Thejo Engineering: A Case Study on India's First SME IPO on NSE EMERGE

Thejo Engineering: A Case Study on India's First SME IPO on NSE EMERGE

The Indian SME sector has seen exponential growth over the years, with many companies leveraging the stock market to raise capital. One of the most remarkable success stories in this space is Thejo Engineering, the first company to get listed on NSE EMERGE, the SME platform of the National Stock Exchange (NSE). In this blog, we will explore Thejo Engineering's journey, its IPO success, and key takeaways for SMEs considering public listing. Insights from CA Vikas Jain will help us decode this inspiring case study.

Thejo Engineering: An Overview

Thejo Engineering was established in 1974 in Chennai, India. The company specializes in material handling solutions and conveyor belt maintenance, primarily catering to industries like mining, power plants, and steel sectors. Over the decades, Thejo Engineering built a reputation for innovation and high-quality industrial solutions, positioning itself as a leader in its niche.

Thejo Engineering’s SME IPO on NSE EMERGE

In 2012, Thejo Engineering became the first SME to list on NSE EMERGE, marking a significant milestone in the Indian stock market. Let’s take a look at the IPO details:

• Issue Price: ?402 per share
• Total Issue Size: ?19.73 Crore
• Shares Issued: 4,91,000 Equity Shares
• Post-IPO Valuation: Approximately ?100 Crore

Thejo Engineering utilized the funds raised through the IPO for manufacturing expansion, R&D, technology upgradation, and working capital management.

Financial Growth: Pre-IPO vs Post-IPO Performance

The IPO helped Thejo Engineering scale its operations significantly. Here's a comparison of its financial performance before and after the IPO:

Pre-IPO (FY 2011-12):

• Revenue: ?93.5 Crore
• Net Profit: ?3.4 Crore
• Debt: ?22 Crore
• Post-IPO (FY 2013-14):
• Revenue: ?121 Crore ????
• Net Profit: ?6.8 Crore ????
• Debt: ?10 Crore (Reduced)
• Current Performance (FY 2023-24):
• Revenue: ?500+ Crore
• Net Profit: ?35+ Crore
• Market Cap: ?1,200+ Crore

Thejo Engineering's stock price has grown exponentially, from ?402 during its IPO in 2012 to ?2,500+ in 2024, proving the success of SME IPOs when executed strategically.

Challenges Faced by Thejo Engineering

While the IPO journey was successful, it came with its own set of challenges:

• Regulatory Compliance: Meeting SEBI regulations was crucial for IPO approval.
• Market Volatility: Initially, SME stocks faced liquidity issues.
• Expansion Risks: Effective planning was required to manage rapid expansion post-IPO.
• According to CA Vikas Jain, SMEs considering an IPO must have a clear strategy, compliance knowledge, and long-term vision to sustain growth.
• Key Takeaways for SMEs from Thejo Engineering’s Success
• SME IPOs Can Be a Game Changer – Thejo Engineering’s listing opened doors for many SMEs to explore NSE EMERGE.
• Proper Fund Utilization Drives Growth – Investing in manufacturing, R&D, and working capital boosted Thejo’s financials.
• Market Positioning Matters – Thejo became a trusted name in its industry, increasing investor confidence.

FAQs 

Q1: Why did Thejo Engineering opt for NSE EMERGE?

NSE EMERGE offers SMEs an opportunity to raise capital without the strict requirements of the main board, making it an ideal platform for smaller companies looking to expand.

Q2: What benefits did Thejo Engineering get from the IPO?

 The IPO helped Thejo raise ?19.73 Crore, which was used for manufacturing expansion, R&D, technology upgradation, and debt repayment, leading to substantial financial growth.

Q3: What are the risks of SME IPOs?

SME IPOs face challenges like regulatory compliance, market volatility, and liquidity issues. However, companies with a strong business model can overcome these hurdles.

Q4: How did investors respond to Thejo’s IPO?

The stock was well received, with its price increasing significantly over time, proving the potential of well-planned SME IPOs.

Q5: What advice does CA Vikas Jain give to SMEs considering an IPO? 

According to CA Vikas Jain, SMEs must ensure proper financial planning, compliance with SEBI regulations, and a long-term vision before opting for an IPO.

Conclusion

Thejo Engineering’s SME IPO journey is a testament to the potential of NSE EMERGE in empowering small businesses. By strategically utilizing funds and ensuring business growth, Thejo Engineering became a benchmark for other SMEs. If you're an SME considering an IPO, Thejo's case study is an inspiring roadmap for success.

For more insights on SME IPOs, taxation, and business finance, stay tuned with CA Vikas Jain and explore new opportunities in the financial world!