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Summary: Zetwerk's order book has doubled in two years and its customers are blue-chip names. Yet it has never made a profit, and most of the fresh IPO money is headed somewhere other than growth. So what exactly are investors being asked to pay for?
Zetwerk Manufacturing Businesses opens its IPO on October 15, closing October 19, at a price band of Rs 143-151 a share, seeking Rs 5,012 crore: Rs 2,830 crore as a fresh issue and Rs 2,182 crore as an offer for sale by existing shareholders. Where the fresh money goes is the catch, covered below.
What the company does
Zetwerk runs an asset-light manufacturing platform in two parts. The larger Manufacturing Business takes orders for industrial goods, wind-turbine parts, solar modules, electronics, defence components, and gets them made, mostly through third-party suppliers and partly at its own 26 facilities across four countries, taking title to the goods and earning the spread. Customers include Siemens Gamesa, boAt, NTPC Renewable Energy, Indian Oil, NALCO, Acer India and DRDO.
The smaller Ecosystem Business, under the Terra91 brand, buys bulk raw materials, steel, aluminium, zinc, copper, and resells them at a margin: a commodity-sourcing book, not a manufacturing one. Zetwerk exited Civil Infrastructure Works in FY26 and apparel trading in FY24.
The numbers
| Particulars (Rs crore) | FY24 | FY25 | FY26 |
|---|---|---|---|
| Revenue from operations | 12,364 | 11,332 | 15,913 |
| Adjusted EBITDA | 97 | 323 | 421 |
| Restated loss for the year | -918 | -371 | -1,606 |
| FY26's loss includes two one-off charges: a Rs 796 crore stake-dilution adjustment and a Rs 453 crore impairment on the discontinued Civil Infrastructure business. | |||
| Key ratios | FY24 | FY25 | FY26 |
|---|---|---|---|
| Gross margin (per cent) | 7.7 | 12.1 | 12.1 |
| Adjusted EBITDA margin (per cent) | 0.78 | 2.85 | 2.65 |
| Net profit margin (per cent) | -7.4 | -3.3 | -10.1 |
| Debt to equity (times) | 0.3 | 0.39 | 0.4 |
| Debt to equity excludes Rs 1,014 crore of FY26 acceptances, a form of vendor financing; including that, consolidated debt had risen to about Rs 4,600 crore by May 2026. | |||
Two businesses, one thin margin
Manufacturing's revenue share rose from 49 per cent in FY24 to 59 per cent in FY26, but its own EBITDA margin stayed pinned near 6 per cent: growth alone hasn't bought better economics. Ecosystem, still 41 per cent of revenue, earns almost nothing, a small loss in FY24, a 1.2 per cent margin in FY26. Judge Zetwerk on Manufacturing; the consolidated top line flatters it.
| Operating metric | FY24 | FY25 | FY26 |
|---|---|---|---|
| Manufacturing share of revenue (per cent) | 49.2 | 55.2 | 58.9 |
| Ecosystem share of revenue (per cent) | 50.8 | 44.8 | 41.1 |
| Manufacturing EBITDA margin (per cent) | 5.7 | 6.4 | 6 |
| Ecosystem EBITDA margin (per cent) | -0.2 | 2.4 | 1.2 |
| Manufacturing order book (Rs crore) | 6,170 | 8,629 | 12,370 |
| Manufacturing new orders (Rs crore) | 8,994 | 11,327 | 15,393 |
| Top 10 customers (per cent of revenue) | 22.4 | 26.9 | 35.9 |
| Owned facilities (number) | - | - | 26 |
Strengths
- It owns the outcome, not just the introduction. Unlike a marketplace such as IndiaMART, which only connects buyer to supplier, Zetwerk takes on quality, delivery and factory management itself, splitting orders across several factories at once for faster delivery than any single plant.
- It can move from making to designing. Design-led work, which pays better than plain contract manufacturing, is now about 14 per cent of manufacturing volumes.
- The order book is doubling. It grew from Rs 6,170 crore to Rs 12,370 crore in two years, with new orders of Rs 15,393 crore in FY26, demand that needs no matching capital since Zetwerk leans on suppliers' capacity.
- A sticky, blue-chip customer base. Repeat customers bring in about 80 per cent of manufacturing revenue across renewables, electronics, defence, oil and gas, and data centres.
Weaknesses
- It earns EBITDA but burns cash. FY26's Rs 421 crore of adjusted EBITDA came with a Rs 682 crore operating cash outflow, widening for three years and swallowing another Rs 506 crore in the first quarter of FY27 alone. Zetwerk pays suppliers before collecting from customers, so cash sits in inventory and receivables, together about Rs 3,500 crore against a Rs 4,800 crore net worth; supplier credit covers only part of that gap.
- Interest eats most of the operating gain. Funding that gap costs money: interest expense was about Rs 366 crore in FY26, a heavy claim against Rs 421 crore of adjusted EBITDA.
- The IPO mostly repays loans, and the need looks permanent. About Rs 2,160 crore of the fresh issue, roughly three-quarters, repays debt. A customer's payment would normally free up that cash; instead Zetwerk keeps needing more just to run, so shareholders' money now pays lenders. Equity can fund a genuinely permanent need, but only if that need stops outgrowing earnings.
- The auditor has flagged weak controls. FY24 drew a disclaimer of opinion on internal financial controls, about the most serious finding short of an adverse opinion; FY25 drew a qualified opinion on how project and construction revenue was estimated and billed, the area most prone to overstating revenue and receivables. The audit trail was also switched off in all three years. Controls look cleaner by FY26, and the loss-making civil infrastructure business behind much of this has since been exited.
Our verdict
At Rs 151, Zetwerk is asking for a market value of about Rs 25,600 crore. P/E means nothing here since it doesn't earn a profit; on enterprise value, market value plus debt minus cash, to adjusted EBITDA, it works out near 60 times, a rich multiple. Zetwerk concedes it has no clean listed peer.
The business is real, and the order book is its strongest part. Stay a middleman reselling manufacturing capacity, and Zetwerk keeps earning a trader's thin margin and feeding the cash cycle. Become a genuinely design-led manufacturer, the one part of this business that can make money, and the economics can improve; otherwise, this stays a trading company with a technology layer.
Revenue growth is only one thing to watch after listing. The harder questions are whether Zetwerk collects payments faster, ties up less cash in inventory, and finally keeps the cash it generates. An interesting business, a demanding issue, worth waiting for answers before paying up.
Also read: Rentomojo IPO: Real profits, rich price
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