Leapfrog Engineering Services IPO (17-19 June) Analysis

IPO Analysis  |  BSE SME Platform  |  100% Book Built Issue

Based on Red Herring Prospectus dated June 10, 2026  |  Issue opens June 17, 2026  |  Closes June 19, 2026

STATUS: Issues Dates: 17-19 June  |  Fresh Issue (3,46,08,000 shares) + OFS (38,76,000 shares by promoter)  |  BSE SME  |  Sector: EPC, HVAC, Automation  |  Bengaluru, Karnataka

 Leapfrog Engineering Services Limited (LESL) is a Bengaluru, Karnataka-based engineering, procurement, and construction (EPC) company specialising in HVAC (Heating, Ventilation, and Air Conditioning) systems, MEP (Mechanical, Electrical, and Plumbing) services, industrial automation, and system integration.

Originally incorporated in May 2005 as Leapfrog Informatics Private Limited, renamed to Leapfrog Engineering Services Private Limited in January 2009, and converted to a public limited company in June 2024, the company has 21 years of operating history under promoters Prabhav Narasimha Rao and Priyashaila Prabhav Rao.

Core service lines:

• Engineering, Procurement, and Construction (EPC) Contracts: Turnkey delivery of complete electrical, instrumentation, fire safety, building automation, and HVAC systems for industrial and commercial facilities.

• HVAC Design, Supply, and Installation: Design and commissioning of complete heating, ventilation, and air conditioning systems for data centres, hospitals, cleanrooms, commercial buildings, and industrial plants.

• System Integration and Automation: Building automation systems, SCADA, industrial control systems, energy management solutions, and modular substations.

• Operation and Maintenance (O&M): Post-commissioning services under standard warranty and ongoing annual maintenance contracts.

Business model: Project-based EPC contracting with revenue recognised on milestone billing or completion. The company wins contracts through competitive tendering and promoter relationships with both domestic (government DISCOMs, private corporates) and international clients (Middle East region).

Revenue geography: This is where the RHP reveals a genuinely important strategic shift. For the 9 months ended December 31, 2025, international revenue was Rs.6,643.64 lakhs  65.79% of total revenue from operations of Rs.10,101.28 lakhs. In FY2025 (full year), international revenue was Rs.8,938.31 lakhs  66.39% of total revenue. The company has established itself as predominantly an international EPC player, primarily serving Middle East markets.

This is a significant and underdisclosed strategic reality: Leapfrog is not primarily a domestic EPC company  it is an international engineering services exporter.

Business segment breakdown (9M FY2026): Contracts segment Rs.9,333.33 lakhs (92.4%); Services segment Rs.453.17 lakhs (4.5%); Other segments Rs.314.78 lakhs (3.1%). The contracts segment (project-based EPC) dominates.

Registered Office: No 496, Chaithanya Dhriti Rudresh, 6th Main, 8th Cross, Vijaya Bank Layout, Bannerghatta Road, Bangalore South, Karnataka 560076. Assembly unit (existing, to be relocated): Ground Floor, 11, 12 and 16, Yelenahalli, Begur Hobli, Bengaluru 560076  rented from M/s Leapfrog Automation and Control System (a promoter-related entity, 5,000 sq ft).

New assembling unit (IPO-funded): Site No. 11 and 12, Akshya Nagar, Yelenahalli, Begur, Bengaluru 560068 (18,000 sq ft, G+2 structure totalling 27,300 sq ft). Agreement to sell signed February 12, 2025 at Rs.1,160 lakhs total consideration, Rs.10 lakhs advance paid as of DRHP date, Rs.304.13 lakhs further paid post-DRHP filing.

Key Basics

This is a Red Herring Prospectus (live document  issue opens June 17, 2026, closes June 19, 2026). This is meaningfully different from the February 2025 DRHP for the same company: the BRLM has changed from GYR Capital Advisors to Finshore Management Services Limited, the registrar has changed to Integrated Registry Management Services, the financial data now includes FY2025 full year and 9M FY2026, the issue size is now specific, and a Karur Vysya Bank bridge loan of Rs.1,500 lakhs has been raised against IPO proceeds.

