HD Fire Protect IPO (13-15 October) Analysis

6 days ago

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HD Fire Protect Limited is an Indian manufacturer and supplier of fire protection equipment and systems, offering a comprehensive portfolio spanning water, foam and gas based fire suppression systems, commonly known as fire fighting products.

The company develops most of its products in house with proprietary designs to meet national and international standards, serving high hazard industrial applications as well as residential and commercial sectors.

According to an industry report commissioned by the company from CRISIL, HD Fire Protect was the second largest manufacturer of fire protection equipment and systems in India by operating income in Fiscal 2025, and the largest exporter by value of equipment in Fiscal 2025.

The company has export sales across more than 90 countries as of Fiscal 2026 and across 49 countries as of the quarter ended June 30, 2026, supported by a distributor led supply chain internationally and a stockist model in India.

The business traces its roots to a partnership firm established in 1990 by Harish Dharamshi, and was consolidated into the present corporate structure in 2005. As of June 30, 2026, the company's offerings span 8 product categories including sprinklers, alarm valves, deluge valves and skids, foam equipment, monitors, systems valves, water spray nozzles, custom engineered systems and gas suppression systems.

It operates two manufacturing facilities in Maharashtra, at Jalgaon MIDC and Thane MIDC, spanning a combined 8.50 acres, and holds a number of international product certifications including UL Listing and FM Approval, said to be the highest among India focused fire protection equipment peers.

The company supplied 2,066 customers in Fiscal 2026 and has supplied products to marquee sites including India's space launch pad at Sriharikota, the Jamnagar refinery and the new Indian Parliament building.

Key Basics

This is an Offer for Sale (OFS) of up to 2,62,84,500 Equity Shares of face value Rs.5 each by the Promoter Selling Shareholders. The company will not receive any proceeds from the Offer. All proceeds, net of Offer related expenses and applicable taxes, will go to the Promoter Selling Shareholders. The Offer is being made under Regulation 6(1) of the SEBI ICDR Regulations, 2018, through the 100% Book Building Process.

Particulars	Details	Particulars	Details
Issue Type	Offer for Sale (OFS) only	Face Value	Rs.5 per Equity Share
Fresh Issue	Nil	Offer for Sale	Up to 2,62,84,500 Equity Shares
Price Band	[TBD]	Lot Size	[TBD]
Bid or Offer Opens	[TBD]	Bid or Offer Closes	[TBD]
Listing At	BSE and NSE	RHP Date	October 5, 2026

Since this is a pure offer for sale, the net proceeds will accrue entirely to the Promoter Selling Shareholders rather than to the company for business use. The offer for sale is being undertaken, in part, by Kusum Harish Dharamshi, one of the company's Promoters, among others disclosed in the RHP as Promoter Selling Shareholders.

How Will the IPO Money Be Used?

As this Offer consists entirely of an Offer for Sale, the company will not receive any proceeds from the Offer. The entire Offer proceeds, net of Offer related expenses and relevant taxes, will be received by the Promoter Selling Shareholders.

The company's stated rationale for participating in the listing process is to achieve the benefits of listing the Equity Shares on the stock exchanges, including enhanced visibility, brand image and the creation of a public market and liquidity for its Equity Shares in India.

Since the company itself receives no funds, there is no object wise utilisation table for business purposes, and no monitoring agency has been appointed for the proceeds, as none are payable to the company.

Financial Performance

Revenue, EBITDA and Profitability

The table below sets out HD Fire Protect's restated financial performance for the three Fiscals ended March 31, 2026, converted from Rs. Millions to Rs. Lakhs.

