Hexagon Nutrition IPO DHRP Analysis

HEXAGON NUTRITION LIMITED

IPO Analysis  |  BSE & NSE Main Board  |  Book Built Issue

Based on Draft Red Herring Prospectus dated September 23, 2025

STATUS: Issue Dates 5-9 June  |  Issue Type: 100% Offer for Sale  |  Exchange: BSE & NSE  |  Price Band: To Be Announced  |  Listing: Main Board

 Hexagon Nutrition Limited (HNL) is a Mumbai-based, research-oriented pure-play nutrition company incorporated in 1993. Originally founded as a micronutrient formulations player, the company has progressively moved up the value chain to become one of the most comprehensive nutrition platforms in India. It is described in the CARE Report as the only holistic nutrition player offering products across the entire range from micronutrient premixes to therapeutic and clinical products.

HNL operates three manufacturing facilities in India (Nasik, Maharashtra; Chennai and Thoothukudi, Tamil Nadu) and one international facility in Tashkent, Uzbekistan, along with two in-house R&D centres. Two of the Indian facilities are located in SEZ zones, offering strategic advantages including duty-free imports and port proximity. The company's products have been exported to over 75 countries during Fiscals 2023, 2024 and 2025.

The company classifies its business into three segments:

• Branded wellness and clinical nutrition products (B2C segment): The flagship consumer-facing business. Key brands include PENTASURE (adult wellness and clinical nutrition), OBESIGO (weight management), PEDIAGOLD (paediatric nutrition), and NUTRONE (launched in FY2024). Distributed across India and exported to 14+ countries. This segment contributed 28.34% of revenue from operations in FY2025, growing from 22.51% in FY2023.

• Premix formulations (B2B2C segment): Supplying customised vitamin and mineral premixes to leading Indian and multinational FMCG companies for fortification of malted beverages, biscuits, dairy products, flour and edible oils. HNL is one of the largest premix players in India per the CARE Report. This segment was the largest revenue contributor at 47.61% of revenue from operations in FY2025.

• Ready to Use Foods (RUFs) and Micronutrient Powders (MNPs) ESG segment: Supplying therapeutic nutrition to international organisations including UN agencies and government health ministries for malnutrition treatment programmes (RUTF for severe acute malnutrition, RUSF for moderate malnutrition, MNPs for home food fortification). HNL is one of the largest licensed MNP suppliers under UN programmes. This segment contributed 23.96% of FY2025 revenues.

All three manufacturing facilities hold FSSC 22000, GMP, ISO 9001:2015, and Halal certifications, validating the company's quality and regulatory compliance across global markets.

Key Basics

This is a 100% Offer for Sale (OFS) which means the company will receive no proceeds. All funds raised go to the Selling Shareholders (four promoters and promoter group members). This is a Book Built Issue seeking a main board BSE and NSE listing, distinct from the SME segment. The price band has not yet been determined at the DRHP stage.

Issue Type	Book Built Offer — 100% Offer for Sale. No fresh issue. Company receives no proceeds.
Total Offer Size	Up to 30,859,704 Equity Shares of face value ₹1 each | Aggregate amount: ₹[●] million (price band TBD)
Face Value	₹1 per Equity Share
Price Band	To be determined. Floor Price and Cap Price to be announced at least 2 working days before Bid Opening.
Pre-Offer Share Capital	110,627,404 Equity Shares (pre-conversion of 12,208,212 CCPS into ~12,290,705 equity shares)
Post-Offer Share Capital	At least 25% of post-offer paid-up capital to be held by public (Regulation 19(2)(b) of SCRR)
Promoter Holding (Pre-Offer)	Vikram Arun Kelkar (21.11%), Arun Purushottam Kelkar (19.81%), Subhash Purushottam Kelkar (19.68%), Nikhil Arun Kelkar (17.26%) — total ~77.86% promoter holding
Selling Shareholders	Arun Purushottam Kelkar (1,536,477 shares), Subhash Purushottam Kelkar (24,188,993 shares), Nutan Subhash Kelkar (3,608,142 shares), Aditya Kelkar (1,526,092 shares)
Promoter Acquisition Cost	Weighted average costs: Arun Purushottam Kelkar ₹0.48/share, Subhash Purushottam Kelkar ₹0.65/share, Nutan Subhash Kelkar ₹0.51/share, Aditya Kelkar ₹1.27/share — all far below any likely offer price.
Listing Exchange	BSE Limited and NSE (Main Board) — not SME platform
Book Running Lead Managers	Cumulative Capital Private Limited (SEBI Reg: INM000013129) and Catalyst Capital Partners Private Limited (SEBI Reg: INM000013068)
Registrar	KFin Technologies Limited
Anchor Investor Bidding Date	One working day prior to Bid/Offer Opening Date
Bid/Offer Open & Close Dates	To be announced
Previous DRHP	Company had filed a Previous DRHP dated December 23, 2021, which stands replaced in entirety by this DRHP.