Document Type	RED HERRING PROSPECTUS dated June 10, 2026. Issue opens June 17, 2026. Closes June 19, 2026. Anchor Investor Bidding: June 16, 2026. Price band to be announced before June 15, 2026.
Issue Structure	Fresh Issue of up to 3,46,08,000 Equity Shares + OFS of up to 38,76,000 Equity Shares by promoter Prabhav Narasimha Rao. Total: up to 3,84,84,000 Equity Shares. Market Maker Reservation: 19,26,000 shares (held from OFS). Net Issue: 3,65,58,000 shares.
Face Value	Rs.1 per Equity Share (sub-divided from Rs.10 in August 2024)
Post-Issue Capital	Fresh Issue: 3,46,08,000 new shares. Pre-issue: 10,08,00,000 shares. Post-issue: 13,54,08,000 shares. Issue constitutes 27.14% of post-issue paid-up capital.
Promoters	Prabhav Narasimha Rao (MD): 4,76,28,000 shares (47.25% pre-issue) | Priyashaila Prabhav Rao (WTD): 4,56,12,000 shares (45.25% pre-issue). Total promoters: 92.50% pre-issue. 79,44,000 shares (7.88%) held by non-promoter public pre-issue.
OFS Seller	Prabhav Narasimha Rao: up to 38,76,000 shares at WAC Rs.0.01/share. At any positive price, essentially entire OFS proceeds are gain. This is effectively promoter partial liquidity via the OFS.
Key Capital Events	20:1 bonus issue (May 2024, 96,00,000 shares of Rs.10 FV). Face value sub-division from Rs.10 to Rs.1 (August 2024). Post-sub-division: 10,08,00,000 shares. Additional shares allotted to public FY2025 (Rs.1,532.16 lakhs raised from equity issuance in FY2025 per cash flow).
Listing Exchange	BSE SME Platform. In-principle approval dated June 20, 2025.
BRLM	Finshore Management Services Limited, Kolkata (SEBI Reg: INM000010210). Contact: Mr. S. Ramakrishna Iyengar.
Registrar	Integrated Registry Management Services (P) Limited, Bengaluru. Contact: Mr. S. Giridhar.
Monitoring Agency	Infomerics Valuation and Rating Limited (appointed per Regulation 262 of SEBI ICDR Regulations).
Statutory Auditor	M/s GRSM and Associates, Chartered Accountants (Peer Review Certificate holder, certified KPIs dated 02/06/2026).
Bridge Loan	Karur Vysya Bank Limited: Rs.1,500 lakhs sanctioned May 15, 2026 (Rs.1,000 lakhs for land purchase, Rs.500 lakhs for construction). Rate: Repo rate + 4.75%. Repayment: 3 months from IPO proceeds receipt. Rs.304.13 lakhs further land payments made post-DRHP using this or internal funds.
Trademark	Leapfrog trademark in Class 37 under opposition  disclosed risk.

 Fresh Issue proceeds go to the company. OFS proceeds go to promoter Prabhav Rao. Three uses: new assembling unit capex at Yelenahalli, Bengaluru (Rs.2,700.36 lakhs  43% of identifiable proceeds), working capital (Rs.3,604.82 lakhs  57%), and GCP. The assembling unit is entirely in Bengaluru  moving the company's assembly operations from its current rented 5,000 sq ft facility (from a promoter entity) to a company-owned 27,300 sq ft G+2 building on acquired land.

Object	Amount (Rs. lakhs)	Details
Funding Capex: New Assembling Unit at Site 11 and 12, Akshya Nagar, Yelenahalli, Begur, Bengaluru 560068	Rs.2,700.36 (from IPO) + Rs.10.00 already incurred = Rs.2,710.36 total	Land: Rs.1,236.56 lakhs (18,000 sq ft, Agreement to Sell with Ms. Melanie Thopiah and Ms. Ashley Anu Thopiah, Rs.1,160 lakhs + Rs.76.56 lakhs stamp duty/registration). Building and Civil Works: Rs.1,397.89 lakhs (G+2 structure, 27,300 sq ft total built-up area, pre-engineered building). Plant and Machinery: Rs.85.91 lakhs (Hydraulic Bus Bar Processing Machine, EOT Crane, Testing Equipment, Forklift, Diesel Generator, UPS, CCTV). Existing assembly machinery to be relocated from current Yelenahalli unit. Karur Vysya Bank bridge loan of Rs.1,500 lakhs already sanctioned for land (Rs.1,000L) and construction (Rs.500L). Pending approvals: BBMP Building Plan, BESCOM electricity connection, Factory Licence. No purchase orders placed for P&M as of RHP date.
Working Capital Requirements	Rs.3,604.82	Fund raw material procurement, WIP financing, and project billing cycle for EPC contracts. Short-term borrowings: Rs.3,148.85 lakhs (December 2025), Rs.1,985.07 lakhs (March 2025)  growing rapidly with business scale. Working capital requirement driven by contract billing milestones, trade receivable build (Rs.9,523.52 lakhs at December 2025), and advance payments to suppliers for large EPC orders.
General Corporate Purposes	Up to 15% of gross proceeds or Rs.10 crore, lower prevails	Ordinary business expenses, strategic initiatives.

