Tools
SME IPO eligibility and the offer-for-sale cap
Checks an issuer against the operating profit condition and returns the ceiling on the offer for sale, the fresh issue and the cap on general corporate purposes.
The figures
Financial year 1 of 3 (FY24 in the note)
Financial year 2 of 3 (FY25 in the note)
Financial year 3 of 3 (FY26 in the note)
The issue
Result
Operating profit condition met in 3 of 3 years, on the figures entered.
Offer for sale of INR 6.00 crore (the 20 per cent issue size cap); fresh issue INR 24.00 crore; general corporate purposes capped at INR 4.50 crore.
The arithmetic
- FY24: EBIDT from operations = 0.42 + 0.71 + 0.55 - 0.35 (profit before tax, plus finance cost, plus depreciation, less other income)INR 1.33 crore, metSEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, regulation 229
- FY25: EBIDT from operations = 0.66 + 0.68 + 0.61 - 0.30 (profit before tax, plus finance cost, plus depreciation, less other income)INR 1.65 crore, metSEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, regulation 229
- FY26: EBIDT from operations = 1.10 + 0.60 + 0.74 - 0.28 (profit before tax, plus finance cost, plus depreciation, less other income)INR 2.16 crore, metSEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, regulation 229
- Operating profit of INR 1 crore from operations in two of the last three financial yearsOperating profit condition met in 3 of 3 yearsSEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, regulation 229
- Offer for sale cap: 20 per cent of INR 30.00 crore issue size, at INR 100 a shareINR 6.00 crore, that is 6,00,000 sharesSEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, regulation 230
- Selling shareholder cap: 50 per cent of a pre-issue holding of 30,00,000 shares15,00,000 sharesSEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, regulation 230
- Binding constraint on the offer for saleThe 20 per cent issue size cap, not the 50 per cent capSEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, regulation 230
- Fresh issue: 30.00 - 6.00INR 24.00 croreSEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, regulation 230
- General corporate purposes cap: the lower of 15 per cent of INR 30.00 crore and INR 10 croreINR 4.50 croreSEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, regulation 230
- Monitoring agency: fresh issue of INR 24.00 crore against INR 50 croreNot above INR 50 crore: not triggeredSEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, regulation 262
Assumptions
- Operating profit is earnings before interest, depreciation and tax from operations: profit before tax, plus finance cost, plus depreciation, less other income. Amortisation is not added back, as the note reads the plain words; the note records that the point is open.
- Each year is compared with INR 1 crore at the two places the accounts are stated in.
- The offer for sale is taken at the most the binding cap allows, as the note does, and the balance of the issue is the fresh issue.
- The fifty per cent cap is computed on the actual holding entered, not on a fully diluted basis.
- The cap on general corporate purposes is the lower of fifteen per cent of the issue size and INR 10 crore, as the note computes it.
- The note does not say which side of the line a fresh issue of exactly INR 50 crore falls; this tool treats only a figure above it as triggering a monitoring agency.
- Only the operating profit condition is tested. The other conditions for listing, the paid-up capital route under regulation 229 and the exchange conditions (NSE Emerge among them), are not tested here, so the tool does not say whether an issuer is eligible.
A figure returned here takes no account of the facts of any matter. It is information, not advice.