Important note: This is a pure OFS. No fresh capital enters the company. The rationale for listing is explicitly stated as (a) enabling the Selling Shareholders to partially exit, and (b) enhancing brand visibility and providing a public market for equity shares. Investors should assess the company's existing financial position carefully since IPO proceeds will not improve it.

How Will the IPO Money Be Used?

The company will receive zero proceeds from this offer. All net proceeds (after deducting offer-related expenses which will be borne by the Selling Shareholders) will be distributed to the four Selling Shareholders in proportion to the shares offered by each.

Selling Shareholder	Shares Offered	Relationship	Wt. Avg. Cost (₹/share)
Arun Purushottam Kelkar	1,536,477	Promoter	0.48
Subhash Purushottam Kelkar	24,188,993	Promoter	0.65
Nutan Subhash Kelkar	3,608,142	Promoter Group	0.51
Aditya Kelkar	1,526,092	Promoter Group	1.27
Total	30,859,704	—	—

Key observation: The promoters and promoter group members acquired their shares at weighted average costs ranging from ₹0.48 to ₹1.27 per share. At any reasonable market listing price, the exit premium will be very substantial. This is structurally common in mature promoter-held businesses going public for the first time, but investors should note they are providing the exit liquidity.

Financial Performance

Note: All figures are in ₹ million unless stated otherwise. HNL's fiscal year runs April to March.

Revenue and Growth

HNL has delivered consistent revenue growth over the past three fiscal years, with revenue from operations rising from ₹2,785.01 million (FY2023) to ₹2,977.31 million (FY2024) and ₹3,249.29 million (FY2025) — a three-year CAGR of approximately 8.06%.

The branded nutrition segment has been the fastest-growing, rising from ₹626.99 million (22.51% of revenue) in FY2023 to ₹920.94 million (28.34% of revenue) in FY2025, reflecting successful brand scaling. The premix segment remains the revenue anchor at ₹1,546.95 million (47.61% of revenue) in FY2025.

The therapeutic/ESG segment declined from ₹930.74 million in FY2024 to ₹778.44 million in FY2025, likely due to timing of government and UN programme orders.

Profitability

Metric	FY2023	FY2024	FY2025
Revenue from Operations (₹ mn)	2,785.01	2,977.31	3,249.29
Total Income (₹ mn)	2,816.46	3,046.21	3,312.87
EBITDA (₹ mn)	171.74	248.77	400.72
EBITDA Margin (%)	6.17%	8.36%	12.33%
Profit After Tax (₹ mn)	58.24	122.14	243.77
PAT Margin (%)	2.07%	4.01%	7.36%
Finance Costs (₹ mn)	33.44	41.47	39.46
EPS — Basic (₹)	0.51	1.10	1.75
EPS — Diluted (₹)	0.47	0.99	1.75

The financial story here is margins, not just growth. EBITDA margin has expanded from 6.17% to 12.33% in just two years, a 616 basis point improvement. PAT more than quadrupled from ₹58.24 million in FY2023 to ₹243.77 million in FY2025.