Critical observation on land purchase: The Agreement to Sell for the Yelenahalli land (Rs.1,160 lakhs) was signed in February 2025, with Rs.10 lakhs advance paid by DRHP date and Rs.304.13 lakhs paid post-DRHP (confirmed in the RHP addendum). The Karur Vysya Bank bridge loan of Rs.1,500 lakhs (at Repo rate + 4.75%, ~12.25%) must be repaid within 3 months of IPO proceeds receipt. The full land cost plus registration charges of Rs.1,236.56 lakhs must be paid from IPO funds  the land is not yet fully transferred to Leapfrog Engineering.

Financial Performance

Note: All figures in Rs. lakhs unless stated. Face value Rs.1 per share throughout. Four financial periods: FY2023, FY2024, FY2025 (full years), and 9M ending December 31, 2025 (nine months, not annualised). Indian GAAP. The key financial story of this RHP is fundamentally different from what the February 2025 DRHP implied: FY2025 is now fully reported and shows strong profitability, and the 9M FY2026 data confirms the trajectory continues.

Revenue

Revenue: Rs.10,417.86 lakhs (FY2023) to Rs.15,785.42 lakhs (FY2024, +51.5%) to Rs.13,466.24 lakhs (FY2025, -14.7%) to Rs.10,101.28 lakhs (9M FY2026, December 2025  9 months). The February 2025 DRHP showed H1 FY2025 of just Rs.3,131 lakhs (6 months), which implied severe revenue decline.

The full FY2025 of Rs.13,466 lakhs and the 9M FY2026 of Rs.10,101 lakhs (annualising to approximately Rs.13,468 lakhs  nearly identical to FY2025) confirms the business has stabilised at approximately Rs.13,000-14,000 lakhs annual revenue, not the feared Rs.6,000 lakh range. FY2024 was the peak (Rs.15,785 lakhs) but the company has not experienced a structural collapse.

Profitability

Metric	FY2023 (Rs. L)	FY2024 (Rs. L)	FY2025 (Rs. L)	9M Dec-25 (Rs. L)
Revenue from Operations	10,417.86	15,785.42	13,466.24	10,101.28
Revenue Growth %	149.19%	51.56%	(14.70%)	~0% ann. vs FY25
Total Income	10,537.88	16,287.69	13,736.69	10,504.57
Cost of Materials Consumed	7,988.58	11,923.90	3,979.47	5,364.27
Contract Execution Expenses	819.03	1,115.72	5,658.72	1,737.29
Changes in Work in Progress	56.24	(243.11)	213.00	(593.88)
Employee Benefits Expense	403.63	458.98	693.70	812.97
Finance Costs	138.92	179.52	193.43	449.55
Depreciation	19.45	58.72	46.71	31.70
Other Expenses	1,049.87	494.86	764.85	762.62
Total Expenses	10,475.72	13,988.59	11,549.88	8,564.52
Profit Before Tax	62.16	2,237.10	2,186.81	1,940.05
Tax Expense	33.86	597.83	564.34	521.65
Profit After Tax (PAT)	28.30	1,639.27	1,622.47	1,418.40
EBITDA (Operating Profit)	100.51	1,973.07	2,156.50	2,018.01
EBITDA Margin %	0.96%	12.50%	16.01%	19.98%
PAT Margin %	0.27%	10.38%	12.05%	14.04%
EPS (post-bonus and sub-division, Rs.1 FV)	0.03	1.63	1.57	1.32 (9M)
Weighted Average EPS (Rs.)			1.33
RONW %	5.32%	75.51%	30.47%	21.03% (9M)
ROCE %	10.95%	68.10%	32.45%	23.98%

Three key revelations from the full RHP financials versus the earlier DRHP reading: First, EBITDA margin has improved every single year: 0.96% (FY2023), 12.50% (FY2024), 16.01% (FY2025), 19.98% (9M FY2026).

