HGS (India) NSE SME IPO Review by Dilip Davda
Issue Details / Capital History
The company is coming out with its maiden book building route combo IPO of 2880000 equity shares of Rs. 10 each to mobilize Rs 34.56 cr. at the upper cap. The company has announced a price band of Rs. 114 – Rs. 120 per share. The minimum application to be made is for 2400 shares and in multiples of 1200 shares thereon, thereafter. The IPO opens for subscription on October 30, 2026, and will close on November 03, 2026. The IPO constitute 26.52% of the post-IPO paid-up capital of the company. The shares will be listed on NSE SME Emerge. From the net proceeds, it will utilize Rs. 15.05 cr. for capex on replacement of plant and machinery of existing facility, Rs. 1.05 cr. for capex on backward integration for setting up in-house gold plating facility, Rs. 3.26 cr. for capex on infra development of building on 2nd floor of existing facility, and the rest for unidentified acquisitions / general corporate purposes.
The IPO is solely lead managed by Hem Securities Ltd., while KFin Technologies Ltd., is the registrar to the issue. HEM group’s Hem Finlease Pvt. Ltd. is the market maker, and also a syndicate member.
The company has issued initial equity capital at par value, and issued further equity shares at a fixed price of Rs. 20.00 per share (based on FV of Rs. 10 per share) in May 1997. It has also issued bonus shares in the ratio of 35 for 1 in October 2009, and 1 for 5 in March 2026. The average cost of acquisition of shares by the promoters is Rs. NIL, Rs. 0.35, Rs. 1.52, Rs. 1.69, Rs. 8.33, and Rs. 18.74 per share.
Post-IPO, company’s current paid-up equity capital of Rs. 8.53 cr. (8532713 equity shares) will stand enhanced to Rs. 10.86 cr. (10858713 equity shares). Based on the upper band of the IPO pricing, the company is looking for a market cap of Rs. 130.30 cr.
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) reported a total income/net profit of Rs. 37.93 cr. / Rs. 4.00 cr. (FY24), Rs. 53.45 cr. / Rs. 10.51 cr. (FY25), and Rs. 48.91 cr. / Rs. 11.64 cr. (FY26). For 1M-FY27 ended on April 30, 2026, it earned a net profit of Rs. 1.11 cr. on a total income of Rs. 3.79 cr. Quantum jump in bottom lines from FY25 onwards raise eyebrows and concern over its sustainability.
For the last three fiscals, the company has reported an average EPS of Rs. 10.94, and an average RoNW of 11.33%. The issue is priced at a P/BV of 1.13 based on its NAV of Rs. 105.96 per share as of April 30, 2026, but its post-IPO NAV data is missing from the offer documents.
If we attribute FY26 super earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 9.76, and based on FY25 earnings, the P/E stands at 11.19. The issue appears reasonably priced, based on its average earnings.
For the reported periods, the company has posted PAT margins of 11.27% (FY24), 21.40% (FY25), 25.77% (FY26), 35.80% (1M-FY27), and RoCE margins of 4.88%, 16.06%, 17.13%, 1.60%, respectively, for referred periods.
The company has paid a dividend of 15% (FY24), 60% (FY25), and 60% (FY26). It has adopted a dividend policy in March 2026, based on its future prospects, and financial performance.
Comparison with Listed Peers
As per the offer document, the company has no listed peers to compare with.
HGS India Ltd. (HIL) was established in 1986 in technical and financial collaboration with Geosource Inc USA, to manufacture geophone strings, seismic cables & connectors. When Geosource Inc was bought out by HGS Inc USA, Geosource India Limited changed its name to HGS (India) Ltd.
HIL is engaged in the business of manufacturing geophones, geophone strings, seismic cables, geophysical connectors, and parts and accessories for geophysical equipment for the seismic industry within the energy and geoscience sectors. Its products are used in the acquisition of seismic data and are integral to recording and transmitting ground vibration signals for the processing, interpretation, and analysis of subsurface geological structures.
Its product portfolio includes Geophone Elements precision-engineered for high-resolution surveys, including ultrasensitive models for passive monitoring. Alongside these, HIL manufactures custom-configured Geophone Strings tailored for land and marsh environments. Beyond core sensor technology, its offerings span the full spectrum of seismic accessories. This includes Seismographs & Accelerographs, Seismometers, Seismic System Cables, Panel-mount Connectors, Battery Chargers and equipment like Weight Drops and Pig Tracking Systems.
This wide range ensures seamless client compatibility across diverse field operations. It manufactures products under the brand name "HG" that sets the standard for quality and reliability. Over the years it has also invested in backward integration where it focuses on critical component manufacturing with multiple extrusion and cable lines to meet wire and cable requirements and 16 Injection Moulding Machines to manufacture components internally. This vertical integration ensures absolute quality control over every input used in their final assemblies.
The company manufactures products utilizing raw materials like: engineered plastic granules, copper, brass, aluminium and stainless steel and mild steel and special conductors designed to meet the operational and quality standards of its vast product-line. Its products are custom-developed to satisfy specific customer requirements. Its solutions are utilized extensively in Oil & Gas Exploration, Defense Research, Mineral Exploration, Vibration Monitoring, Geophysical Seabed Surveys, Earthquake Seismology, and Applied & Academic Research industries & Institutes. Beyond seismic data acquisition systems, it also manufactures cables and connectors for resistivity meters and radar equipment. As a One Star Export House, the company maintains a broad global client base across the United States, Germany, Sweden, Switzerland, Estonia, Slovakia, Netherlands, South Africa, Saudi Arabia, Australia, Spain, United Kingdom, Norway, Ukraine, Brazil, Canada, Indonesia, Denmark, UAE and many other nations.
Its primary focus is delivering integrated services to global seismic contractors and major oil companies. It is Recognized as a 100% Export Oriented Unit by NSEZ (Noida Special Economic Zone). Its operations adhere to stringent quality standards that include: • ISO 9001:2015 certified (Quality Management System issued by TUV SUD), • Awarded the ZED Gold Certification (“Zero Defect Zero Effect”) by the Ministry of MSME. Thereafter in the year 2015 HGSI established its wholly owned subsidiary HGS Products B.V. in Netherlands to provide comprehensive global sales support. As of April 30, 2026, it had 162 employees on its payroll.
Merchant Banker's Track Record
This is the 56th mandate from Hem Securities Ltd., in the last three fiscals (including the ongoing one). Out of the last 10 listings, 2 opened at par, and the rest with a premium ranging from 3.70% to 90.00% on the listing date.
Conclusion
HIL is engaged in the business of manufacturing geophones, geophone strings, seismic cables, geophysical connected and parts and accessories for the said segment. While it marked inconsistency in its top lines, its bottom line improved for the reported periods. It enjoys 100% EOU status and has certain monopoly products in its portfolio. Based on its recent average financial data, the issue appears reasonably priced. Investors may park funds for medium to long term.
Dilip Davda is a veteran financial journalist associated with the Indian stock market since 1978. He has been contributing to print and electronic media on capital markets, insurance, and finance since 1985.
He is widely recognized for reviewing public issues and non-convertible debentures (NCDs) in the primary market. Drawing on over three decades of market experience and close interaction with merchant bankers, his reviews focus on detailed fundamental and financial analysis of companies, with a special emphasis on SME public issues.
Disclaimer: The information provided herein is solely for educational and informational purposes and does not constitute an offer, solicitation, or recommendation to buy or sell any securities. Readers are advised to consult a qualified financial advisor before making any investment decisions. Investments in the securities market are subject to market risks. The author does not intend to invest in the securities discussed.
