Millworks Technologies IPO (14-16 July) Analysis

IPO Analysis  |  BSE SME Platform  |  100% Book Built Fresh Issue  |  Regulation 229(2)

Based on Draft Red Herring Prospectus dated February 16, 2026  |  Precision Machined Components  |  Peenya Industrial Area, Bengaluru, Karnataka

STATUS: DRHP FILED  |  Fresh Issue: up to 50,00,000 Shares  |  No OFS  |  Pre-SEBI Observation Stage  |  BSE SME Platform  |  Price Band: [TBD]  |  Confirmed Order Book: Rs.9,594.45 Lakhs

 Millworks Technologies Limited (MTL) is a Bengaluru, Karnataka-based precision engineering company specialising in manufacturing machined components, sheet metal parts, and integrated assemblies for mission-critical applications across the railways, aerospace, defence, and semiconductor sectors. Formerly known as Millworks Technologies Private Limited, the company was incorporated in 2021 and converted to a public limited company ahead of this IPO.

Its registered office and primary manufacturing operations are at No. 458/1, 10th A Cross, Phase-4, Peenya Industrial Area, Peenya Small Industries, Bangalore, Karnataka 560058. Its website is https://millworksindia.com. Its CIN is U29200KA2021PLC153863. The four promoters are Mr. Sridhar Acharya (Managing Director), Mr. H K Madhu (Whole Time Director), Mrs. Sowmya Madhu, and Mrs. Rashmi Sridhar Acharya.

Business model and engagement modes: MTL operates under two engagement frameworks. Under Build to Print (BTP), the company manufactures strictly as per customer-provided drawings and technical specifications, with no design input. Under Build to Spec (BTS), the company produces components based on defined functional and performance requirements, involving a more collaborative engineering relationship with the customer. This dual approach enables MTL to serve both standardised high-volume component requirements and bespoke, performance-defined manufacturing needs across its four target sectors.

Manufacturing infrastructure: as of November 30, 2025, MTL operates four manufacturing units, all located in Bengaluru, Karnataka: Unit 1 at No. 458/1, 10th A Cross, 4th Phase, Peenya Industrial Estate; Unit 2 at B 165, 4th Main, Peenya 2nd Stage; Unit 3 at Plot No. 270/2, 3rd Main Road, 4th Phase, Peenya Industrial Estate (commenced April 2024); and Unit 4 at No. 77/1, Binnamangala Arisinakunte.

All four units are located in the Peenya Industrial Area or adjacent zone, Bengaluru. The facilities are equipped with CNC machining centres (3-axis, 4-axis, and 5-axis), CNC turning and turn-mill centres, wire EDM machines, fibre laser cutting systems, CNC press brakes, welding equipment, and designated assembly and inspection areas. A Spring division was also installed by November 2025 but was conducting only trial runs at that date.

Sector coverage: railways (structural and functional components for the Indian railway supply chain), aerospace and defence (precision parts for structural and mission-critical aerospace and defence applications), and semiconductors (precision components for semiconductor manufacturing equipment and infrastructure). The confirmed order book as of January 10, 2026 was Rs.9,594.45 lakhs, providing meaningful forward revenue visibility.

Rapid scale-up trajectory: the company was incorporated in 2021 but has demonstrated extraordinary growth since inception: revenue grew from Rs.177.40 lakhs (FY2023) to Rs.2,210.01 lakhs (FY2025) to Rs.6,571.44 lakhs in just the eight-month stub period ending November 30, 2025, implying an annualised FY2026 revenue exceeding Rs.9,800 lakhs. This trajectory reflects successful customer acquisition and capacity expansion in high-growth, government-prioritised sectors.

Key Basics

This is a 100% Fresh Issue with no Offer for Sale component. The DRHP is dated February 16, 2026 and is at the pre-SEBI observation stage. This is a BSE SME listing under Regulation 229(2) and 253(1) and 253(2) of Chapter IX of SEBI ICDR Regulations. Price Band, bid dates, Market Maker quantum, and all items remain undetermined. The company has received BSE SME in-principle approval (date not specified in reviewed sections).