This reflects the structural shift in product mix towards higher-margin branded products and improved operating leverage. Finance costs have remained low and stable, declining slightly from ₹41.47 million in FY2024 to ₹39.46 million in FY2025.

Return Ratios

Metric	FY2023	FY2024	FY2025
Return on Equity (ROE) %	3.50%	7.21%	10.47%
Return on Capital Employed (ROCE) %	5.94%	11.12%	17.06%
Debt to Equity Ratio	0.32	0.21	0.14
Interest Coverage Ratio	3.82	5.70	9.54
Current Ratio	1.93	2.98	3.49

Return ratios are improving across the board: ROCE has risen from 5.94% to 17.06% in two years. Debt to equity is extremely low at 0.14x and declining — the company is effectively nearly debt-free on a net basis. Interest coverage of 9.54x is very comfortable. The current ratio of 3.49x indicates strong short-term liquidity. These are high-quality balance sheet characteristics.

Cash Flow

Cash Flow	FY2023	FY2024	FY2025
Net Cash from Operations (₹ mn)	(0.01)	233.80	377.94
Net Cash from Investing (₹ mn)	(187.04)	37.13	(226.85)
Net Cash from Financing (₹ mn)	69.86	(191.27)	(192.39)
Net Change in Cash (₹ mn)	(117.19)	79.66	(41.30)
Cash & Cash Equivalents Year-End	113.87	193.53	152.23

Operating cash flow turned sharply positive in FY2024 (₹233.80 million) and remained strong in FY2025 (₹377.94 million), after being essentially breakeven in FY2023. This is a significant positive: the company converts its accounting profits into real cash.

The investing outflow in FY2025 (₹226.85 million) primarily reflects capex and mutual fund investments. Financing outflows include dividend payments of ₹50 million in FY2025 and debt repayment. Critically, unlike many IPO-stage companies, HNL generates positive operating cash flows.

Balance Sheet Snapshot (March 31, 2025)

Balance Sheet Item	FY2023 (₹ mn)	FY2024 (₹ mn)	FY2025 (₹ mn)
Total Assets	2,889.00	2,505.44	2,613.59
Total Non-Current Assets	649.27	718.72	777.16
Total Current Assets	2,239.73	1,786.72	1,836.43
Inventories	875.17	793.75	612.05
Trade Receivables	741.94	485.14	598.24
Cash & Equivalents	113.87	193.53	152.23
Investments (Current)	300.79	189.86	339.52
Total Equity	1,630.84	1,758.73	1,941.81
Total Borrowings (Current)	481.47	284.37	194.96
Total Borrowings (Non-Current)	37.26	84.56	71.04

The balance sheet shows consistent equity growth (from ₹1,630.84 million to ₹1,941.81 million over three years) while aggressively reducing debt — current borrowings halved from ₹481.47 million to ₹194.96 million. Inventories have declined meaningfully, suggesting improved working capital management. Current investments of ₹339.52 million (primarily mutual funds) represent a productive deployment of liquidity. The company is not balance-sheet stressed.

Revenue Composition and Business Segments

Segment	FY2023 Revenue (₹ mn)	FY2023 %	FY2024 Revenue (₹ mn)	FY2024 %	FY2025 Revenue (₹ mn)	FY2025 %
Branded Nutrition (B2C)	626.99	22.51%	710.65	23.87%	920.94	28.34%
Premix Formulations (B2B2C)	1,527.99	54.86%	1,333.13	44.78%	1,546.95	47.61%
Therapeutic Nutrition (ESG)	627.83	22.54%	930.74	31.26%	778.44	23.96%
Other	2.20	0.08%	2.79	0.09%	2.95	0.09%
Total	2,785.01	100%	2,977.31	100%	3,249.29	100%

The most significant structural trend is the sustained increase in the branded nutrition (B2C) segment's revenue share from 22.51% to 28.34% over three years.

Since branded products carry significantly higher margins than premixes or RUFs/MNPs, this mix shift is a key driver of the EBITDA margin expansion documented in Section 4. If this trend continues, it could be a source of sustained earnings upgrades.

