Diksha Polymers IPO (17-19 June) Analysis

SME IPO Analysis  |  BSE SME Platform  |  Fixed Price Issue

STATUS: Issue Dates (17-19 June) |  Issue: 100% Fresh Issue (No OFS)  |  Exchange: BSE SME  |  Sector: PET Bottle Recycling and Plastic Polymer Products  |  Gwalior, MP

Diksha Polymers Limited is a Gwalior, Madhya Pradesh-based manufacturer and seller of recycled polymer products, primarily PET (polyethylene terephthalate) recycled granules and other plastic recycled materials. Originally incorporated in March 1998 as Vijay Pet Plast India Private Limited under the Companies Act, 1956, the company renamed itself Diksha Polymers Private Limited in February 2000 and has operated in the plastic recycling and polymer manufacturing space for 27 years. It converted to a public limited company ahead of this BSE SME IPO. The company's CIN is U25202MP1998PLC012664.

Core business: Diksha Polymers collects used plastic waste (primarily PET bottles, other plastic containers, and industrial plastic scrap), processes it through mechanical recycling (sorting, washing, shredding, extrusion), and sells the recycled PET flakes, granules, and other polymer products to downstream manufacturers of packaging, textiles (polyester fibres), and industrial applications.

Products:

• Recycled PET Granules and Flakes: The primary product. Clean, sorted PET recyclate used by manufacturers to produce new packaging, polyester fibre for textiles, and industrial applications. Available in various grades including food-grade (requiring higher quality processes) and industrial grade.

• Other Recycled Polymer Products: HDPE, PP, LDPE, and other polymer recyclates depending on the scrap input mix. The company processes mixed plastic waste and separates by polymer type.

• Processed Plastic Products: Potentially includes direct moulded or extruded products, though the primary business is recyclate supply to downstream manufacturers.

Manufacturing: Single facility at B-33, Maharajpura Industrial Area, Maharajpura A.F., Gwalior, Gird, Madhya Pradesh, 474020. Gwalior is a central India industrial city with established plastic processing ecosystems. The facility houses sorting, washing, shredding, and extrusion equipment for the recycling process.

Promoters: Vivek Mandelia (Managing Director, DIN: 00680654) and Vipin Mandelia (Whole-time Director, DIN: 00680703). Family business with the Mandelia family holding the majority of pre-issue capital. Anjana Mandelia (non-executive director, DIN: 03059693) is also listed as a director. The promoter family has managed this business since the reincorporation in 2000.

Statutory Auditor change: The company changed auditors in April 2025 from Rakesh Agarwal (Gwalior, not peer review certified) to M/s Agarwal R C and Co (Radheyshyam Agarwal, Mumbai, Peer Review No. 020625). The auditor change in the year of IPO preparation, combined with the appointment of a peer-review certified firm from Mumbai, indicates pre-IPO governance improvement.

Key Basics

This is a Fixed Price SME Issue on BSE SME Platform  not a book-built process. The price will be fixed (not discovered through book building). This is a Draft Prospectus, indicating the issue is at an advanced stage compared to a DRHP. The issue is 100% Fresh Issue with no OFS.

Document Type	Draft Prospectus dated December 2025. Fixed Price Issue.
Issue Type	100% Fixed Price Fresh Issue. NO Offer for Sale. Company receives all net proceeds.
Face Value	Rs.10 per Equity Share
Issue Price	Fixed Price to be determined and announced. Not a book-built process  price is set, not discovered through bidding.
Promoters	Vivek Mandelia (MD) and Vipin Mandelia (WTD)  founding family. Anjana Mandelia (non-executive). Total promoter + promoter group holding: majority.
Listing Exchange	BSE SME Platform
Lead Manager	Aryaman Financial Services Limited, Mumbai (SEBI Reg: INM000011344)
Registrar	Cameo Corporate Services Limited
Statutory Auditor	M/s Agarwal R C and Co, Chartered Accountants. Mumbai, Peer Review No. 020625)  changed in April 2025 from previous Gwalior-based firm.
Monitoring Agency	Not separately identified in sections reviewed
Previous Auditor	Rakesh Agarwal, Gwalior (not peer-review certified)  changed April 25, 2025
Bid/Offer Dates	To be announced (Fixed Price issue  no bidding process)
Key Financial Indicator	FY2025 EPS: Rs.7.31 | Weighted Average EPS: Rs.4.61 | RONW: 59.75% (FY25) | NAV per share: Rs.110.14 (March 2025)
Industry P/E Range	18.41x (lowest: Mitsu Chem Plast) to 22.77x (highest: TPL Plastech) | Average: 20.59x

 How Will the IPO Money Be Used?