This is a consistent, accelerating margin trajectory. Second, PAT in FY2025 (Rs.1,622 lakhs) is nearly identical to FY2024 (Rs.1,639 lakhs) despite 14.7% lower revenue  this confirms the business is producing more PAT per rupee of revenue as margins improve. Third, the 9M FY2026 PAT of Rs.1,418 lakhs (nine months) implies full-year FY2026 of approximately Rs.1,891 lakhs  a new PAT high. The earnings trajectory is positive and improving.

FY2025 weighted average EPS of Rs.1.33 and 9M FY2026 EPS of Rs.1.32. At industry average P/E of 22.37x on FY2025 EPS of Rs.1.57, implied price is approximately Rs.35 per share (face value Rs.1). At the same multiple on FY2025 weighted average EPS Rs.1.33: approximately Rs.30. At FY2024 peak EPS of Rs.1.63 and 22.37x: approximately Rs.36. These are the pricing anchors when the price band is announced.

Return Ratios and Key Metrics

Metric	FY2023	FY2024	FY2025	9M Dec-25
RONW %	5.32%	75.51%	30.47%	21.03% (not ann.)
Weighted Average RONW %			41.29%
ROCE %	10.95%	68.10%	32.45%	23.98%
D/E (Total Borrowings / TNW)	2.45x	0.63x	0.38x	0.48x
Net Asset Value per Share (Rs.)	Not separately extracted	Not separately extracted	4.97	6.29
Total Net Worth (Rs. L)	531.76	2,171.03	5,325.66	6,744.08
Total Borrowings (Rs. L)	1,304.69	1,377.85	2,010.55	3,222.30
Industry Peer P/E Range	Engineers India: 27.14x	Konstelec: 17.60x	Average: 22.37x
Implied price at 22.37x on FY25 EPS Rs.1.57			Rs.35.12
Implied price at 22.37x on WAG EPS Rs.1.33			Rs.29.75

Net worth has grown dramatically: Rs.531.76 lakhs (FY2023) to Rs.6,744.08 lakhs (December 2025)  a 12.7x increase in under 3 years. This growth reflects both retained earnings (PAT of approximately Rs.4,700 lakhs over FY2024-FY2025 plus 9M FY2026) and the equity issuance of Rs.1,532.16 lakhs in FY2025. The D/E ratio has improved from 2.45x to 0.48x over three years. Post-IPO, with fresh equity of Rs.3,46,08,000 shares, the D/E will decline further toward approximately 0.15-0.20x, dramatically improving balance sheet quality.

Balance Sheet

Balance Sheet Item	FY2023 (Rs. L)	FY2024 (Rs. L)	FY2025 (Rs. L)	Dec-25 (Rs. L)
Total Net Worth	531.76	2,171.03	5,325.66	6,744.08
Long-Term Borrowings	101.58	59.36	25.48	73.46
Short-Term Borrowings	1,203.11	1,318.49	1,985.07	3,148.85
Total Borrowings	1,304.69	1,377.85	2,010.55	3,222.30
Inventories	361.68	860.27	425.23	1,153.78
Trade Receivables	1,484.95	1,236.99	10,820.21	9,523.52
Cash and Bank Balances	887.24	730.23	829.24	871.67
Short-Term Loans and Advances	2,919.64	829.54	1,091.40	2,414.68
Other Current Assets	548.24	1,073.02	1,144.51	1,028.60
Total Current Assets	6,645.38	5,110.73	14,917.00	15,603.75
Total Assets	6,645.38	5,110.73	14,917.00	15,603.75
Trade Receivables Days (approx.)	52 days	29 days	293 days	345 days

The trade receivables figure is the single most alarming number in the RHP. Trade receivables exploded from Rs.1,236.99 lakhs (FY2024) to Rs.10,820.21 lakhs (FY2025) to Rs.9,523.52 lakhs (December 2025). At 9M FY2026 revenue of Rs.10,101 lakhs, the December 2025 receivable of Rs.9,523 lakhs represents approximately 345 days of revenue outstanding  nearly 12 months of revenue locked in receivables. For comparison: FY2024 receivable days were approximately 29 days.