Particulars (Rs. Lakhs)	FY2026	FY2025	FY2024
Revenue from Operations	48,928.1	43,279.9	37,295.3
Operating EBITDA	15,045.9	13,800.8	10,663.2
Operating EBITDA Margin	30.75%	31.89%	28.59%
Profit After Tax (PAT)	11,678.7	10,971.8	8,792.0
PAT Margin (on Total Income)	23.12%	24.35%	22.43%
Basic and Diluted EPS (Rs.)	6.66	6.26	5.01
Return on Net Worth (RoNW)	31.07%	27.71%	25.69%
Return on Capital Employed (RoCE)	40.33%	39.63%	37.61%

Revenue grew from Rs.37,295.3 Lakhs in FY2024 to Rs.48,928.1 Lakhs in FY2026, a compounded increase of roughly 14.5% per year, with EBITDA margin holding in the 28% to 32% range across the three years. PAT grew broadly in line with revenue.

However, investors should note that the company's Equity Share Capital rose sharply from Rs.265.5 Lakhs as at March 31, 2024 to Rs.8,761.5 Lakhs as at March 31, 2025, on account of a bonus issue of equity shares in the ratio of ten new shares for every one share held, allotted in March 2025.

This bonus issue expands the share count more than tenfold and should be kept in mind when comparing per share metrics such as EPS and NAV across FY2024 and the later years, since the FY2024 EPS of Rs.5.01 was computed on a much smaller share base than the FY2025 and FY2026 figures.

The company's revenue is split between domestic and export markets, with export revenue contributing between roughly 33% and 36% of total revenue from operations across the three months period ended June 30, 2026 and the last three Fiscals.

Balance Sheet and Cash Flow

Particulars (Rs. Lakhs)	FY2026	FY2025	FY2024
Total Assets	43,202.6	45,008.2	39,263.2
Total Equity (Net Worth)	37,714.7	39,723.2	34,341.3
Trade Receivables	9,371.3	5,777.9	4,795.6
Net Asset Value per Share (Rs.)	21.45	NA	NA
Net Cash from Operating Activities	9,249.2	9,831.5	6,377.1

The balance sheet is largely equity funded, with minimal reliance on borrowings, and finance costs remain negligible across all periods presented, at under Rs.20 Lakhs each year. Operating cash flow has remained positive and broadly tracked profitability across all three Fiscals, which is a reassuring sign of underlying cash conversion.

Trade receivables rose from Rs.4,795.6 Lakhs in FY2024 to Rs.9,371.3 Lakhs in FY2026, growing faster than revenue over the period, and investors may wish to track this working capital trend, alongside the stated Trade Receivable Days of 57 at the end of FY2026 compared with 45 in FY2025 and 48 in FY2024.

The company's Order Book stood at Rs.1,586.01 Lakhs as at June 30, 2026, up from Rs.1,344.48 Lakhs at the end of FY2026, Rs.703.45 Lakhs at the end of FY2025 and Rs.752.92 Lakhs at the end of FY2024. The RHP itself cautions that order book growth of 91.13% in FY2026 may not be indicative of future order intake or revenue, and that the order book declined by 6.57% in FY2025.

How Does It Compare to Peers?

The RHP discloses that there are no listed players in India in the fire protection equipment and systems industry. The peer set used for comparison purposes instead comprises broader capital goods and industrial equipment companies such as Azad Engineering Limited, KSB Limited, Kirloskar Pneumatic Company Limited, Elgi Equipment Limited and Ingersoll Rand (India) Limited, selected on the basis of broad similarity in business model and scale rather than direct product comparability.

Company	RoNW (%)	NAV per Share (Rs.)	P/E (Diluted)
HD Fire Protect Limited	31.07%	21.45	NA
Azad Engineering Limited	8.74%	236.74	145.65
KSB Limited	16.11%	96.46	55.68
Kirloskar Pneumatic Company Limited	20.36%	192.25	17.20
Elgi Equipment Limited	19.28%	70.41	44.83

Since the peer set has no business that directly competes in fire protection equipment, metrics such as P/E and NAV per share are not strictly comparable across the table, and the industry average P/E of 62.95 disclosed in the RHP is derived from this mixed peer group rather than from fire protection equipment specialists.

On the sole basis of Return on Net Worth, HD Fire Protect's 31.07% in FY2026 compares favourably with each of the disclosed listed peers, though investors should treat this comparison with caution given the dissimilar business models.

