CMPDI IPO: Should you subscribe?

Summary: Margins of 38 per cent, zero debt, ROCE of 41 per cent. CMPDI looks like a clean business. But 96 per cent of revenue comes from government-linked entities, receivables stretch to 229 days, and the valuation leaves no room for error. Central Mine Planning & Design Institute (CMPDI) will open for IPO subscription from March 20 to March 24, 2026, excluding the weekend of March 21-22. The issue is a complete offer for sale (OFS) of Rs 1,842 crore, meaning all proceeds go to the selling shareholder, the government, and none to the company itself. Below is an analysis of the company's business, financials and valuation to help investors decide whether to subscribe. What the company does CMPDI is not a mining company. It is a consulting company that makes mining possible, handling everything from the first geological survey of untouched land to the final closure of an exhausted mine. In plain terms, it helps coal and mineral producers, primarily its parent Coal India, figure out how to find, plan and safely extract resources, including coal, bauxite and manganese. Its revenue comes from four core services: Geological exploration and resource evaluation contribute about 46 per cent and cover drilling, testing and mapping.  Mine planning and design account for 20 per cent, involving layout design, equipment selection and infrastructure planning. Environmental planning and monitoring contribute 18 per cent, ensuring regulatory compliance and land restoration. The remaining comes from geomatics and remote sensing, which use satellite imagery, drones and GPS to map mining areas. How it operates CMPDI commands a 61 per cent share in India’s coal and mineral consultancy market. This dominance is not purely competitive; it is structural. A large part of its work is awarded on a nomination basis by the government and Coal India, rather than through competitive bidding. Coal India and its subsidiaries contribute roughly two-thirds of revenue, while government-linked entities account for nearly 96 per cent. The company operates 58 drilling rigs and eight testing labs across India, forming one of the country’s largest exploratory drilling fleets. However, some of these assets are funded by government grants and legally owned by the Ministry of Coal or Coal India. That means CMPDI cannot treat them as owned assets or collateral. Operationally, demand exceeds its in-house capacity. In FY25, its own rigs drilled 0.46 million metres, while outsourced vendors handled 0.55 million metres. The top 10 vendors alone account for nearly 31 per cent of total expenses. Execution also relies on about 1,600 contract workers hired through third parties. This keeps fixed costs low but limits control over ground-level operations. Financial recap Revenue grew from Rs 1,386 crore in FY23 to Rs 2,103 crore in FY25, and profit after tax more than doubled over the same period, from Rs 297 crore