Document Type	Draft Red Herring Prospectus (DRHP) dated February 16, 2026. Pre-SEBI observation stage. Price Band, bid dates, and all items to be finalised at RHP stage.
Issue Type	100% Book Built Fresh Issue of up to 50,00,000 Equity Shares of face value Rs.10 each. No OFS. Company receives all net proceeds after issue expenses.
Face Value	Rs.10 per Equity Share
Promoters	Mr. Sridhar Acharya (Managing Director), Mr. H K Madhu (Whole Time Director), Mrs. Sowmya Madhu, and Mrs. Rashmi Sridhar Acharya. Promoters and Promoter Group collectively hold 83,11,149 Equity Shares (65.08% of pre-issue paid-up capital).
Eligibility	Regulation 229(2) and 253(1) and 253(2) of Chapter IX of SEBI ICDR Regulations 2018 (BSE SME Platform, post-issue paid-up capital exceeds Rs.10 crore).
Listing Exchange	SME Platform of BSE Limited (BSE SME). In-principle approval received. Designated Stock Exchange: BSE.
BRLM	GYR Capital Advisors Private Limited. Contact: Mr. Mohit Baid / Mr. Sagar Vidhani. Email: millworks.ipo@gyrcapitaladvisors.in
Registrar	Purva Sharegistry (India) Private Limited. Contact: Ms. Deepali Dhuri. Email: newissue@purvashare.com
Anchor / Bid / Issue Dates	All dates to be announced after SEBI observations and RHP filing.
Listed Industry Peers	Unimech Aerospace and Manufacturing Limited (P/E 53.27x, CMP Rs.937.00 on Feb 13, 2026) and Azad Engineering Limited (P/E 107.71x, CMP Rs.1,579.10 on Feb 13, 2026). Industry P/E: Highest 107.71x, Lowest 53.27x, Average 80.49x.
Confirmed Order Book	Rs.9,594.45 lakhs as of January 10, 2026, providing meaningful visibility into near-term revenue.

 This is a 100% Fresh Issue. The Net Proceeds are deployed across two specific objects and General Corporate Purposes. The dominant allocations are working capital (approximately 59% of identified objects) and capital expenditure for new machinery (approximately 41%), with GCP capped at 15% of Gross Proceeds or Rs.10 crore, whichever is lower.

Object	Amount (Rs. Lakhs)	Details
Capital Expenditure: Purchase of Plant and Machinery	6,103.05	Acquisition of: Hi Precision Ultrasonic Cleaning Machine with Pick and Place System and automation (for aerospace cleaning requirements), Rolling Machine, HURON KX200 L (5-axis CNC machining centre), CNC Machine, and CNC Turret Punching Machine. Equipment procured from suppliers including Upanal CNC Pvt. Ltd. (Bengaluru). Quotations received but no firm purchase orders placed as of the DRHP date. All deployment planned in FY2027.
Funding Working Capital Requirements	8,700.00	Incremental working capital to support the significantly expanded order book (Rs.9,594.45 lakhs as of January 10, 2026) and projected revenue growth. As of November 30, 2025, aggregate fund-based working capital facilities sanctioned by banks totalled just Rs.500 lakhs, which is materially insufficient relative to operating scale. The Rs.8,700 lakh working capital allocation is the dominant use of proceeds and directly addresses this gap.
General Corporate Purposes	[TBD]	Capped at 15% of Gross Proceeds or Rs.10 crore, whichever is lower, per Regulation 230(2) of SEBI ICDR Regulations.
TOTAL IDENTIFIED OBJECTS	14,803.05	100% Fresh Issue. No OFS. None of the Objects have been appraised by any bank or financial institution. All deployment planned in FY2026-27.

The working capital dominance (approximately 59% of identified objects) is the most distinctive feature of this use of proceeds. It directly reflects the company's operating reality: trade receivables surged from Rs.680.65 lakhs (FY2025) to Rs.5,960.08 lakhs (November 2025), a nearly nine-fold increase in one year, as revenue scaled dramatically.

The existing sanctioned bank working capital limit of just Rs.500 lakhs is wholly inadequate for a business generating over Rs.6,500 lakhs of revenue in 8 months. The Rs.8,700 lakh working capital allocation effectively 'catch-up-funds' the business's financial infrastructure to match its actual operating scale.

Financial Performance

Note: All figures in Rs. lakhs unless stated. Financial periods: Eight months ended November 30, 2025 (8M FY2026, stub); Fiscal 2025 (year ended March 31, 2025); Fiscal 2024 (year ended March 31, 2024); Fiscal 2023 (year ended March 31, 2023). Restated Financial Statements under Indian GAAP, audited by Vishnu Daya and Co. LLP, Chartered Accountants (ICAI Firm Registration No. 008456S/S200092).

All per-share figures adjusted for a bonus issue. The company's growth trajectory is exceptional by any benchmark in this series: revenue has grown approximately 3,703% (37-fold) from FY2023 to the annualised 8M FY2026 run rate. PAT has grown approximately 6,193% (62-fold) over the same period.