This extraordinary jump from 29 to 345 days in two years is the most significant financial risk in this entire RHP. The company is booking revenue on large EPC contracts but has not collected the corresponding cash. The IPO's working capital allocation of Rs.3,604.82 lakhs addresses some of this, but Rs.9,523 lakhs in outstanding receivables dwarfs the working capital injection.

The geographical split (66% international in 9M FY2026) suggests a significant portion of these receivables are from Middle East clients  potentially long-dated government or private sector project billings in Kuwait, Bahrain, or Turkey.

Cash Flows

Cash Flow (Rs. L)	FY2023	FY2024	FY2025	9M Dec-25
Net Cash from Operating Activities	1,264.52	(115.78)	(1,714.85)	(752.22)
Operating Profit before WC Changes	175.75	2,425.80	2,361.61	2,375.26
WC Change  Trade Receivables	(459.67)	247.96	(9,583.22)	1,296.69
WC Change  Short-Term Loans and Advances	(2,303.76)	2,090.10	(261.86)	(1,323.28)
WC Change  Other Current Liabilities	4,287.13	(4,237.12)	953.77	(816.99)
Net Cash from Investing Activities	(351.99)	(177.57)	(182.66)	(140.75)
Net Cash from Financing Activities	(815.97)	(106.36)	1,971.43	762.22
Cash at Period End	887.24	730.23	3.03 (free cash)	1.19 (free cash)
Bank FDs (margin money)	Not extracted	Not extracted	826.21	870.48

Operating cash flows turned negative in FY2024 (Rs.115.78 lakhs negative) and worsened significantly in FY2025 (Rs.1,714.85 lakhs negative) before partially recovering in 9M FY2026 (Rs.752.22 lakhs negative). The dominant driver: Rs.9,583 lakhs of trade receivable build in FY2025. Despite Rs.1,622 lakhs of PAT in FY2025, operating cash was deeply negative because the company billed Rs.13,466 lakhs but collected far less.

The free cash balance is essentially nil (Rs.3.03 lakhs at March 2025, Rs.1.19 lakhs at December 2025)  the Rs.871 lakhs in bank balances is almost entirely fixed deposits held as margin money for bank guarantees and LCs. The business has a net cash balance of approximately Rs.1-3 lakhs in free cash. This is the most acute financial vulnerability.

Revenue Composition and Business Mix

Revenue Segment	FY2023 (Rs. L)	FY2024 (Rs. L)	FY2025 (Rs. L)	9M Dec-25 (Rs. L)
India Revenue	Not separately reported	Not separately reported	4,527.93	3,457.64
International Revenue	Not separately reported	Not separately reported	8,938.31	6,643.64
International Revenue %	Not reported (likely significant)	Not reported	66.39%	65.79%
Contracts Segment	9,103.13 (est.)	13,549.50 (est.)	7,093.14	9,333.33
Services Segment	1,098.73 (est.)	2,026.42 (est.)	6,015.72	453.17
Other Segments	216.00 (est.)	209.50 (est.)	357.38	314.78
Total Revenue from Ops	10,417.86	15,785.42	13,466.24	10,101.28

The critical strategic insight from the RHP is that Leapfrog Engineering is fundamentally an international EPC company, not a domestic one. International revenue was 66.39% of FY2025 total revenue and 65.79% of 9M FY2026 revenue. This concentration in international markets (principally Middle East) is both the source of the company's growth and the primary driver of its receivables risk.

The contrast between FY2024 and FY2025 segment data is also notable: in FY2024, the contracts segment (project-based EPC) dominated at approximately Rs.13,550 lakhs, while services (ongoing O&M and services) were Rs.2,026 lakhs. In FY2025, the services segment surged to Rs.6,015 lakhs (up 197%) while contracts declined to Rs.7,093 lakhs  suggesting a shift in revenue mix toward longer-duration service arrangements.

How Does It Compare to Peers?

