Should you subscribe to Zetwerk’s IPO?

Zetwerk Manufacturing Businesses is currently open for IPO subscription, with the company expecting to raise ₹2,830 crore. Promoters and existing investors like Peak XV, Accel, and Lightspeed are also offering shares worth ₹2,182 crore through an offer-for-sale. After accounting for dilution, the promoter's stake in the company is expected to drop from 21% to 16%.

Zetwerk aims to pay off ₹2,160 crore of debt and use the remaining proceeds for acquisitions and general corporate purposes. The company is valued at around ₹24,225 crore at the upper end of the IPO price band, equating to about 58x FY26 adjusted EBITDA. Zetwerk operates at the intersection of technology and manufacturing, serving customers in energy, consumer electronics, aerospace, precision engineering, utilities, renewables, consumer electronics, aerospace, defence, oil & gas, and AI.

Its customers include Siemens Gamesa, Acer, boAt, CG Power, NTPC, Indian Oil, DRDO, and the Indian Air Force. The company connects with about 7,000 manufacturers, often MSMEs with low capacity utilisation, who provide various manufacturing processes such as stamping, fabrication, machining, forging, die casting, and assembling. Zetwerk then purchases the goods from these suppliers and sells them to its customers.

The company has built its own manufacturing facilities for some processes and operates through its proprietary platform, Zetwerk OS, which manages the entire process from order enquiries to quality assurance and logistics. Zetwerk's revenue has grown at a CAGR of 13.5% between FY24 and FY26, EBITDA at 293%, and adjusted EBITDA (adjusted for ESOP cost) at 108%. Manufacturing revenue has grown at a higher CAGR of 24%.