All proceeds go to the company. No OFS. The uses of proceeds are not fully extracted from the sections reviewed but the company's balance sheet indicates high leverage (D/E declining from historical highs) and strong working capital requirements given the recycling business model. Likely uses: working capital for raw material procurement (plastic waste), capacity expansion, debt reduction, and GCP. The full objects must be reviewed in the complete Draft Prospectus.

Likely Object	Context
Working Capital	The recycling business requires continuous raw material procurement (plastic waste collection), sorting, processing, and finished goods holding before sale. Net working capital: Rs.261 lakhs (FY2023) to Rs.1,814 lakhs (H1 FY2026), reflecting rapid business scaling.
Potential Capacity Expansion	The business has grown 4x in revenue in 2.5 years. Additional machinery for shredding, washing, and extrusion capacity may be required. The full objects section should be reviewed.
Possible Debt Reduction	Finance costs: Rs.51.53 lakhs (FY2023) to Rs.68.03 lakhs (FY2024) to declining. Borrowings have been reducing as profits improve. IPO equity may partially replace borrowings.
General Corporate Purposes	Up to 15% of gross proceeds (capped at Rs.10 crore per SEBI regulations).

Financial Performance

Note: All figures in Rs. lakhs unless stated. Four periods: FY2023, FY2024, FY2025 (full years), and H1 FY2026 (April-September 2025). Indian GAAP. The financial performance shows a genuine growth and profitability transformation story.

Revenue

Revenue trajectory: Rs.1,113.52 lakhs (FY2023) to Rs.1,972.37 lakhs (FY2024, +77.1%) to Rs.4,272.20 lakhs (FY2025, +116.6%) to Rs.2,245.22 lakhs (H1 FY2026  6 months, implying approximately Rs.4,490 lakhs annualised FY2026, +5% over FY2025). The FY2025 revenue of Rs.42.72 crore is a near-doubling in one year. The H1 FY2026 run-rate suggests continued revenue stability at the FY2025 level.

Profitability

Metric	FY2023 (Rs. L)	FY2024 (Rs. L)	FY2025 (Rs. L)	H1 FY2026 (6M) (Rs. L)
Revenue from Operations	1,113.52	1,972.37	4,272.20	2,245.22
Revenue Growth %		77.12%	116.60%	~5% ann. vs FY25
Cost of Material Consumed	1,291.44	1,847.32	3,814.86	1,411.42
Materials as % of Revenue	115.99%	93.65%	89.29%	62.86%
Employee Benefits Expense	21.74	16.36	38.17	20.59
Finance Costs	22.54	32.57	68.03	51.53
Depreciation	17.12	14.71	63.60	24.20
Other Expenses	17.65	25.23	99.28	73.63
Total Expenses	1,108.38	1,837.20	3,931.34	1,984.55
Profit Before Tax	5.14	135.17	341.46	260.67
Tax Expense (est.)	4.75	50.17	121.81	54.97
Profit After Tax (PAT) (est.)	0.40	85.00	219.65	205.70
EPS Basic and Diluted (Rs.)	0.13	2.81	7.31	5.41 (6M, not ann.)
Weighted Average EPS (Rs.)			4.61
RONW %	6.38%	57.06%	59.75%	30.67% (6M)

The financial story has two dramatic features. First, materials cost as a percentage of revenue declined from 116% (FY2023, loss-making on materials alone) to 89% (FY2025) to 63% (H1 FY2026). This extraordinary improvement reflects: (a) the business shifting from buying expensive clean polymer to processing lower-cost waste plastic; (b) improved operational efficiency; and (c) potentially a business model transformation toward processing waste at higher margins.

The FY2023 materials cost of 116% of revenue would imply either negative gross margins compensated by some other income, or a very different business mix in FY2023 vs FY2025. Second, PAT transformation from near-zero (FY2023: Rs.0.40 lakhs) to Rs.219.65 lakhs (FY2025)  a 549x increase. RONW went from 6.38% to 59.75% in two years. These are extraordinary metrics. The H1 FY2026 EPS of Rs.5.41 (for 6 months only) is exceptionally strong, implying full-year FY2026 EPS could approach Rs.10+.