The premix segment, while declining as a percentage, remains the volume anchor and provides stable base revenue with large FMCG clients including multinational beverage companies and dairy cooperatives.

How Does It Compare to Peers?

The DRHP provides competitor comparisons via the CARE Report, identifying Nutrivita Foods, Compact India, Soma Nutrition Labs, Nuflower Foods, and Nutriset SAS as the comparable set. Hexagon is the only company with available FY2025 data at the time of the DRHP.

Parameter	Hexagon Nutrition (FY25)	Nutrivita Foods (FY24)	Compact India (FY24)	Nuflower Foods (FY24)
Net Sales (₹ mn)	3,249	979	1,851	1,299
EBITDA (₹ mn)	401	173	355	127
EBITDA Margin %	12.3%	17.7%	19.2%	9.8%
Net Profit (₹ mn)	244	136	259	38
Net Profit Margin %	7.5%	13.9%	14.0%	2.9%
Debt-to-Equity	0.14	0.01	0.13	1.69
ROCE %	18.05%	66.0%	53.4%	26.1%

Hexagon is by far the largest in the peer group by revenue. Its EBITDA margin (12.3%) lags behind Nutrivita (17.7%) and Compact India (19.2%), suggesting the higher-margin branded segment still has room to scale as a share of overall revenues.

Its ROCE of 18.05% is respectable. The debt-to-equity of 0.14x is better than Nuflower (1.69x). Note that since this is a DRHP, the Offer Price is not yet available and a formal P/E or EV/EBITDA comparison cannot be completed. Such analysis should be done when the price band is announced.

Competitive differentiation: The CARE Report positions HNL as uniquely placed — it is the only integrated player with in-house premix nutritional raw materials, which gives it cost advantages over branded-only peers like Abbott Healthcare and Nestlé India who purchase premixes externally.

Its global footprint (75+ countries) and UN programme supply relationships are meaningful differentiators that most listed Indian nutrition companies cannot match.

Key Risks

• Pure OFS: Company receives zero capital: Unlike many IPOs that raise fresh capital for growth, this is entirely a promoter exit event. The company's financial position will not improve from this listing. Investors are providing liquidity to promoters who acquired shares at ₹0.48–₹1.27 per share. The business will continue with its existing financial resources.

• Low capacity utilisation: 30% across three years: HNL's manufacturing capacity utilisation has been consistently low: 31.07% (FY2023), 29.53% (FY2024), 30.03% (FY2025). This means the company operates at one-third of its installed capacity, suggesting either the market has not scaled as quickly as capacity was built, or the business model relies on built-in headroom. Under-utilised facilities carry fixed cost drag and flag execution risk on volume projections.

• Significant revenue concentration in top 10 customers: Revenue from top 10 customers was ₹1,490.49 million in FY2025 — representing approximately 45.9% of total revenue. Loss of any major FMCG client from the premix segment (where large volume deals are typical) could materially affect revenues.

• The DRHP discloses various past corporate non-compliances (Risk Factor 54): The document flags 'certain instances of non-compliances with respect to certain corporate actions' in the past. This is a broad flag that warrants scrutiny of the detailed risk factor section before investing.

• Geographically concentrated domestic revenue: Most domestic revenue comes from Maharashtra, Karnataka, Tamil Nadu, Gujarat, Telangana, West Bengal, and Uttar Pradesh thereby creating concentration risk to regional disruptions. No single state-level disruption could affect operations across all facilities simultaneously, but regional market dependencies in the branded nutrition business remain a risk.

• Promoters' weighted average acquisition cost is effectively near-zero vs any likely offer price: All Selling Shareholders acquired their shares at ₹0.48–₹1.27 per share. At likely listing prices, this represents a 100x+ premium. While legally permissible, this underlines the asymmetry of returns between founders and incoming investors.

• Counterfeit and look-alike products risk: The DRHP explicitly flags that counterfeit and look-alike products, particularly in the domestic market, could harm brand reputation. This is an endemic Indian FMCG challenge and is particularly relevant for a relatively smaller brand player like HNL competing against much larger names like Abbott and Nestlé.

