Zetwerk DRHP: Exiting civil infrastructure business, rising order book and pledged promoter shares among...

Zetwerk DRHP: Exiting civil infrastructure business, rising order book and pledged promoter shares among 10 things to watch

Zetwerk Manufacturing Businesses, the technology-led manufacturing platform, has filed its Updated Draft Red Herring Prospectus (UDRHP) with the Securities and Exchange Board of India (SEBI) on August 14 detailing its proposed initial public offering (IPO).

The company’s IPO comprises a fresh issue of up to Rs 2,600 crore and an offer for sale (OFS) of up to 9.68 crore shares.

The filing comes after a sharp improvement in Zetwerk’s operating performance in FY26, with revenue from continuing operations rising 40.43% to Rs 15,913.3 crore and adjusted PBT turning positive.

The UDRHP also provides details on Zetwerk’s decision to exit its Civil Infrastructure Works business, the rapid growth of its Manufacturing Business, its cash flow and working-capital requirements, customer concentration, promoter share pledges and ongoing legal proceedings. Here are 10 key things to know from Zetwerk’s UDRHP.

Zetwerk plans to raise up to Rs 2,600 crore through a fresh issue, while existing shareholders will sell up to 9.68 crore shares through the OFS. The company may also undertake a pre-IPO placement of up to Rs 520 crore. If completed, the amount raised through the pre-IPO placement will be reduced from the fresh issue.

The fresh issue proceeds will primarily be used to repay or prepay borrowings of the company and certain subsidiaries. The remaining funds will be used for unidentified and other strategic acquisitions and general corporate purposes.

Revenue grows 40%, adjusted PBT turns positive

Zetwerk’s revenue from continuing operations increased 40.43% to Rs 15,913.3 crore in FY26 from Rs 11,331.9 crore in FY25. Adjusted PBT turned positive at Rs 45.7 crore, compared with a loss of Rs 149.2 crore in FY25 and Rs 248.8 crore in FY24.

Adjusted EBITDA also increased to Rs 421.3 crore in FY26 from Rs 322.6 crore in FY25. However, the adjusted EBITDA margin remained thin at 2.65%.

Zetwerk’s Manufacturing Business ended FY26 with an order book of Rs 12,370 crore, up 43.3% from Rs 8,629 crore a year earlier. New orders also rose 35.9% to Rs 15,393 crore during the year.

Reported loss rises to Rs 1,606 crore

Despite the improvement in adjusted operating metrics, Zetwerk reported a restated loss of Rs 1,606.2 crore in FY26, compared with Rs 370.7 crore in FY25.

The continuing operations reported a loss of Rs 964.4 crore, while discontinued operations contributed another Rs 641.8 crore loss. The continuing-operations loss included an exceptional item of Rs 835.8 crore, primarily relating to adjustments to the conversion ratio of various classes of shares.

The company also had a Rs 453-crore exceptional impairment loss linked to its Civil Infrastructure Works business.

Zetwerk exits civil infrastructure business

Zetwerk decided to discontinue its Civil Infrastructure Works segment, which undertook construction and other projects including water pipelines and railway tracks.

The company said the decision was part of a strategic realignment to focus on its core business segments. Its board approved the sale of the operations in January and March 2026, followed by shareholder approval in March.

The business has been classified as a discontinued operation, with Zetwerk expecting the sale to be completed within 12 months.

Manufacturing business becomes the key growth driver

Zetwerk’s Manufacturing Business revenue grew 50.02% to Rs 9,374.7 crore in FY26 from Rs 6,249.1 crore in FY25.

Energy Products accounted for Rs 6,507.6 crore of the segment’s revenue, followed by Precision Products at Rs 1,397.2 crore and Capital Goods at Rs 1,464.4 crore.

The Manufacturing Business EBITDA increased to Rs 565.1 crore, while its EBITDA margin was 6.03%. Its order book stood at Rs 12,370 crore at the end of FY26, compared with Rs 8,629 crore a year earlier.

Operating cash flow remains negative

Despite the growth in revenue, Zetwerk reported negative cash flow from operating activities for the third consecutive year.

Operating cash outflow stood at Rs 681.5 crore in FY26, compared with Rs 386.3 crore in FY25 and Rs 281.5 crore in FY24. The company has warned that periods of negative cash flow in the future could adversely affect its results, financial condition and profitability.

Working capital remains a key requirement

As of March 31, 2026, Zetwerk had inventories of Rs 1,249.6 crore, trade receivables of Rs 2,329.9 crore and trade payables of Rs 2,199.3 crore.

The company said that as it executes its growth plans, it may need additional capital for working capital and capital expenditure through further debt or equity. It also warned that an inability to meet working-capital requirements or service debt could materially affect its business and financial condition.

Customer concentration has increased

Zetwerk’s top 10 customers accounted for 35.90% of its revenue in FY26, compared with 26.89% in FY25 and 22.37% in FY24.

Its top 10 suppliers accounted for 38.18% of total expenses in FY26. The company has warned that the loss of a major customer or disruption in its supplier relationships could affect its business and financial performance.

The UDRHP flags the pledging of promoter and promoter-group shares as a risk.

As of the filing, 2.85 crore equity shares held by promoters Amrit Pratik Acharya and Srinath Ramakkrushnan, representing 1.85% of pre-offer fully diluted equity, were pledged.

Another 7.37 crore shares, representing 4.80%, held by certain promoter-group members and Creovate Innovation were pledged and subject to non-disposal undertakings in favour of Catalyst Trusteeship. The company warns that exercise of the pledges by lenders could dilute promoter shareholding and affect the share price.

Founders and investors are selling in the IPO

The OFS includes shares being sold by both the promoters and existing investors.

Amrit Pratik Acharya and Srinath Ramakkrushnan will each sell up to 1.42 crore shares, while promoter-group entity Creovate Innovation will sell up to 2.30 crore shares.

Peak XV Partners Investments V, Accel India V, Lightspeed Venture Partners Select IV, Lightspeed India Partners II and Kae Capital Fund II are among the institutional investors participating in the OFS.

US legal dispute and counterclaim

Zetwerk and two subsidiaries filed a case against Ayr Energy in Texas alleging trade-secret misappropriation and breach of fiduciary duty involving a former Zetwerk employee. The Texas Business Court denied Ayr’s motions to dismiss, and the case is currently in discovery.

Ayr subsequently filed a counterclaim in the Texas proceedings alleging damages of at least $1 billion. Separately, Ayr and two individuals voluntarily dismissed a complaint they had filed against Zetwerk in a California federal court. Ayr has also filed a complaint before the US International Trade Commission seeking restrictions on exports of certain transformer products by Zetwerk and its affiliates. Zetwerk has disputed Ayr’s allegations.

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