Dhara Rail Projects Limited Makes Strong Debut with 19.05% Premium, Lists at ₹150.00 Against Outstanding Subscription

Dhara Rail Projects Limited, incorporated in 2010 as ISO 9001:2015 certified company providing various services including annual maintenance contracts and repair services for railway rolling stock systems offering AMC and repairs of train lighting systems across all types of trains including Vande Bharat, overhead equipment maintenance vehicles, power car equipment and HVAC systems, supply, installation, testing, and commissioning of electrical equipment, and outsourced services for coach operations working primarily with Ministry of Railways through tenders and OEM collaborations with order book of ₹144.10 crore, made a strong debut on NSE SME on December 31, 2025. After closing its IPO bidding between December 23-26, 2025, the company commenced trading with a premium of 19.05% opening at ₹150.00 and touched ₹155.00 (up 23.02%).

Dhara Rail Projects Limited Listing Details

Dhara Rail Projects launched its IPO at ₹126 per share with minimum investment of 2,000 shares costing ₹2,52,000. The IPO received outstanding response with subscription of 111.90 times - individual investors at 97.61 times, QIB at 71.30 times, NII at 199.41 times.

First-Day Trading Performance

Listing Price: Dhara Rail Projects opened at ₹150.00 representing premium of 19.05% from issue price of ₹126.00, touched high of ₹155.00 (up 23.02%) and low of ₹142.60 (up 13.17%), with VWAP at ₹150.09, supported by outstanding subscription of 111.90 times.

Growth Drivers and Challenges

Growth Drivers:

Strong Growth Trajectory: Revenue increased 40% and PAT surged 120% between FY24 and FY25, exceptional ROE of 67.85%, ROCE of 25.59%, RoNW of 50.66%, healthy PAT margin of 14.67%, EBITDA margin of 11.88%.

Diversified Order Book: Order book of ₹144.10 crore as of September 2025 providing revenue visibility, revenue from multiple geographies across India, assured quality services, experienced senior management.

Strategic Positioning: ISO 9001:2015 certified company, working primarily with Ministry of Railways Government of India, providing critical services for railway rolling stock systems including Vande Bharat trains, comprehensive service portfolio across AMC, repairs, SITC, and outsourced services.

Challenges:

Profit Quality Concerns: Analyst highlights boosted bottom lines from FY25 onwards raises eyebrows questioning sustainability, issue appears fully priced despite strong fundamentals.

High Leverage: Debt-to-equity of 1.66 representing significant financial leverage, total borrowings of ₹21.33 crore, ₹7.00 crore of IPO proceeds for debt repayment.

Operational Risks: Extreme price-to-book of 10.85x, significant promoter dilution from 98.33% to 72.36%, operating primarily with government Ministry of Railways creating dependency on government spending and tender processes, vulnerable to project delays and payment cycles, competitive bidding environment for railway contracts.

Utilisation of IPO Proceeds

Working Capital: ₹30.50 crore for meeting working capital requirements supporting railway projects execution and service operations.

Debt Repayment: ₹7.00 crore for repayment and prepayment of certain borrowings strengthening balance sheet.
General Corporate Purposes: ₹6.87 crore for general corporate purposes supporting operational needs and strategic initiatives.

Financial Performance

Revenue: ₹48.00 crore for FY25, growth of 40% from ₹34.23 crore in FY24, reflecting expanding railway rolling stock maintenance and services operations.

Net Profit: ₹6.53 crore in FY25, growth of 120% from ₹2.97 crore in FY24, demonstrating dramatic profitability improvement though analyst questions sustainability of boosted margins.

Financial Metrics: Exceptional ROE of 67.85%, high debt-to-equity of 1.66, ROCE of 25.59%, PAT margin of 14.67%, extreme price-to-book of 10.85x, post-issue EPS of ₹9.37, P/E of 13.45x, order book of ₹144.10 crore, borrowings of ₹21.33 crore, and market capitalisation of ₹232.29 crore representing strong listing premium of 19.05% touching 23.02% high validating outstanding subscription of 111.90 times.