H.R.Hygiene Products IPO (29-31 July) Analysis

IPO Analysis | BSE SME | 100% Book Built Offer (Fresh Offer and Offer for Sale) | Regulation 229(2) and 253(1)

Based on Draft Red Herring Prospectus dated September 28, 2025 | Hygiene Products (Sanitary Napkins and Diapers) | Rajkot, Gujarat

STATUS: DRHP FILED | PRE-SEBI OBSERVATION STAGE | ALL BID DATES AND PRICE BAND TO BE DETERMINED

Fresh Offer: up to 49,05,600 Equity Shares | Offer for Sale: up to 12,25,600 Equity Shares by 4 Promoters | Total: up to 61,31,200 Equity Shares

BSE SME Platform | No Listed Peers Exist | Revenue CAGR of 65.03% (FY23 to FY25) on a very small base, from a company with recent statutory compliance gaps

 H. R. Hygiene Products Limited was incorporated on July 21, 2016 as H.R. Hygiene Private Limited and converted to a public limited company on February 10, 2025. Its CIN is U74999GJ2016PLC093028 and its registered office and manufacturing unit are at Survey No. 125/P2/P2, Village Lothada, Rajkot, Gujarat. The Promoters are Hemal Babubhai Borsadiya, Rahul Kishorbhai Sheradia, Borsadiya Binita Hemalbhai and Sheradia Parth Damjibhai.

The Company manufactures hygiene products under a brand portfolio spanning Femiss (economy sanitary napkins), Womanica (premium high absorbency sanitary napkins), ElderFit (elderly hygiene care) and Bloom Baby (baby diapers, launched April 2025 under contract manufacturing). The Company's core historical focus has been sanitary napkins, and it also manufactures white label sanitary napkins for other customers.

Products are sold through a dual channel model combining offline dealer distribution and e-commerce marketplaces including Meesho, Amazon, Glowroad, Flipkart, Snapdeal and JioMart, across more than 200 customers in 28 states and 8 union territories, with Gujarat as the dominant market followed by Maharashtra and Rajasthan.

The Company has grown very rapidly off a small base: revenue from operations rose from Rs.4,217.04 Lakhs in Fiscal 2023 to Rs.11,501.34 Lakhs in Fiscal 2025, a 2 year CAGR of 65.03% on the Company's own computation, while PAT rose from Rs.18.53 Lakhs to Rs.909.45 Lakhs over the same period.

The Company added manufacturing capacity of 8 Crore pieces annually in March 2024 and is now entering the baby diaper category, having sold 2,75,880 diaper pieces through a contract manufacturer in its first year. In August and September 2025, shortly before this DRHP, the Company increased its authorised share capital and completed a 15:10 bonus issue.

The IPO: Key Basics

Particulars	Details
Document Type	Draft Red Herring Prospectus (DRHP) dated September 28, 2025. Pre-SEBI observation stage; all [TBD] items including Price Band and Bid dates remain undetermined.
Issue Structure	100% Book Built Offer comprising a Fresh Offer of up to 49,05,600 Equity Shares by the Company and an Offer for Sale of up to 12,25,600 Equity Shares entirely by the 4 Promoters, aggregating to up to 61,31,200 Equity Shares. Face value Rs.10 per share.
Face Value	Rs.10 per Equity Share.
Promoters and Selling Shareholders	All 4 Promoters (Hemal Babubhai Borsadiya, Rahul Kishorbhai Sheradia, Borsadiya Binita Hemalbhai, Sheradia Parth Damjibhai) are each offering up to 3,06,400 Equity Shares in the Offer for Sale, at WACAs of Rs.1.14 (Borsadiya, Sheradia Parth Damjibhai and Borsadiya Binita Hemalbhai) and Rs.2.05 (Rahul Kishorbhai Sheradia), both a tiny fraction of the likely Offer Price.
Eligibility Route	Regulation 229(2) and 253(1) and (2) of the SEBI ICDR Regulations, 2018.
Listing Exchange	SME Platform of BSE Limited (BSE SME); in principle approval not yet obtained as of this DRHP.
BRLM	Marwadi Chandarana Intermediaries Brokers Private Limited.
Registrar	Purva Sharegistry (India) Private Limited.
Bid or Offer Dates	Not yet determined; this is a DRHP at pre-SEBI observation stage.
Listed Peers, One Line	None. The DRHP states there are no listed companies in India engaged in a comparable business segment or of comparable size, so no industry peer comparison is provided.

The most structurally distinctive feature of this offer is that the entire Offer for Sale is being made by the 4 Promoters themselves, at WACAs of barely over Rs.1 to Rs.2 per share, meaning the Promoters stand to realise a very large multiple of their original cost through this Offer, on top of the separate Fresh Offer that will bring new capital into the Company. This is also one of the small number of reports in this series where no listed industry peer exists at all.

