Digilogic Systems Filing DRHP for BSE SME IPO, Seeking Funds to Raise Money for Growth and OFS by Promoter

Hyderabad, September 19, 2025 – Hyderabad-based Digilogic Systems Ltd, an expert in automated test equipment and simulation systems, has submitted its Draft Red Herring Prospectus (DRHP) with market regulators for listing through an IPO on the BSE SME platform. This is a combination of a fresh issue of shares along with an offer for sale by the promoter to raise capital for expansion of capacity, repayment of debt, and corporate purposes.

IPO Structure and Proceeds

Digilogic proposes a new equity issue totaling approximately ₹73 crore, and an Offer for Sale by its promoter, Madhusudhan Varma Jetty, of up to 11.5 lakh shares of face value ₹2 each. Prior to the IPO, a pre-IPO placement is possible aggregating around ₹14 crore, which would lower the fresh issue size. The company has also made a provision for a reservation in favor of a market maker for facilitating liquidity post-listing.

Of the net proceeds of the new issue, about ₹52.35 crore will be used to establish a new unit, about ₹7 crore towards repayment of borrowings and the remainder for general corporate purposes (at 15% of the gross proceeds or ₹10 crore, whichever is lower).

Strong Financial Growth Trajectory

Digilogic has witnessed dramatic financial turnaround in the last few years. Topline from operations increased from ~₹55.96 crore in FY23 to ~₹72.06 crore in FY25. EBITDA also increased in a big way, with the margin increasing from ~9.4% in FY23 to ~18.1% in FY25. Net profit (PAT) tripled in this period, increasing from ~₹2.18 crore in FY23 to ~₹7.76 crore in FY25. Its net worth at the end of FY25 was at ~₹32.99 crore.

Business Profile and Strengths

Digilogic Systems is AS9100D and ISO 9001:2015 certified with facilities in Hyderabad and a presence in Bengaluru as well. It has a broad portfolio of test and simulation systems, ranging from radar simulators to electronic warfare systems, avionics rigs, embedded control systems, and so on. The company is a System Integrator and Application Software Partner of National Instruments (USA) and is an authorized channel partner of Tektronix India. These alliances give it exposure to world technologies and increase its capacity to quote, negotiate, and provide cutting-edge instrumentation.

Risks and Challenges

Being directly related to defence and aerospace contracts, Digilogic is vulnerable to policy and procurement cycle risks. Government contract delays or regulatory approvals might impact cash flows. The company is working‐capital‐and capital-intensive, so funding and inventory control will be essential. International vendors providing comparable test systems are also a risk.

Future Outlook

If the IPO is successful as planned, Digilogic would stand to gain significantly from improved scale, increased capacity, and improved balance sheet. The proceeds being used for the new facility and repayment of debt should enhance operating leverage and minimize financial risk. With India’s growing emphasis on modernization of defence, aerospace, and indigenous capability development (including Make in India, Aatmanirbhar Bharat), entities such as Digilogic are well-placed. Investors will be closely observing the pricing, valuation, subscription rates, and how rapidly the company can carry out its expansion plans without slippage.

REF: https://www.bsesme.com/download/389464/SME_IPO InPrinciple/DRHP_DSL_17092025_20250918101146.pdf

Disclaimer: At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.

If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com.

Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations