Admach Systems Limited IPO Analysis: Designed to Order, Built to Perform

From custom blueprints to automated powerhouses, Admach Systems is shifting gears with a ₹42.60 crore IPO, aiming to scale its precision engineering into industrial dominance.

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Before the Deep Dive: What’s Working — and What Isn’t

Now that you’ve seen the snapshot, let’s unpack the full story behind these numbers and understand the business in context.

Industry Overview
India’s capital goods production reached INR 4,29,000 Crores in 2023−24. Admach Systems Limited operates within the Indian and global engineering industry, specialising in Special Purpose Machines (SPM), automation, and robotic material handling systems. The SPM market focuses on creating customised solutions for specific industrial applications that are not part of standard manufacturing agendas and are not available on a ready basis. These tailored machines are primarily used to enhance precision and efficiency in processes like automated trimming, inspection, and assembly

A significant portion of this industry’s demand is driven by the steel sector, which represents a major part of the company's client base. India’s domestic steel demand is projected to grow by 9–10% in FY25, supported by the local availability of raw materials and cost-effective labor57. The broader engineering sector acts as a vital pillar of the Indian economy, representing 27% of all factories and roughly 25% of total goods exports

Looking ahead, the industry is positioned for growth as India is expected to become the world's second-largest consumer of steel and a global manufacturing hub under the "Make in India" initiative. Furthermore, investment in engineering R&D in India is forecasted to reach US$ 63 billion by 2025.

Operating in the Special Purpose Machine industry is like being a master architect; while a standard builder follows a generic blueprint for every house, an SPM manufacturer must design a unique structure from the ground up to solve the specific operational challenges of each individual client.

Company Origin Story

Founded in 2008 in Pune, Admach Systems began its journey by taking over a specialised proprietorship where the promoters identified a vital gap between standard, off-the-shelf machinery and the growing industrial need for customised, precision-driven engineering. Leveraging over 30 years of promoter expertise, the company built an integrated manufacturing framework to design and assemble customised bespoke Special Purpose Machines (SPMs) and automation systems, maintaining absolute control over technical accuracy and performance. What began as a strategic takeover of a small engineering business gradually evolved into a global player in robotics and material handling, aligning with India’s industrial shift from generic mechanical services to high-tech.

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Admach Systems Limited operates as a specialised engineering entity focused on designing and building customised mechanical solutions for the Indian and global markets. The company’s business model is fundamentally rooted in bespoke engineering, where it creates unique machinery tailored to the specific operational challenges of various industries, most notably steel, automobile, packaging, and food processing.

Value Chain and Customisation Strategy

Unlike standard manufacturers, Admach does not typically produce repeatable "off-the-shelf" units. Instead, each project is uniquely engineered to client specifications, meaning installed capacity is measured by project throughput and resource loading rather than standard machine hours. The lifecycle of a project involves:

• Consultative Design: In-depth application studies and 3D design formulation to identify client bottlenecks.

• Rigorous Quality Control: Utilization of advanced tools like Coordinate Measuring Machines (CMM) and Laser Trackers to ensure precision before trials.

• Lifecycle Support: Providing both on-site installation and online support, including PLC program modifications and error diagnosis to ensure optimal performance throughout the machine's lifecycle.

Core Offerings and Revenue Streams

Admach Systems operates as a customised engineering and automation solutions provider, with its product portfolio centred on bespoke machinery rather than standardised, off-the-shelf equipment.

Special Purpose Machines (SPMs):
SPMs constitute the core product offering and primary revenue driver. These machines are engineered for specialised industrial applications such as automated trimming, cutting, welding, inspection, and assembly, and are deeply integrated into customers’ production lines. Their made-to-order nature enables higher realisations and fosters strong client stickiness.

Automation and Robotic Solutions:
The company provides end-to-end automation systems, including PLC-based controls, conveyors, sensors, and robotic material handling solutions. These offerings enhance operational efficiency by improving throughput, safety, and process consistency, aligning with the broader trend toward industrial automation.

Non-Destructive Testing (NDT) Equipment:
Admach manufactures NDT equipment such as X-ray and ultrasonic inspection systems, which are critical for quality assurance in steel and precision manufacturing. This segment adds technical depth and provides partial revenue diversification beyond SPMs.

Packaging Machines:
The company also supplies industrial packaging machines, including wrapping, strapping, and bundling systems, which support downstream material handling and logistics requirements. While strategically relevant, this segment remains a relatively smaller contributor to overall revenues.

Revenue Mix by Product Category                                                                               (₹ in Cr)

Revenue Mix by Geography                                                                                           (₹ in Cr)

Admach leverages a mix of domestic stability and international expansion. Domestically, its revenue is concentrated in states of Maharashtra and Jharkhand. Internationally, the company has successfully exported machinery to China, Italy, South Korea, UAE, and France.. The company maintains strong customer loyalty, with more than 13 clients associated for over 15 years.

Operational and Strategic Shift

A key component of Admach's current business model is the strategic transition toward in-house manufacturing. Historically, the company outsourced many critical parts, but it is now moving to process 60%–70% of components internally. This shift is designed to:

• Compress lead times from months to days.

• Reduce outsourcing costs by approximately 15%–20%.

• Maintain absolute control over quality and technical accuracy.