Revenue, EBITDA, and Profitability

Metric	8M FY26 (Rs. L)	FY2025 (Rs. L)	FY2024 (Rs. L)	FY2023 (Rs. L)
Revenue from Operations	6,571.44	2,210.01	938.60	177.40
Revenue Growth % YoY	N/A (8M stub)	+135.45%	+429.09%	N/A (FY2023 base year)
Other Income	230.68	31.79	0.96	0.71
Total Income	6,802.12	2,241.80	939.56	178.11
Cost of Materials Consumed	2,378.51	1,071.72	253.94	147.36
Direct Expenses	337.62	426.34	268.64	77.97
Changes in Inventories	294.96	(503.72)	(92.10)	(123.46)
Employee Benefits Expense	550.07	384.86	204.54	24.00
Finance Costs	128.36	68.10	31.45	5.30
Depreciation and Amortisation	200.55	31.17	10.47	1.91
Other Expenses	148.72	54.68	24.79	5.01
Total Expenses	4,038.79	1,533.15	701.73	138.09
Profit Before Tax	2,763.33	708.65	237.83	40.02
PBT Margin % (of Revenue from Ops.)	42.05%	32.06%	25.34%	22.56%
Total Tax Expense	713.77	183.42	42.45	6.93
Profit After Tax	2,049.56	525.23	195.38	33.09
PAT Growth % YoY	N/A (8M stub)	+168.84%	+490.38%	N/A
EBITDA (PBT + Finance Costs + D&A)	3,092.24	807.92	279.75	47.23
EBITDA Margin %	47.06%	36.56%	29.81%	26.62%
PAT Margin %	31.19%	23.77%	20.82%	18.65%
Return on Net Worth (RoNW) %	36.07% (8M, not annualised)	22.53%	83.86%	88.01%
Total Borrowings	1,667.28	962.61	456.60	230.18
Net Worth	5,681.75	2,331.58	232.98	37.60
Basic and Diluted EPS (Rs., post-bonus)	16.89	5.04	1.94	0.33
NAV per Share (Rs., post-bonus)	45.20	19.85	2.32	0.37

The financial trajectory is exceptional across every dimension. Revenue grew 429% in FY2024 and 135% in FY2025, and the 8M FY2026 stub period revenue of Rs.6,571.44 lakhs already far exceeds the full FY2025 revenue of Rs.2,210.01 lakhs with four months of the year remaining. EBITDA margin has expanded continuously from 26.62% (FY2023) to 36.56% (FY2025) to 47.06% (8M FY2026), demonstrating remarkable operating leverage as the high fixed-cost precision machining business scales.

PAT margin has also expanded from 18.65% to 31.19%, a rare combination of rapid revenue growth with simultaneous margin expansion.

The high RoNW figures for FY2023 (88.01%) and FY2024 (83.86%) reflect the very small equity base in those early years relative to growing profitability. As the equity base has grown through retained earnings and share capital infusions, RoNW has moderated to 22.53% in FY2025, though still an excellent return.

The 8M FY2026 RoNW of 36.07% is not annualised and reflects the rapid PAT growth in the stub period. Note: the EBITDA calculation above adds back finance costs and depreciation to PBT, as no standalone EBITDA line is separately disclosed in the financial statements.

Balance Sheet and Cash Flow

Item	Nov 2025 (Rs. L)	FY2025 (Rs. L)	FY2024 (Rs. L)	FY2023 (Rs. L)
Equity Share Capital	6.25	5.84	5.00	5.00
Reserves and Surplus	5,675.50	2,325.74	227.98	32.60
Total Net Worth	5,681.75	2,331.58	232.98	37.60
Long-Term Borrowings	831.52	625.78	72.91	18.04
Short-Term Borrowings	835.76	336.83	383.69	212.14
Total Borrowings	1,667.28	962.61	456.60	230.18
Trade Payables	1,480.67 (est.)	305.48	122.42	57.44
Total Assets	11,582.79	4,084.25	1,064.35	378.53
Property, Plant and Equipment (Net)	1,303.39	200.51	46.18	10.00
Inventories	625.48	751.20	361.01	144.81
Trade Receivables	5,960.08	680.65	188.22	68.84
Cash and Bank Balance	60.51	194.54	3.81	7.60
Short-term Loans and Advances	976.63	456.52	164.79	101.10
Net Cash from Operating Activities	(579.17)	(292.06)	58.45	(172.16)
Net Cash from Investing Activities	(1,396.56)	(986.26)	(268.81)	(48.08)
Net Cash from Financing Activities	1,916.36	1,336.32	206.57	227.59

The balance sheet reveals a business growing at extraordinary speed but with a financial infrastructure that has not kept pace with operational scale. Total assets grew from Rs.378.53 lakhs (FY2023) to Rs.11,582.79 lakhs (November 2025), a 30-fold increase in less than three years.