Two listed peers in the RHP: Engineers India Limited  Standalone (CMP Rs.224.73, EPS Rs.8.28, P/E 27.14x, RoNW 17.76%, Revenue Rs.302,835 lakhs) and Konstelec Engineers Limited (CMP Rs.49.80, EPS Rs.2.83, P/E 17.60x, RoNW 4.34%, Revenue Rs.19,370.68 lakhs). Industry P/E range: 17.60x to 27.14x, average 22.37x. Neither peer is directly comparable: Engineers India is a PSU engineering consultancy 22x Leapfrog's revenue; Konstelec is an SME electrical contractor in a different segment.

Metric	Leapfrog Engineering (FY25)	Engineers India Ltd (FY25)	Konstelec Engineers Ltd (FY25)
Revenue from Ops (Rs. L)	13,466.24	3,02,835.26	19,370.68
EBITDA (Rs. L)	2,156.50	48,871.53	1,314.71
EBITDA Margin %	16.01%	16.14%	6.79%
PAT (Rs. L)	1,622.47	46,523.76	427.73
PAT Margin %	12.05%	15.36%	2.21%
EPS (Rs., face value comparable)	1.57 (Rs.1 FV)	8.28 (Rs.5 FV)	2.83 (Rs.10 FV)
RONW %	30.47%	17.76%	4.34%
P/E	TBD at IPO	27.14x (highest)	17.60x (lowest)
NAV per Share (Rs.)	4.97	46.62	65.34
International Revenue %	66.39%	Significant (PSU EPC)	Domestic only
Implied price at 22.37x on EPS Rs.1.57	Rs.35.12

Leapfrog's EBITDA margin (16.01%) is essentially identical to Engineers India's (16.14%)  a genuinely notable metric for a Rs.135 crore company benchmarked against a Rs.3,000 crore PSU. PAT margin (12.05%) is respectable and improving. RONW of 30.47% significantly outperforms both peers.

The issue price anchored to the industry average P/E of 22.37x on FY2025 EPS of Rs.1.57 implies Rs.35 per share, and on 9M FY2026 EPS of Rs.1.32 (nine months, not annualised): at 22.37x annualised Rs.1.76 = approximately Rs.39 per share. The 9M FY2026 data suggests FY2026 EPS could approach Rs.1.87-1.90, which at 22.37x implies approximately Rs.42.

Key Risks

• Trade receivables of Rs.9,523 lakhs at December 2025  approximately 345 days of revenue outstanding: This is the single most important risk in the entire RHP. Trade receivables went from Rs.1,237 lakhs (FY2024, approximately 29 days) to Rs.10,820 lakhs (FY2025, approximately 293 days) to Rs.9,523 lakhs (December 2025, approximately 345 days).

The company has booked Rs.25,000+ lakhs of cumulative EPC revenue since FY2024 but holds Rs.9,523 lakhs in uncollected receivables  38% of that cumulative revenue outstanding. International EPC clients (Middle East governments and private sector) can take 12-24 months to pay on large contracts. If any material portion is irrecoverable, the financial position changes dramatically. The IPO working capital injection of Rs.3,604 lakhs does not resolve this.

• Operating cash flows negative for three consecutive periods (FY2024, FY2025, 9M FY2026): Despite PAT of Rs.1,622 lakhs (FY2025) and Rs.1,418 lakhs (9M FY2026), operating cash flows were negative Rs.115.78 lakhs (FY2024), negative Rs.1,714.85 lakhs (FY2025), and negative Rs.752.22 lakhs (9M FY2026).

The company reports profit but generates no operating cash  because the large receivables build absorbs every rupee of earnings. Free cash balance is Rs.1-3 lakhs. Any disruption to the short-term borrowing lines (Rs.3,148.85 lakhs at December 2025) would create an immediate liquidity crisis.

• 66% of revenue from international markets  Middle East EPC concentration: FY2025 and 9M FY2026 both show approximately 65-66% of revenue from outside India, primarily Middle East. Any geopolitical disruption, project cancellation, currency restriction, or client default in the Middle East would impact two-thirds of Leapfrog's revenue immediately. The company has no domestic diversification sufficient to compensate. Domestic revenue was only Rs.3,457 lakhs (34.2% of 9M FY2026 revenue).

