Madhusudan Kela-Backed Merritronix Files RHP for Rs 70.03 Crore BSE SME IPO

Merritronix Ltd, a Hyderabad-based electronics manufacturing company with a focus on Defence and Aerospace applications, has filed its Red Herring Prospectus for an initial public offering on the BSE SME platform.

The proposed IPO is a 100 per cent fresh issue of up to 47 lakh equity shares, aiming to raise Rs 70.03 crore. The price band has been fixed at Rs 141 to Rs 149 per share, with a minimum lot size of 2,000 shares and in multiples of 1,000 shares thereafter.

Madhusudan Kela Link Draws Attention

One of the key talking points around the IPO is the company’s association with veteran investor Madhusudan Kela, popularly known as Madhu Kela. As per the information provided, Merritronix is backed by Madhu Kela through Founders Collective Fund, which holds a 3.61 per cent stake in the company.

While this may attract investor attention, IPO evaluation should also factor in the company’s business model, financials, industry positioning, risk factors and valuations.

Use of IPO Proceeds

The company plans to use the net proceeds mainly for business expansion and balance sheet strengthening. The funds are proposed to be utilised for:

Capital expenditure towards purchase of machinery and equipment of up to Rs 2,136.43 lakh.

Funding working capital requirements of up to Rs 2,195.21 lakh.

Repayment or prepayment of outstanding borrowings of up to Rs 1,271.92 lakh.

The remaining amount will be used for general corporate purposes.

Business Overview

Incorporated in 1988, Merritronix operates from the Electronic Complex in Kushaiguda, Hyderabad. The company provides end-to-end Electronics System Design and Manufacturing services, including PCB design, SMT and THT assembly, component sourcing, testing and Logistics.

The company has built its presence in mission-critical defence and aerospace applications. It has long-standing approvals with Bharat Electronics Ltd since 2009 and Hindustan Aeronautics Ltd since 2012. The company has also been exporting to Europe through Honeywell Aerospace since 2008.

Its work spans areas such as missile seeker assemblies, airborne radar systems and defence aircraft digital voice recording systems. Merritronix also specialises in obsolescence management and reverse engineering, which helps keep legacy defence systems operational through replacements and system redesign.

Financial Performance

Merritronix has reported growth in revenue and profitability over the past three financial years.

Revenue from operations stood at Rs 15,589.56 lakh in FY2026, compared to Rs 11,356.38 lakh in FY2025 and Rs 8,569.91 lakh in FY2024.

EBITDA improved to Rs 2,721.68 lakh in FY2026 from Rs 1,518.11 lakh in FY2025 and Rs 672.64 lakh in FY2024. EBITDA margin expanded to 17.42 per cent in FY2026, compared to 13.31 per cent in FY2025 and 7.82 per cent in FY2024.

Profit after Tax stood at Rs 1,610.30 lakh in FY2026, rising from Rs 865.95 lakh in FY2025 and Rs 305.03 lakh in FY2024. PAT margin also improved to 10.33 per cent in FY2026.

The company’s net worth increased to Rs 5,252.28 lakh in FY2026, while its debt-equity ratio declined from 1.93 in FY2024 to 0.81 in FY2026, indicating improvement in leverage levels.

Management and Certifications

Merritronix is led by Managing Director Dovari Amarnath, a Computer Science Engineering graduate from IIT Madras with more than three decades of experience in the electronics manufacturing industry.

The company is EN 9100:2018 certified, a globally recognised quality standard for aerospace and defence manufacturing. It is also selected as a vendor for CERN projects routed through TIFR.

Investor Takeaway

Merritronix’s IPO comes at a time when defence electronics, aerospace manufacturing and domestic ESDM capabilities remain key areas of focus in India’s manufacturing ecosystem. The company has shown growth in revenue, margins and profitability, while also reducing its debt-equity ratio over the past three years.

However, despite the strong operating momentum, investors should remain mindful of certain factors. The business remains relatively small in scale, customer concentration is inherently high given the nature of the defence sector, and working capital requirements remain significant. Additionally, revenue visibility is dependent on order flows from a limited set of defence and aerospace programs, which can be subject to delays and execution risks. At the upper end of the price band, the valuation appears to reflect a meaningful portion of the near-term growth expectations.

Considering the company's attractive industry positioning and improving financial profile on one hand, and the concentration, execution and valuation-related risks on the other, we maintain a Neutral stance on the IPO. Long-term investors may track the company's ability to sustain growth, diversify its customer base and execute its expansion plans, while investors seeking immediate listing gains may find the risk-reward broadly balanced at current valuations.