Key Risks

● Pure Offer for Sale with no proceeds to the company. The company will not receive any proceeds from this Offer. The entire Offer proceeds will go to the Promoter Selling Shareholders, and the Offer does not fund any business expansion, debt repayment or working capital requirement of the company.

● Promoter shareholding largely acquired at near zero cost. The average cost of acquisition of Equity Shares for the Promoters ranges from Rs.0.05 and Rs.0.09 per share for two Promoters, to Nil for the remaining three Promoters, reflecting the effect of a 10 for 1 bonus issue in March 2025 and share transfers by way of gifts. Investors subscribing at the eventual Offer Price will be paying a materially higher price than the cost basis of the selling Promoters.

● Rising trade receivables and lengthening collection cycle. Trade receivables grew from Rs.4,795.6 Lakhs in FY2024 to Rs.9,371.3 Lakhs in FY2026, and Trade Receivable Days rose to 57 in FY2026 from 45 in FY2025, a trend that, if it continues, could increasingly tie up working capital.

● Supplier concentration has increased sharply. The top 10 suppliers accounted for 47.76% of total expenses in FY2026, up from 35.59% in FY2024, and there are no long term purchase agreements or firm commitments with these suppliers, creating a risk to continuity of raw material and contract manufactured goods supply.

● Order Book is not necessarily indicative of future revenue. The company's own disclosure cautions that its order book, which grew 91.13% in FY2026 after declining 6.57% in FY2025, may be delayed, modified, cancelled or not fully paid by customers, and should not be relied upon as a predictor of future revenue or profit.

● One of the company's joint statutory auditors resigned before completing its term, citing discontinuation of its audit practice, and the individual auditor was subsequently appointed Chief Financial Officer of the company. While the RHP states this was not triggered by any adverse audit finding, such a sequence of events may be viewed cautiously by some investors.

● The company and its Directors are party to certain outstanding legal proceedings at various stages of adjudication, the outcome of which cannot be assured.

● The company has filed compounding and adjudication applications with regulatory authorities for past non compliances under the Companies Act, including procedural lapses in a prior buyback of shares and a delayed cost auditor appointment. While the disclosed matters have been settled with fines paid, certain adjudication applications remain pending as of the RHP date.

● Export revenue, which has contributed between roughly 33% and 36% of total revenue over the last three Fiscals, exposes the company to foreign exchange fluctuation risk and to regulatory or geopolitical developments affecting its more than 90 export markets.

● A meaningful share of revenue, rising to 88.05% in the quarter ended June 30, 2026 from 79.76% in FY2024, comes from repeat customers, meaning the loss of key repeat relationships could have an outsized impact on revenue.

Positives to Note

● Established and recognised industry position, with the RHP citing the company as the second largest manufacturer of fire protection equipment and systems in India by operating income in Fiscal 2025, and the largest exporter by value of equipment in the same period.

● Consistent profitability and healthy margins across all three Fiscals presented, with Operating EBITDA margin in the 28% to 32% range and Return on Capital Employed above 37% in each of the last three Fiscals.

● Positive and broadly stable operating cash flow across all three Fiscals, indicating reasonable cash conversion from reported profits, alongside a largely equity funded balance sheet with minimal borrowings and negligible finance costs.

● Strong product certification credentials, including the highest number of UL Listed and FM Approved product certifications among India focused fire protection equipment peers as of September 2026, along with a long operating history of more than three decades and a clean record on product recalls.

● Diversified end markets and geographic reach, with supply to more than 90 countries in Fiscal 2026 and a customer base spanning industrial, residential and commercial segments, including prestigious reference sites such as India's space launch pad at Sriharikota and the new Indian Parliament building.

A Note on Figures

The financial figures disclosed in the Red Herring Prospectus for HD Fire Protect Limited are stated in Rs. Millions. For consistency with our standard reporting format, all monetary figures in this article have been converted to Rs. Lakhs (1 Million equals 10 Lakhs) unless stated otherwise.