The most striking development is trade receivables: from Rs.68.84 lakhs (FY2023) to Rs.5,960.08 lakhs (November 2025), a 87-fold increase, which at this level represents approximately 109 days of annualised 8M FY2026 revenue outstanding. This receivables surge is the principal driver of the large working capital allocation in the IPO objects.

Operating cash flow is negative in three of four periods (November 2025 stub: negative Rs.579.17 lakhs, FY2025: negative Rs.292.06 lakhs, FY2023: negative Rs.172.16 lakhs), with only FY2024 generating positive operating cash (Rs.58.45 lakhs).

Despite strong and growing PAT, the business consistently consumes cash because receivables and other working capital items grow faster than profitability. All OCF shortfalls have been bridged through fresh borrowings and equity infusions (financing inflows in all four periods). The IPO's Rs.8,700 lakh working capital allocation is designed to address this structural cash consumption pattern.

How Does It Compare to Peers?

The DRHP names two listed industry peers: Unimech Aerospace and Manufacturing Limited and Azad Engineering Limited. Both are comparably positioned as precision engineering companies serving aerospace and defence sectors, though significantly larger than MTL by revenue. P/E ratios computed on February 13, 2026 NSE closing prices versus FY2025 diluted EPS.

Metric (FY2025)		Millworks Tech	Unimech Aerospace	Azad Engineering
Total Income (Rs. Lakhs)		2,241.80	26,769.25	46,794.50
Diluted EPS (Rs.)		5.04	17.59	14.66
Face Value (Rs.)		10	5	2
P/E Ratio (CMP Feb 13, 2026)		TBD	53.27x	107.71x
RoNW %		22.53%	12.48%	6.21%
NAV per Share (Rs.)		19.85	131.53	215.82
Industry P/E Range	Highest: 107.71x, Lowest: 53.27x, Average: 80.49x

 MTL's RoNW of 22.53% (FY2025) meaningfully exceeds both named peers (Unimech: 12.48%, Azad Engineering: 6.21%), indicating substantially higher capital efficiency per rupee of shareholders' equity, even at a much smaller scale. MTL's revenue of Rs.2,241.80 lakhs (FY2025) compares to Unimech at Rs.26,769 lakhs (approximately 11.9 times larger) and Azad Engineering at Rs.46,795 lakhs (approximately 20.9 times larger).

Both peers trade at very elevated P/E multiples (53.27x to 107.71x, industry average 80.49x), reflecting the market's premium for high-quality precision engineering companies serving defence and aerospace. Applying a discount to the peer average of 80.49x to MTL's FY2025 EPS of Rs.5.04 implies a per-share value of approximately Rs.405 at the peer average, though MTL's higher growth rate and expanding margin trajectory could support a different multiple.

Key Risks

l  Trade receivables surged 877% in one year to Rs.5,960.08 lakhs against an 8-month revenue of Rs.6,571.44 lakhs: receivables as at November 2025 represent approximately 109 days of annualised revenue. This massive receivables build (from Rs.680.65 lakhs in FY2025 to Rs.5,960.08 lakhs in just 8 months) is the single most urgent financial concern. The company's acknowledged sanction of only Rs.500 lakhs in bank working capital facilities against this scale of receivables means MTL is structurally cash-stressed. The entire Rs.8,700 lakh working capital IPO allocation targets this gap, but until the IPO proceeds are received, the company's liquidity position is extremely thin.

l  Negative operating cash flow in three of four reporting periods despite strong PAT growth: OCF was negative Rs.579.17 lakhs (8M FY2026), negative Rs.292.06 lakhs (FY2025), and negative Rs.172.16 lakhs (FY2023), with only FY2024 positive at Rs.58.45 lakhs. This persistent pattern of profitable but cash-consuming operations reflects a structural working capital mismatch: as revenue and receivables grow faster than profitability, the business consistently needs external funding even while reporting strong margins. The company has bridged this entirely through borrowings and equity raises in all periods.

l  All four manufacturing units are concentrated in Bengaluru's Peenya Industrial Area, with no geographic diversification: any disruption at the Peenya cluster level, including industrial disputes, infrastructure failure, natural calamities, or regulatory actions affecting the industrial estate, would simultaneously impair all manufacturing operations. Given the company's specific dependence on specialised precision equipment (CNC centres, EDM machines, laser systems), replacement and recovery timelines would be extended.