• Land for new assembling unit not yet fully paid or transferred  Karur Vysya Bank bridge loan must be repaid from IPO proceeds within 3 months: The Rs.1,160 lakh land purchase (Agreement to Sell signed February 2025) has had only Rs.10 lakhs paid at DRHP stage and Rs.304.13 lakhs paid post-DRHP. The remaining approximately Rs.845-850 lakhs must come from IPO proceeds. Additionally, the Karur Vysya Bank bridge loan (Rs.1,500 lakhs at Repo + 4.75%) must be repaid within 3 months of IPO proceeds receipt  adding urgency and cost to the IPO proceeds deployment.

• New assembling unit at Yelenahalli has multiple pending approvals  BBMP building plan, BESCOM electricity, factory licence all pending: The new 27,300 sq ft G+2 assembling unit at Bengaluru has received no statutory approvals as of the RHP. BBMP Building Plan Approval (pending, to be applied before construction), BESCOM electricity connection (pending, to be applied before use), and Factory Licence (pending, to be applied prior to occupancy) must all be obtained before the facility can operate. Any delay in BBMP approval in Bengaluru (which can take 12-24 months in practice) will delay the IPO's primary capex object.

• OFS by promoter Prabhav Rao at WAC Rs.0.01/share  effective full-gain exit on 38.76 lakh shares: Promoter Prabhav Rao is selling up to 38,76,000 shares at a weighted average cost of Rs.0.01 per share (reflecting the historical face value basis). At any realistic issue price of Rs.30-40, he realises essentially 100% of proceeds as gain. While the OFS component is 10.07% of the total issue, it represents the promoter taking liquidity at the time of IPO before the assembling unit is built and without demonstrated sustained cash generation.

• Assembly unit currently rented from promoter group entity Leapfrog Automation and Control System: The existing assembly facility (5,000 sq ft at Yelenahalli) is rented from a related party. The existing unit will be shut down when the new unit is ready. Any overlap period creates transition risk, and the ongoing related-party rental remains until the new unit is operational.

• Short-term borrowings growing rapidly: Rs.1,203 lakhs (FY2023), Rs.1,318 lakhs (FY2024), Rs.1,985 lakhs (FY2025), Rs.3,148 lakhs (December 2025). The company is increasingly dependent on bank credit lines to fund the receivables gap. Any tightening of these lines would be immediately disruptive.

• Leapfrog trademark under opposition in Class 37 (construction services): If the opposition succeeds, rebranding costs and market confusion could be material for a company where the brand name is integral to marketing.

• EPC project concentration risk: Large project-based EPC business means a small number of contracts drive the majority of revenue in any given period. Win or lose one large contract and the financial picture changes substantially. Project delays cause revenue deferral while costs continue.

• Material restatement in FY2024: The restatement note discloses Rs.27.78 lakhs of receivables recognised in FY2024 that had to be reversed (erroneous recognition). While minor in amount, it signals a quality control gap in project revenue recognition that investors should note.

Positives

•  EBITDA margin improving every single year: 0.96% (FY2023), 12.50% (FY2024), 16.01% (FY2025), 19.98% (9M FY2026)  a continuous, accelerating margin expansion trend with no reversal.

• PAT consistently above Rs.1,600 lakhs for two full years and 9M FY2026 already at Rs.1,418 lakhs (nine months)  implying FY2026 full-year PAT of approximately Rs.1,890 lakhs, a new record.

• International EPC capability is a genuine competitive strength  66% of revenue from Middle East markets validates Leapfrog's ability to compete and win contracts against both local and international players in one of the world's most active infrastructure markets.

• Net worth 12.7x in under 3 years: Rs.531 lakhs (FY2023) to Rs.6,744 lakhs (December 2025)  a rapidly compounding equity base funded by retained earnings and FY2025 equity issuance.

• D/E ratio improved from 2.45x to 0.48x in three years  significant deleveraging from operations and equity capital. Post-IPO fresh equity will reduce D/E below 0.20x.

• Revenue stabilised at Rs.13,000-14,000 lakhs  the feared collapse from H1 FY2025 did not materialise. FY2025 full year of Rs.13,466 lakhs and 9M FY2026 annualising to Rs.13,468 lakhs confirms a stable revenue floor.

• Infomerics Valuation and Rating as monitoring agency  mandatory independent oversight of IPO proceeds utilisation provides investor protection.

• 21-year operating history since 2005  the company has navigated multiple EPC cycles including post-COVID disruptions and geopolitical volatility in Middle East markets.

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