• R&D-dependent product pipeline: New product launches (which are critical to sustaining the branded segment's growth trajectory) depend on successful R&D outcomes. If new products fail to commercialise or are delayed, the branded segment's revenue momentum could stall.

• ESG/RUF segment volatility: Revenue from the therapeutic/ESG segment swung from ₹627.83 million (FY2023) to ₹930.74 million (FY2024) and back down to ₹778.44 million (FY2025). This volatility reflects dependence on UN and government programme cycles, which can be lumpy and unpredictable.

• Manufacturing disruption risk: Three of four manufacturing facilities are in India, with two in SEZ zones. Any significant disruption (natural disaster, regulatory issue, quality failure) at either the Nasik or Chennai/Thoothukudi facilities could materially affect operations.

• Environmental and regulatory compliance: Nutrition and food supplement companies face evolving health, safety, and environmental regulations across multiple geographies (India, EU, US FDA, and others). Regulatory changes or non-compliance events could impact business.

Positives

• Consistent profitable growth with strong operating cash flow: Revenue has grown steadily (FY2023–FY2025 CAGR of ~8%), PAT has quadrupled, and critically, operating cash flow has been strongly positive in FY2024 (₹233.80 million) and FY2025 (₹377.94 million). This is a profitable, cash-generative business, not a speculative pre-profit story.

• Exceptional EBITDA margin expansion (617 bps in 2 years): From 6.17% in FY2023 to 12.33% in FY2025 is a compelling operational improvement story. The primary driver is product mix shift branded products (which carry higher margins) are growing faster than the overall business. If this trend continues, FY2026 margins could potentially reach 14–15%.

• Near debt-free balance sheet with strong liquidity: Debt-to-equity of 0.14x and an interest coverage ratio of 9.54x mean the company has minimal financial risk. Current ratio of 3.49x and ₹339.52 million in current investments (mutual funds) indicate ample near-term financial flexibility.

• Only integrated player from premix to clinical nutrition: The company's end-to-end capability, from manufacturing raw ingredient premixes to supplying branded therapeutic products is a genuine structural moat. Competitors like Abbott and Nestlé cannot replicate the vertical integration without building their own premix infrastructure.

• Global footprint across 75+ countries including UN programme supply: Being a licensed supplier to UN agencies for MNPs is not easily replicable. This provides credibility, regulatory validation, and a recurring institutional revenue stream that insulates the business from purely domestic market volatility.

• Rapidly growing branded segment (B2C) driving mix improvement: Branded nutrition growing from 22.51% to 28.34% of revenue signals successful consumer brand building. PENTASURE, OBESIGO, and PEDIAGOLD are establishing multi-therapy area presence, building customer loyalty and repeat purchase cycles.

• Capacity headroom for growth without significant capex: With only 30% capacity utilisation, HNL can nearly triple output with minimal incremental capital expenditure. This is a significant earnings operating leverage opportunity if brand volume scales.

Hexagon Nutrition Limited is a genuine quality nutrition business with a differentiated integrated platform, strong brand portfolio, consistent revenue growth, and a compelling margin expansion story. The near-debt-free balance sheet, positive operating cash flows, and global export reach mark it as a structurally sound company — not a pre-profit speculative story.

The key concerns are the pure OFS nature (no proceeds to the company), persistently low capacity utilisation at 30%, and significant customer concentration. Valuation can only be assessed once the price band is announced. At that point, investors should compare the trailing and forward P/E against listed nutrition and specialty food peers, and assess whether the branded segment growth justifies a premium to the premix-heavy peer group.

For long-term investors, the capacity utilisation headroom represents a compelling earnings growth story if executed. For shorter-term oriented investors, the pure OFS structure and absence of fresh capital deployment limit near-term catalysts beyond listing day sentiment.

 Analysis based on DRHP dated September 23, 2025  |  All figures from Restated Consolidated Financial Information