How Will the IPO Money Be Used?

Object	Estimated Amount (Rs. Lakhs)	Substantiation
Setting up new manufacturing facility (Unit 2) at Rajkot for diaper manufacturing	2,663.16	Backed by a 20 year leasehold land agreement (dated July 24, 2025) and an independent Chartered Engineer's certificate; however, the capex is intended to build in house diaper manufacturing capacity to replace the Company's current reliance on a single contract manufacturer, and specific equipment orders are addressed under the risk of delay noted in Section 6.
Prepayment or repayment of loan	Up to 411.00	A capped rupee amount disclosed; the RHP summary reviewed here does not include a lender-by-lender certified schedule of the kind seen in some other reports in this series.
General corporate purposes	[TBD]	Capped at 15% of Gross Proceeds or Rs.10 Crore, whichever is lower. No further breakdown provided, as is standard.

The core rationale for Unit 2 is reasonably well explained: the existing Rajkot facility was running at around 85% average capacity utilisation in Fiscal 2025, and the Company wants to bring baby diaper production in house instead of depending on a contract manufacturer, which management expects to reduce cost and improve quality control as the Bloom Baby brand scales. The land is already leased and the capacity plan is independently certified.

That said, as the Company's own Risk Factors disclose, orders for the underlying equipment and machinery have not yet been placed as of this DRHP, so cost and timeline execution risk remains open, and since this is still a DRHP the Gross Proceeds, Net Proceeds and General Corporate Purposes figures are all undetermined.

Financial Performance

P&L and Key Performance Indicators (Rs. Lakhs unless stated)

Particulars	FY 2025	FY 2024	FY 2023
Revenue from operations	11,501.34	8,271.14	4,217.04
Total income	11,556.19	8,492.95	4,218.54
EBITDA	1,437.50	586.51	155.13
EBITDA margin (%)	12.50	7.09	3.68
Profit after tax	909.45	503.42	18.53
PAT margin (%)	7.87	5.93	0.44
Basic and Diluted EPS (Rs.), post bonus basis	5.31	2.99	0.11
Return on equity / RoNW (%)	28.58	80.35	15.05
Net worth	3,181.99	626.54	123.13
NAV per equity share (Rs.), FY25 only	44.67	N/A	N/A

Balance Sheet and Cash Flow Highlights (Rs. Lakhs)

Particulars	FY 2025	FY 2024	FY 2023
Total assets	9,056.31	4,886.95	3,368.11
Total borrowings (long and short term)	2,126.79	2,476.51	1,963.63
Net cash from / (used in) operating activities	(1,036.20)	118.95	(144.85)
Net cash from / (used in) investing activities	(23.58)	(573.39)	(34.73)
Net cash from financing activities	1,154.39	415.78	190.79
Net increase / (decrease) in cash and cash equivalents	94.62	(38.66)	11.22

Independent recomputation confirms the Company's own disclosed 2 year revenue CAGR of 65.03% (FY23 to FY25) reconciles with the endpoint figures, and PAT growth has been dramatic in absolute and percentage terms: from a near breakeven Rs.18.53 Lakhs in FY23 to Rs.503.42 Lakhs in FY24 (a jump of more than 27 times) and Rs.909.45 Lakhs in FY25. RoNW tells a similarly volatile story, spiking to 80.35% in FY24 (when net worth was still small, at Rs.626.54 Lakhs) before moderating to 28.58% in FY25 as the equity base roughly quintupled following a bonus issue and premium capital raise.

This trajectory reflects a very small, recently converted company scaling quickly rather than a stable, mature earnings base, and investors should treat the historical growth rate as a poor guide to what a much larger revenue and asset base can sustain going forward.

The cash flow picture in FY 2025 deserves a specific and prominent caveat, unlike some other reports in this series where a headline 'negative cash flow' risk factor turned out to be a benign artifact of capital expenditure.

Here, net cash used in operating activities was a substantial Rs.1,036.20 Lakhs in FY 2025, despite the Company reporting its highest ever profit (Rs.909.45 Lakhs PAT) in the same year. This divergence is driven overwhelmingly by a large build up in trade receivables, which rose from Rs.627.33 Lakhs at the end of FY24 to Rs.4,938.89 Lakhs at the end of FY25, an increase of more than Rs.4,300 Lakhs in a single year against total revenue of Rs.11,501.34 Lakhs.

In plain terms, a meaningful share of FY 2025's reported profit had not yet been converted into cash as of the balance sheet date, which is a real quality of earnings flag rather than a capital expenditure story, and is worth weighing alongside the strong headline growth numbers.

How Does It Compare to Peers?

