% Revenue from Rubber Hoses:
   • 92-96% of revenue from rubber hoses and assemblies (per analyst sources)
   • Extreme single-product dependency
   • Any downturn in rubber hose demand severely impacting revenues
   • Limited product diversification
4. Heavy Automobile Sector Dependency – Cyclicality Risk:
   • Automotive sector (OEMs) appears to be dominant customer base (exact % not disclosed)
   • Auto industry highly cyclical – downturns directly impacting demand
   • EV transition potentially disrupting traditional auto component suppliers
   • No disclosed long-term contracts providing revenue visibility
5. Capacity Under-Utilization – Existing Assets Not Fully Deployed:
   • Per analyst: “Capacity under-utilization challenges” flagged
   • Raising ₹9.69 cr for new machinery while existing capacity underutilized questionable
   • Integration of acquired businesses may not be optimized
   • Capital deployment efficiency concerns
6. GMP ₹0 – No Grey Market Premium Indicates Weak Investor Appetite:
   • Grey Market Premium (GMP) at ₹0 / flat (as of Jan 2026)
   • No listing gain expectation in grey market
   • Weak investor sentiment despite “reasonable valuation” per lead manager
   • High 15% IPO expense ratio (₹2.06 cr) for small ₹13.77 cr issue

---

Disclaimer

Defrail Technologies Limited (incorporated Oct 2023 – only 15 months old) acquired Vikas Rubber (1980) + Impex Hitech (2008) on April 2024 providing 44-year legacy, manufactures rubber hoses (92-96% revenue), profiles, moulded products for automotive, railways (RDSO-approved), defence with explosive 8,540% revenue growth (FY24 ₹0.72 cr to FY25 ₹62.21 cr) due to BTA consolidation not organic growth, 70% IPO for capex (machinery + solar), but faces risks: only 15-month entity track record, growth from accounting consolidation not operations, 92-96% rubber hose concentration, auto sector dependency, capacity under-utilization, GMP ₹0 indicating weak demand. SME listing BSE.