Critical note on industry P/E: The two listed peers are TPL Plastech Limited (CMP Rs.68.77, EPS Rs.3.02, P/E 22.77x, RoNW 15.98%) and Mitsu Chem Plast Ltd (CMP Rs.99.25, EPS Rs.5.39, P/E 18.41x, RoNW 7.48%). Diksha's RoNW of 59.75% far exceeds both peers (15.98% and 7.48%). At the industry average P/E of 20.59x on FY2025 EPS of Rs.7.31, implied fair value is Rs.150.50. At 20.59x on weighted average EPS of Rs.4.61, implied value is Rs.94.90. The NAV per share of Rs.110.14 (March 2025) provides a book value anchor.

Balance Sheet

Item	FY2023 (Rs. L)	FY2024 (Rs. L)	FY2025 (Rs. L)	H1 FY2026 (Rs. L)
Net Worth (est.)	8-10 (very small)	Grew substantially	292 (est. from RONW)	705 (est. from H1 RONW/PAT)
NAV per Share (Rs.)	Not applicable	Not applicable	110.14 (Mar-25)	17.65 (Sep-25)*
Inventories (change in FY2023)	(262.12) build	(98.99) build	(156.14) build	403.17 reduction
Finance Costs (Rs. L)	22.54	32.57	68.03	51.53
Depreciation (Rs. L)	17.12	14.71	63.60	24.20
EPS (Rs.)	0.13	2.81	7.31	5.41 (6M)
RONW %	6.38%	57.06%	59.75%	30.67% (6M, not ann.)

Important note on NAV: The NAV per share of Rs.110.14 (March 2025) dropped dramatically to Rs.17.65 (September 2025). This likely reflects a large bonus share issue between March and September 2025 that significantly increased the share count, diluting NAV per share. If a large bonus was issued pre-IPO, the EPS figures (Rs.7.31 for FY2025 on a post-bonus share count) are correctly restated retrospectively, but the NAV movement must be understood before assessing the issue price.

Revenue Composition and Business Mix

Metric	FY2023	FY2024	FY2025	H1 FY2026
Revenue from Operations (Rs. L)	1,113.52	1,972.37	4,272.20	2,245.22
Revenue Growth %		77.12%	116.60%	~5% ann.
Materials as % of Revenue	115.99%	93.65%	89.29%	62.86%
Finance Costs as % of Revenue	2.02%	1.65%	1.59%	2.30%
PAT as % of Revenue	~0%	4.31%	5.14%	9.16% (6M)
Change in Inventories Pattern	Build-up	Build-up	Build-up	Liquidation (Rs.403L reduction)

The material cost ratio declining from 116% to 63% in 2.5 years is the single most transformative financial metric.

This scale of change requires explanation:

(a) the company may have shifted from buying expensive virgin or near-virgin plastic to processing lower-cost waste plastic scrap at better margins;

(b) product mix may have shifted toward higher-value-added polymer products where the company captures more conversion margin;

(c) the H1 FY2026 Rs.403 lakh inventory liquidation (reduction) significantly boosted the period's material cost ratio calculation. Investors should seek management commentary on the drivers of the material cost improvement in the RHP/Prospectus.

How Does It Compare to Peers?

Two listed peers: TPL Plastech Limited (Rs.34,933 crore total revenue, Rs.3.02 EPS, 22.77x P/E, 15.98% RoNW) and Mitsu Chem Plast Ltd (Rs.33,228 crore revenue, Rs.5.39 EPS, 18.41x P/E, 7.48% RoNW). Industry average P/E: 20.59x.

Metric	Diksha Polymers (FY25)	TPL Plastech Ltd (FY25)	Mitsu Chem Plast (FY25)
Revenue (Rs. L)	4,272.20	34,933.31	33,227.84
EPS (Rs.)	7.31	3.02	5.39
RONW %	59.75%	15.98%	7.48%
P/E at market / industry average	20.59x avg	22.77x	18.41x
NAV per Share (Rs.)	12.24 (post-bonus adj.)	18.92	71.43
At 20.59x on FY25 EPS Rs.7.31	Implied Rs.150.50
At 20.59x on WAG EPS Rs.4.61	Implied Rs.94.90
Scale comparison	Rs.43 crore revenue	Rs.349 crore revenue	Rs.332 crore revenue

Diksha's RONW of 59.75% is dramatically superior to both peers (15.98% and 7.48%), suggesting significantly higher capital efficiency. However, the peers are 8-9x larger by revenue and are likely more diversified and established businesses. The scale discount for Diksha (sub-Rs.50 crore revenue vs Rs.300-350 crore for peers) is a valuation consideration. At the industry average P/E of 20.59x on FY2025 EPS, the implied fair value of Rs.150.50 needs to be weighed against the NAV per share post-bonus adjustment.

