Can Zetwerk Manufacturing IPO deliver long-term growth for high-risk investors?

ET Intelligence Group: Zetwerk Manufacturing Businesses, a manufacturer of assorted products with dominant share from green energy, is seeking to raise as much as ₹2,830 crore through fresh equity in an IPO even as it continues to make losses. It will also raise upto ₹2,182 crore through an offer for sale. Given the profile of the company, it says there are very few peers in Indian listed space, but boasts of clients including Siemens Gamesa, CG Power, and NTPC Renewable. While the normal price-to-earnings metrics wouldn't apply here due to its losses, the cash flow doesn't appear to be inspiring with a negative operating cash flow over the past three years. The debt is rising too. The cash deficit narrowed to ₹506.2 crore as of June 2026 from ₹796.4 crore a year earlier. Net debt rose to ₹1,942.2 crore as of June 2026 from ₹1,232.1 crore in FY24. The IPO is priced at a revenue to sales multiple of 1.6 on post-IPO equity basis. The promoter group's stake will reduce to 15.4% after the IPO from 20.7%.

Business

Incorporated in 2017 and backed by investors such as Peak XV Partners, Accel India, and Lightspeed India Partners, Zetwerk unites own manufacturing and third-party supplies using a proprietary technology platform, Zetwerk OS. Apart from finished products, it also sources industrial commodities including ferrous and non-ferrous metals from third party suppliers for its customers enabling cost-effective procurement under the ecosystem segment. The company operates a 'universal factory' model combining a network of 6,979 third-party suppliers across 26 countries with 26 owned manufacturing facilities across four countries including India, Spain, USA and Germany.

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Financials

Revenue from operations increased 13.4% annually to 15,913.3 crore between FY24 and FY26. The operating margin before depreciation and amortisation (Ebitda margin) was 2.7% in FY26, 2.9% in FY25 and 0.8% in FY24.

Net loss widened to ₹1,606.2 crore in FY26 from ₹370.7 crore in FY25 and ₹917.9 crore in FY24. In the June quarter, revenue grew 55.4% to ₹4,117.9 crore while net loss reduced to ₹733 crore from ₹1,368.5 crore year-on-year.

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Valuation

While the company has grown revenue rapidly over the past three years, it works on wafer thin operating margin and continues to report net losses. Given these factors and that it outsources much to fulfil its order book, investors may wait to see clarity in financials.