Regaal Resources IPO Opens For Subscription Today — Should You Subscribe Or Avoid? Read Anand Rathi Report

The Kolkata-based agro-processing company specializing in the manufacturing of maize-based products has fixed the price band in the range of Rs 96 and Rs 100 per equity share.

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Anand Rathi Report

Regaal Resources Ltd.'s initial public offering opened today for subscription and the offer closes on Aug. 14. The Kolkata-based agro-processing company specializing in the manufacturing of maize-based products has fixed the price band in the range of Rs 96 and Rs 100 per equity share.

Investors can place bids starting from a minimum of 144 shares and in multiples thereafter.

The mainboard IPO is a book-building issue worth Rs 306 crore. Regaal Resources IPO is a combination of a fresh issue of 2.06 crore shares, worth Rs 210 crore, and an offer-for-sale of 94 lakh shares, amounting to Rs 96 crore.

Pantomath Capital Advisors Pvt Ltd., Sumedha Fiscal Services Ltd. are the book-running lead managers for the public issue while MUFG Intime India Pvt Ltd. is the registrar to the offer.

Objects of the Issue:

1. Re-payment or pre-payment of term loans, in full or in part, of certain borrowings availed by the Company; and

2. General corporate purposes.

Key Strategies:

• Increasing the manufacturing capacity by undertaking brownfield expansion.

• Deleveraging the balance sheet by paring debt.

• Commence manufacturing derivative products and further broad-basing the product range of modified starches.

• Increasing domestic reach and international footprint.

• Developing the white labelling business.

Valuation:

Regaal Resources is an Indian agro-processing company specializing in the manufacturing of maize-based products. The company is well positioned to capitalize on this opportunity, leveraging its strategic location in Kishanganj, a key maize belt accounting for 11.58% of national output and its proximity to major mandis and cross-border markets. With capacity utilization at 99.74% and an ongoing scale-up from 750 to 1,650 TPD, the company demonstrates strong demand visibility and robust execution capabilities.

Its integrated 54-acre facility, captive power plant, and ESG-compliant systems enhance operational resilience, while a diversified product portfolio spanning native and modified starches addresses high-growth sectors including food, pharma, and personal care. A growing pan-India footprint, deepening customer relationships, and a strong sourcing strategy further reinforce its competitive edge.

On the valuation front, based on annualized FY25 earnings, the company is seeking a P/E of 21.9 times, and a post-issue market capitalization of approximately Rs 10,477 million, making the issue appear fully priced.

We believe, it has capital-intensive nature of operations, exposure to Agri cycles, and limited pricing power in a commoditized market.

However, its strategic location, diversified customer base, and expanding footprint support longterm scalability.

Thus, we assign Subscribe for Lont-Term rating for this issue.

Key Risk:

High Supplier Concentration and Absence of Long-Term Contracts:

The Company exhibits significant supplier concentration risk, with purchases from its top 10 maize vendors accounting for over 83% of total maize procurement costs in each of the disclosed financial periods. The absence of long-term supply contracts or arrangements with these vendors heightens exposure to potential supply disruptions and adverse pricing movements. Loss of any key supplier, or a material increase in maize prices, could negatively impact raw material availability, cost structure, and overall revenue performance.

Negative Operating Cash Flows:

The Company has recorded negative net cash flows from operating activities in prior periods. Sustained or recurring negative operating cash flows in the future could constrain liquidity, limit the ability to fund working capital and capital expenditure requirements, and adversely affect the company’s growth prospects.

Customer Concentration Risk:

While the company serves a diversified customer base, sales to its top 10 customers account for a significant share of total revenue. The loss of any such key customer, or a material decline in order volumes from them, could have a material adverse impact on the company’s business performance, results of operations, and financial condition.

Seasonality and Price Volatility of Key Raw Material:

Maize, the primary raw material for the company’s products, is seasonal in nature. Although the manufacturing facility is located within a maize-growing belt, delays, interruptions, or reductions in supply — as well as abrupt price fluctuations could adversely impact production costs, product pricing, and consequently, the company’s business, results of operations, financial condition, and cash flows.

Geographic Concentration Risk:

The Company’s sales are concentrated in certain geographies. Any inability to sustain or expand operations in these key markets could adversely impact the company’s business performance, financial condition, results of operations, cash flows, and longterm growth prospects.

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