Visakhapatnam-headquartered Arete 22 Limited, an integrated precision aluminium mobility solutions manufacturer, has filed its draft red herring prospectus (DRHP) dated Sept. 25, 2026, with the market regulator Securities and Exchange Board of India (SEBI) to raise up to Rs 440 crore through an initial public offering (IPO). The issue is a 100% book-built, pure fresh issue of equity shares with a face value of Rs 10 each, with no offer-for-sale (OFS) component from existing shareholders or promoters. The company may also consider a pre-IPO placement aggregating up to Rs 50 crore prior to filing the red herring prospectus (RHP) with the Registrar of Companies (RoC), which, if undertaken, will reduce the net fresh issue size proportionately.
Arete 22 IPO: Issue Details, Key Dates
- Issue Structure, Size: Fresh issue of equity shares of Rs 10 face value aggregating up to Rs 440 crore.
- Offer for Sale (OFS): Nil (Not Applicable).
- Price Band, Issue Price: Under SEBI regulations for a DRHP, the price band, floor price, cap price, and final issue price are not fixed at the DRHP stage and will be decided by the company in consultation with the Book Running Lead Manager (BRLM) at least two working days prior to the bid opening date.
- Key Issue Dates (Bidding & Anchor Timeline): The exact calendar dates for anchor bidding, issue opening, and closing remain unspecified blanks in the DRHP and will be updated in the final RHP upon regulatory clearance. The DRHP confirms the anchor bidding window will open one working day prior to the bid opening date.
Issue Allocation Split:
Qualified Institutional Buyers (QIBs): Up to 50% of the net issue (with up to 60% of the QIB portion allocable to anchor investors on a discretionary basis).
Non-Institutional Bidders (NIBs/NIIs): Not less than 15% of the net issue.
Retail Individual Bidders (RIBs): Not less than 35% of the net issue.
Intermediaries & Listing: The shares are proposed to be listed on both BSE and NSE. Unistone Capital Private Ltd. is acting as the sole Book Running Lead Manager, while Bigshare Services Private Limited is the registrar to the issue.
Purpose of the Issue (Objectives)
The net proceeds from the fresh issue will be deployed across the following key operational and balance sheet priorities:
- Working Capital Funding: Rs 150.00 crore earmarked towards expanding working capital needs for Fiscals 2028 and 2029.
- Debt Repayment / Pre-payment: Rs 120.00 crore towards scheduled repayment or pre-payment, in full or in part, of certain outstanding borrowings to reduce finance costs.
- Plant & Machinery Procurement: Approximately Rs 34.82 crore for acquiring equipment and machinery to augment existing manufacturing capabilities. General Corporate Purposes: Residual proceeds after meeting issue expenses.
Financial Performance Snapshot
Arete 22 has demonstrated scale over the past three fiscal years, driven by capacity expansion and volume ramp-ups:
- Revenue from Operations: Jumped from Rs 112.46 crore in FY24 to Rs 212.39 crore in FY25, and reached Rs 537.95 crore in FY26.
- Net Profit (PAT): Rose from Rs 2.92 crore in FY24 to Rs 12.36 crore in FY25, before climbing to Rs 44.97 crore in FY26.
- Operating EBITDA & Margins: Total income stood at Rs 540.26 crore in FY26, compared to total expenses of Rs 487.20 crore
Key Investment Risks
Severe Customer Concentration: The top five customers accounted for 98.77% of revenue from operations in FY26, 96.84% in FY25, and 96.62% in FY24, with its single largest customer contributing 49.05% of sales in FY26. Supply contracts operate without firm, long-term volume commitments.
End-Market Cyclicality & Single Sector Exposure: The business is virtually 100% reliant on the two-wheeler automotive segment (98.77% in FY26), leaving operations vulnerable to industry cycles, festive seasonality, and shifts in rural consumer sentiment.
Raw Material Dependency, Price Volatility: Raw material consumption constitutes the overwhelming bulk of expenses (87.29% of total expenses and 79.05% of operational revenue in FY26), consisting of aluminium alloy ingots, cast iron rings, and industrial coatings. Most suppliers operate on purchase orders without long-term price locks.
Indebtedness, Negative Operating Cash Flows: Outstanding borrowings stood at Rs 361.81 crore as of Aug. 31, 2026. In addition, the company registered negative cash flows from operations of Rs 18.42 crore in FY26 and Rs 17.18 crore in FY25, largely due to working capital lock-in.
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