Capacity Utilization

Admach measures its performance through internal benchmarks, such as how many hours engineers spend on designs and how much of the factory floor is currently occupied by projects. While they use the term "unit" in their reports, it is only intended to compare their performance across different years rather than representing a fixed output.

The company reached 100% capacity utilisation in the 2024-25 financial year. To handle more projects at the same time and improve delivery speeds, they have built a new factory shed to house advanced CNC cutting and milling machinery.

Management + Promoters

Admach Systems Limited is led by a core group of four promoters from the Longani family, who possess significant technical depth and over 30 years of industry experience. They collectively hold 70.51% of the company.The management is technically grounded; Chairman Ajay Longani holds a mechanical engineering degree, while Executive Director Mahesh Longani specializes in instrumentation engineering, providing the expertise necessary to handle complex, bespoke industrial projects.

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  (₹ in Cr, except for percentage)

Revenue growth accelerated sharply during FY24–FY25 as Admach moved into a higher execution phase, but the more important development has been the improvement in profitability. EBITDA and PAT margins expanded meaningfully, reflecting operating leverage as fixed manufacturing and engineering costs were spread over a much larger revenue base. The margin expansion also suggests better project selection and a gradual shift toward higher-value, export-oriented orders rather than pure volume-led growth.

The most visible balance sheet movement is in working capital, particularly inventory. Inventory days increased significantly, which is inherent to Admach’s project-driven business model where components and sub-assemblies are procured well in advance for long-duration, customised machinery orders. This inventory build-up is therefore execution-led rather than demand stress, and reflects the company preparing for higher order throughput rather than facing slowdown risk.

Receivables have increased in line with scale, but remain manageable given the nature of institutional and industrial clients where payment cycles are longer yet largely predictable. Payables have remained relatively stable, indicating that the company is not aggressively stretching suppliers to fund growth, and is instead relying on internal accruals and planned funding to support expansion.

As a consequence, the cash conversion cycle has lengthened and operating cash flows have remained under pressure during the scale-up phase. This is typical for engineering companies transitioning into a higher revenue bracket, where cash is temporarily absorbed to support inventory and work-in-progress. The key monitorable going forward is the stabilisation of inventory levels and the conversion of the growing order book into billings, which should gradually restore operating cash flows as execution catches up with capacity.

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A significant portion of the funding, totaling ₹16.47 Cr, is dedicated to capital expenditure for the purchase and installation of a new CNC laser cutting machine and a CNC milling machine. This investment serves the strategic goal of transitioning away from outsourcing, allowing the company to process 60% to 70% of its critical components in-house, which is anticipated to reduce costs by 15% to 20% while compressing lead times from months to just a few days. Additionally, the company will allocate ₹15.50 Cr to meet its working capital requirements, ensuring it has sufficient liquidity to handle the long gestation periods inherent in building customized machinery, where inventory holding and payment cycles often extend beyond 100 days.The remaining funds will be directed toward general corporate purposes, providing a financial buffer for business development, marketing initiatives, and unexpected operational expenses as the company expands its market presence

Risks

• Customer and Industry Concentration: The company is heavily dependent on the steel and non-destructive testing (NDT) industry, with steel machines alone accounting for 76.11% of revenue as of June 30, 2025. Furthermore, its top 10 customers contributed 95.03% of total sales in FY 2024-25, and 99.94% in the period ending June 30, 2025..

• Working Capital Intensity: Due to the "made-to-order" nature of the business, the company faces a high inventory holding period (268 days in FY 2025) and has historically experienced negative operating cash flows.

• Administrative Pending Tasks: While the manufacturing land was acquired in 2009, the official government "mutation" records have not yet been updated in the company's name..

•  Financial Liabilities: The Promoters have provided personal guarantees for the company’s borrowings, involving their own residential and commercial properties as collateral

• Supply Chain Vulnerability: There are no long-term agreements with the majority of raw material suppliers, and the top 10 suppliers account for over 54% of total purchases

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Through the LMVT Framework

Leadership:
A technically strong, promoter-led engineering company with over three decades of hands-on experience in bespoke machine design and execution. The Longani family’s deep involvement ensures precision and accountability, though the business remains execution-dependent on key promoters.

Moat:
Admach’s competitive edge lies in its custom-engineering capability, long-standing client relationships, and increasing shift toward in-house manufacturing, which improves cost control and delivery timelines. However, the moat is operational rather than structural—replication is possible with capital, talent, and time.

Valuation:
At 13.41 P/E, the IPO is fairly priced rather than cheap—it offers reasonable entry for investors comfortable with execution risk and working-capital volatility, but upside rerating will depend on cash-flow normalisation and diversification beyond steel rather than earnings growth alone.

Tailwinds:
Strong domestic steel demand, rising automation adoption, Make-in-India–led capex, and the company’s transition from outsourced to in-house manufacturing support medium-term growth. A healthy ₹44.2 Cr order book provides near-term revenue visibility.

Bottom Line:
Admach Systems is a high-growth, execution-driven engineering play transitioning into a more integrated manufacturing model. While improving margins and a strong order pipeline are positives, customer concentration, working-capital intensity, and cyclicality of end markets remain key risks. Investor returns will hinge on Admach’s ability to convert orders into cash flows and sustain margins beyond the current upcycle.

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