Will Sedemac’s IPO deliver long term growth for high-risk investors?

Synopsis Auto components firm Sedemac Mechatronics is set to raise ₹1,087.5 crore via an offer for sale, with its promoter stake slightly decreasing. The company, specializing in electronic control units, has shown strong revenue and profit growth. However, significant customer concentration, with nearly 75% of revenue from TVS Motor Company, presents a key risk for investors. ET Intelligence Group: Sedemac Mechatronics, an auto components company, plans to raise Rs 1,087.5 crore through an offer for sale. The promoter group's stake will fall a tad to 26.2% after the IPO from 26.4%. The company designs and manufactures control-intensive electronic control units (ECU) for leading original equipment manufacturers (OEMs). Its revenue grew in double-digit while net profit more than doubled between FY23 and FY25. However, nearly 75% of the revenue comes from TVS Motor Company, reflecting customer concentration. Given these factors, investors with high-risk appetites may consider the IPO. Business Incorporated in 2007, Sedemac is a Pune-based company which designs and manufactures powertrain controllers, motor control products, and integrated starter-generator (ISG) solutions for automotive and industrial applications. The company provides patented sensor-less motor control technology, enabling precise performance without external sensors for both engine-powered and electric bicycles and three-wheelers. It has two manufacturing facilities in Pune with 94% and 81% capacity utilisation. It has two upcoming facilities, yet to be operational. list of parts: Co has strong numbers, and is adding capacity. But IPO more suitable for high-risk investors due to revenue concentration Financials Between FY23 and FY25, revenue grew by 24.8% annually to '658.4 crore and net profit jumped 134.3% to '47 crore. Operating profit before interest, tax, depreciation and amortisation (Ebitda) grew 51.8% to '125.1 crore while Ebitda margin expanded to 19% from 12.8% during the period. Around 91% revenue comes from the top three customers. Return on equity (ROE) grew to 22% in FY25 from 7.8% in FY23. For the nine months ended December 2025, revenue and net profit were Rs 770.7 crore and Rs 71.5 crore, respectively. Though research & Development (R&D) expenses increased to Rs 53.8 crore during the nine months ended December 2025 from Rs 43.5 crore in FY23, R&D spend as a percentage of revenue declined to 7% from 10.3%. Valuation Considering the post-IPO equity and annualised profit for FY26, the price-earnings (P/E) multiple is 62.7. While it may not have a direct peer in the strict sense, some of the auto ancillary companies, including ZF Commercial Vehicle Control Systems India and Sona BLW Precision Forgings trade at forward P/Es of 56 and 54 respectively. (You can now subscribe to our ETMarkets WhatsApp channel) (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price ...moreless (You can now subscribe to our ETMarkets WhatsApp channel) (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price ...moreless Inside Akasa’s big plans: CEO Dube on profits, fleet orders and why 2032 isn’t the end Prashant Jain’s contrarian masterstroke: From IT exit to SBI super bet Battlefields and barrels: The explosive link between war and crude Why Maruti chose China’s BYD over Make in India for its first EV Stock Radar: GAIL stock climbs above descending trendline; time to buy after 16% fall from highs? 5 stocks with consistent score improvement and upside potential of up to 26% in 1 year, according to analysts 1 2 3