The DRHP states plainly that there are no listed companies in India engaged in a comparable business segment or of comparable size to H. R. Hygiene Products Limited, so no accounting ratio comparison with industry peers is provided. This places the Company alongside a small number of other companies in this series, such as Rentomojo and Sotefin Bharat, where no meaningful peer benchmark exists.

In the absence of a peer table, the Company's own 3 year trend, set out in Section 4 above, along with the industry-level context in the Credence Research Report the Company commissioned for this Offer (which investors should note was paid for by the Company itself and is not an independent recommendation), are the only available reference points for valuation and performance context.

Key Risks

l FY 2025 operating cash flow was sharply negative (Rs.1,036.20 Lakhs used) in the same year the Company reported its highest ever profit, driven by trade receivables ballooning from Rs.627.33 Lakhs to Rs.4,938.89 Lakhs; this divergence between reported profit and cash generation is a genuine quality of earnings concern that sits alongside the headline growth story.

l Revenue growth has been extremely rapid off a very small base (a 65.03% 2 year CAGR, with PAT rising more than 27 times between FY23 and FY24 alone), and RoNW swung from 15.05% to 80.35% to 28.58% across the 3 disclosed years as the equity base changed; this level of volatility makes historical performance a weak guide to what a larger post-IPO capital base can sustain.

l As of this DRHP, several TDS returns for Fiscal 2024-25 (Q3 and Q4, both Form 26Q and Form 27EQ) remained unpaid as of the filing date, with delays of 120 to 240 days and counting, alongside a documented history of delayed EPF, GST and Income Tax filings and payments across the last 3 fiscals.

l The Company's Statutory Auditor has flagged CARO observations in both FY24 and FY25 relating to overdue TDS and Income Tax dues (Rs.1,00,130 in FY24 and Rs.2,55,613 TDS plus Rs.13,493 Income Tax in FY25).

l The entire Offer for Sale is being made by the Company's own 4 Promoters, whose Weighted Average Cost of Acquisition of Rs.1.14 to Rs.2.05 per share is likely to be a very small fraction of the eventual Offer Price, meaning Promoters stand to realise substantial value through this sale independent of the Fresh Offer.

l Revenue remains concentrated in a single product category (sanitary napkins historically) and in Gujarat (75.34% of FY 2025 revenue), and the Company has not yet placed firm orders for the equipment needed for its Proposed Unit 2, the largest identified use of Net Proceeds.

l The Company depends on a single contract manufacturer for its newly launched Bloom Baby diaper line, a category it is now trying to internalise through the Objects of this Offer.

l There have been multiple discrepancies and delayed filings in the Company's corporate records with the Registrar of Companies (forms including SH-7, MGT-7, PAS-3, ADT-1, CHG-1, AOC-4, MGT-14 and DIR-12), spanning from 2017 through as recently as October 2025, though the Company states these have not resulted in any regulatory proceedings to date.

l The Company relies on a limited number of suppliers, including imported fluff pulp and Super Absorbent Polymer, without long term contracts, exposing margins to raw material price and availability risk.

l None of the Company's Directors have prior experience serving on the board of a listed company.

l The Company does not have a formal hedging policy despite some exposure to imported raw materials, leaving it exposed to foreign exchange fluctuations.

l The Company relies on relationships with e-commerce marketplaces (Meesho, Amazon, Flipkart and others) for a portion of its online sales, introducing platform dependency risk.

l Industry data cited in this DRHP comes from a report commissioned and paid for by the Company itself (the Credence Research Report), which investors should weigh accordingly rather than treat as fully independent.

Positives to Note

l The Company has scaled from a near breakeven business (PAT of Rs.18.53 Lakhs in FY23, PAT margin of 0.44%) to a meaningfully profitable one (PAT of Rs.909.45 Lakhs in FY25, PAT margin of 7.87%) in just 2 years, with EBITDA margin improving from 3.68% to 12.50% over the same period.

l The customer base is genuinely diversified, spanning more than 200 customers across 28 states and 8 union territories over the last 3 fiscals, which reduces single customer dependency risk even as the Company remains geographically concentrated in manufacturing.

l The Company has already secured a 20 year leasehold land agreement for its proposed Unit 2 and obtained an independent Chartered Engineer's capacity certification, reducing (though not eliminating) execution risk on the largest Object of the Offer.

l The Company is diversifying its brand and product portfolio (Femiss, Womanica, ElderFit and the newly launched Bloom Baby diaper line) across the hygiene product life stages, rather than depending on a single product line indefinitely.

l Existing manufacturing capacity utilisation was already running at around 85% in FY 2025, indicating genuine, near term demand for the expansion capacity this Offer is intended to fund, rather than speculative capacity building.

l The dual distribution model, combining offline dealer networks with multiple major e-commerce marketplaces, gives the Company reach across both B2B and B2C channels pan-India.

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