Key Risks

• Material cost ratio change from 116% to 63% of revenue in 2.5 years  extraordinary and unexplained: A decline from 116% (FY2023) to 62.86% (H1 FY2026) in material costs as a percentage of revenue is extraordinary. FY2023 implied the company was buying materials at a loss on the gross margin line (116% implies negative gross profit before other costs). Without a clear management explanation, investors cannot assess whether this is: (a) a sustainable structural improvement from business model change; (b) a temporary improvement from inventory liquidation in H1 FY2026 (Rs.403 lakh reduction in inventories boosted H1 margins); or (c) a mix shift in revenue that may not persist.

• NAV per share dropped from Rs.110.14 (March 2025) to Rs.17.65 (September 2025)  large unexplained dilution: A dramatic decline in NAV per share implies either a large bonus share issue between March and September 2025, or a significant equity restructuring event. While EPS figures should be retrospectively adjusted for bonus shares, investors must understand the full capital structure history to correctly interpret the financial metrics. A pre-IPO bonus issue of 5-6x (Rs.110 to Rs.17.65 implies approximately 6.24x share count increase) is significant.

• Auditor changed April 2025 (from non-peer-review firm to Mumbai-based peer-review firm)  pre-IPO governance enhancement that reveals prior governance gap: The company operated for 27 years with a non-peer-review-certified auditor. Changing to a peer-review-certified Mumbai firm immediately before the IPO suggests the prior audit quality may have been lower. The restatement requirements (if any) should be reviewed.

• Full objects of issue not extracted from sections reviewed  investors cannot assess fund deployment quality: The specific objects, amounts, and timelines for IPO proceeds deployment are not available from the sections reviewed. Investors must independently review the complete Draft Prospectus for this critical information.

• H1 FY2026 inventory reduction of Rs.403 lakhs may have boosted margins artificially for that period: Inventory reduction improves the material cost ratio in the period when it occurs (inventory liquidation means lower net material consumption). H1 FY2026's exceptional material cost ratio of 62.86% may partially reflect this Rs.403 lakh inventory rundown rather than permanently improved sourcing economics.

• Small scale  Rs.42.72 crore revenue vs peers at Rs.332-349 crore: A 8-9x scale disadvantage vs listed peers means limited bargaining power with suppliers and customers, lower economies of scale in processing, and higher fixed cost burden per unit of output.

• Single manufacturing facility in Gwalior  operational concentration risk: All production at one location. Fire, flood, regulatory inspection, or machinery failure halts all operations with no backup.

• Plastic recycling is an emerging regulatory landscape  EPR obligations, BIS standards, state pollution board compliance: India's plastic waste management rules (Plastic Waste Management Rules, 2016 as amended) impose recycling targets on producers and brand owners who purchase EPR credits from registered recyclers. Any tightening of quality standards or EPR certificate requirements could affect Diksha's buyer base.

• Dependence on plastic waste collection infrastructure: Input raw material (used plastic waste) availability depends on municipal collection systems, kabadiwala networks, and organised waste aggregators. Any disruption in this collection chain could constrain production.

Positives

• Revenue 4x in 2.5 years: Rs.1,114 lakhs (FY2023) to Rs.4,272 lakhs (FY2025), with H1 FY2026 annualising to Rs.4,490 lakhs  genuine and sustained growth momentum.

• PAT transformed from near-zero (Rs.0.40 lakhs, FY2023) to Rs.219.65 lakhs (FY2025) to Rs.205.70 lakhs (H1 FY2026 alone, 6 months)  exceptional earnings trajectory.

• RONW of 59.75% (FY2025)  dramatically outperforms both listed peers (15.98% and 7.48%)  highest capital efficiency metric in the sector.

• EPS grew from Rs.0.13 (FY2023) to Rs.7.31 (FY2025) to Rs.5.41 in just 6 months of FY2026  at this pace FY2026 full-year EPS could approach Rs.10.

• 100% Fresh Issue with no OFS  all proceeds fund the company. Promoters retain full holding. Strong alignment.

• Circular economy positioning  recycling is aligned with India's EPR regulations, plastic waste mandates, and ESG investing themes.

•27 years of operating history  the business has survived multiple economic cycles since 1998.

• Industry average P/E of 20.59x on FY2025 EPS of Rs.7.31 implies Rs.150  meaningful potential upside if priced at or below this level.

Analysis based on Draft Prospectus dated December 2025  |  Restated Financial Statements (Indian GAAP)  |  All figures in Rs. lakhs unless stated

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