l  Extreme customer concentration: top 5 customers at 70.93% of 8M FY2026 revenue, top 10 at 90.86%: the single largest customer contributed 19.79% (Rs.1,300 lakhs) of revenue in the 8-month period. Top 5 customers collectively contributed Rs.4,592.88 lakhs (70.93%). In FY2025, concentration was even higher: the top 1 customer at 33.51% alone. There are no disclosed long-term supply agreements with these customers, meaning all relationships are at-will and subject to change without contractual notice.

l  Very recent incorporation (2021) with limited corporate and operating track record: MTL was incorporated in 2021, giving it a corporate history of approximately four to five years at the time of the DRHP. While the growth has been exceptional, the institutional infrastructure, quality systems, compliance frameworks, and management bandwidth required for a listed public company are being built alongside the business itself. The company has no experience managing the regulatory, governance, and investor relations requirements of a listed entity.

l  No purchase orders placed for Rs.6,103 lakh machinery capex: while quotations have been received for the new equipment (Hi Precision Ultrasonic Cleaning Machine, HURON KX200 L, CNC Turret Punching Machine), no firm purchase orders have been placed as of the DRHP date. All estimates are based on quotations that may change or expire. The risk of cost escalation, delayed delivery, or vendor non-performance is therefore present and unmitigated at this stage.

l  Working capital mismatch: bank-sanctioned facilities of only Rs.500 lakhs against Rs.5,960 lakhs of trade receivables at November 2025 means the company is almost entirely dependent on equity-funded receivables financing. Until the IPO proceeds are deployed and internal systems for bank credit enhancement are established, the company remains susceptible to operational disruption from a single delayed payment by a major customer.

l  The entire revenue base is concentrated in government-linked and defence-affiliated procurement cycles: railways, aerospace, and defence orders in India are subject to government budget allocations, procurement approvals, and policy priorities. Any changes in defence spending patterns, railway capex prioritisation, or procurement policy can directly affect order flow without MTL having direct commercial influence.

l  Tax litigation with three pending direct and indirect tax proceedings involving Rs.7.84 lakhs: while the amounts are relatively small, the existence of three ongoing tax proceedings at the time of this DRHP, involving a company that is less than five years old, suggests the compliance environment during the rapid growth phase may have had gaps.

l  Rapid growth has outpaced management and systems capacity: the company's revenue has grown 37-fold in under three years. The management team, internal controls, ERP systems, compliance infrastructure, and HR capacity required to support Rs.9,800+ crore annualised operations is different from what was required at Rs.177 lakhs of revenue. Any execution or quality failure at this scale could damage customer relationships in the unforgiving aerospace and defence sectors.

Positives to Note

l  Exceptional revenue growth of 37-fold in under three years: from Rs.177.40 lakhs (FY2023) to Rs.6,571.44 lakhs in just 8 months of FY2026 (annualised run rate exceeding Rs.9,800 lakhs), MTL has demonstrated one of the most rapid revenue expansions of any company reviewed in this series. This growth has been achieved in sectors (railways, aerospace, defence, semiconductors) that are widely recognised as strategic government priorities with sustained long-term investment.

l  EBITDA margins expanding consistently from 26.62% to 47.06% over four periods: the simultaneous achievement of exceptional revenue growth alongside expanding margins is the most compelling financial signal in this filing. Margins have expanded every single period, suggesting genuine operating leverage from the fixed-cost precision machining model as volumes scaled.

l  Confirmed order book of Rs.9,594.45 lakhs as of January 10, 2026 provides strong near-term revenue visibility: at approximately 1.46x FY2025 full-year revenue, the confirmed order book provides meaningful forward revenue assurance. This is not a speculative pipeline but a confirmed backlog that management expects to execute in the near term.

l  RoNW of 22.53% (FY2025) is the highest of both named listed peers at significantly larger scale: exceeding Unimech Aerospace (12.48%) and Azad Engineering (6.21%) on capital efficiency indicates that MTL is generating disproportionately high returns relative to shareholders' equity, even while the company is still in a high-growth investment phase.

l  Build-to-Print and Build-to-Spec dual capability positions MTL for both standardised and bespoke precision manufacturing relationships: the ability to execute both BTP (exact drawing replication) and BTS (performance-defined production) widens the addressable customer base and enables entry-level relationships (BTP) to evolve into deeper strategic partnerships (BTS) over time.

l  Targeting four of India's highest-strategic-priority sectors with strong government policy tailwinds: Indian Railways modernisation (Vande Bharat, metro, freight corridor programmes), Atmanirbhar Bharat defence indigenisation, semiconductor ecosystem development (INDIAchip programme, CHIPS incentives), and aerospace capacity expansion all have multi-decade government commitment that provides structural demand underpinning for precision component manufacturers.

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