Nityas Gems cleared IPO profitability rule by ₹13.9 lakh

Nityas Gems cleared the Securities and Exchange Board of India (SEBI) profitability criterion for an initial public offering (IPO) by Rs 13.9 lakh. Its Rs 15.139 crore average operating profit for Fiscal 2026, Fiscal 2025 and Fiscal 2024 was 0.93% above the Rs 15 crore threshold in Regulation 6(1)(b) of the SEBI ICDR Regulations.

How did Nityas Gems meet the IPO profitability rule?

Nityas Gems met the IPO profitability rule because Fiscal 2026 replaced Fiscal 2023 in the applicable three-year period. The company reported operating profit of Rs 27.951 crore in Fiscal 2026, Rs 12.361 crore in Fiscal 2025 and Rs 5.104 crore in Fiscal 2024. Those three years produced the disclosed average of Rs 15.139 crore, above the Rs 15 crore minimum under Regulation 6(1)(b).

At the Draft Red Herring Prospectus (DRHP) stage, the relevant period instead comprised Fiscal 2025, Fiscal 2024 and Fiscal 2023. Nityas Gems filed its DRHP on March 30, 2026, when it reported operating profit of Rs 12.361 crore in Fiscal 2025, Rs 5.104 crore in Fiscal 2024 and Rs 35.1 lakh in Fiscal 2023. The resulting three-year average was Rs 5.939 crore, Rs 9.061 crore below the Regulation 6(1)(b) requirement.

The updated financial information changed both the lookback period and the profit included in the calculation. Replacing Fiscal 2023 operating profit of Rs 35.1 lakh with Fiscal 2026 operating profit of Rs 27.951 crore increased the disclosed average by Rs 9.2 crore, from Rs 5.939 crore to Rs 15.139 crore. Nityas Gems also reported operating profit in each fiscal of both three-year periods, another stated condition under Regulation 6(1)(b).

The applicable rules are the SEBI Issue of Capital and Disclosure Requirements (ICDR) Regulations. Regulation 6(1)(b) requires average operating profit of at least Rs 15 crore during the preceding three fiscals, with operating profit in each fiscal. Nityas Gems said the updated Fiscal 2026, Fiscal 2025 and Fiscal 2024 information now meets that test.

Why did Nityas Gems change from Regulation 6(2) to Regulation 6(1)?

Nityas Gems changed its proposed IPO route because the Fiscal 2026, Fiscal 2025 and Fiscal 2024 financial information met the Regulation 6(1) tests that it had not met in the DRHP. The DRHP proposed the issue under Regulation 6(2) because both Fiscal 2023 net tangible assets and the Fiscal 2025 to Fiscal 2023 average operating profit were below the relevant Regulation 6(1) thresholds.

Net tangible assets were Rs 1.244 crore in Fiscal 2023, below the Rs 3 crore minimum required in each of the preceding three full fiscals. After Fiscal 2026 entered the eligibility period, Nityas Gems reported net tangible assets of Rs 71.12 crore in Fiscal 2026, Rs 22.566 crore in Fiscal 2025 and Rs 5.33 crore in Fiscal 2024. Each of those figures exceeded the Rs 3 crore condition.

The monetary-assets condition was satisfied in both periods. Monetary assets represented 0.76% of net tangible assets in Fiscal 2026, 1.32% in Fiscal 2025 and 1.00% in Fiscal 2024, compared with the stated limit of no more than 50%, subject to the applicable proviso. The earlier Fiscal 2025, Fiscal 2024 and Fiscal 2023 percentages were 1.32%, 1.00% and 16.34%, respectively.

Net worth was also above the prescribed Rs 1 crore level in each relevant fiscal. Nityas Gems reported net worth of Rs 61.752 crore in Fiscal 2026, Rs 21.339 crore in Fiscal 2025 and Rs 5.277 crore in Fiscal 2024. The company further said it had not changed its name within the preceding year for the purposes of Regulation 6(1)(d), and that removing “Private” after conversion to a public limited company did not constitute a name change under that provision.

How narrow is Nityas Gems' profitability eligibility margin?

Nityas Gems' profitability eligibility margin is Rs 13.9 lakh, equivalent to approximately 0.93% of the Rs 15 crore average-profit requirement. The company described the excess as marginal and stated that meeting the Regulation 6(1) requirements should not be taken as an indication that it can maintain comparable operating profit, net tangible assets, net worth or financial performance.

The qualifying result depends substantially on the latest fiscal. Operating profit rose from Rs 5.104 crore in Fiscal 2024 to Rs 12.361 crore in Fiscal 2025 and Rs 27.951 crore in Fiscal 2026. Fiscal 2026 alone accounted for more than half of the Rs 45.417 crore aggregate operating profit used to calculate the Rs 15.139 crore three-year average.

Revenue from operations also increased over the same period, from Rs 53.655 crore in Fiscal 2024 to Rs 96.845 crore in Fiscal 2025 and Rs 202.894 crore in Fiscal 2026. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose from Rs 5.476 crore to Rs 12.901 crore and Rs 30.974 crore, respectively. These reported movements accompanied the change in the regulatory eligibility calculation.

Profit after tax increased from Rs 4.024 crore in Fiscal 2024 to Rs 7.988 crore in Fiscal 2025 and Rs 22.315 crore in Fiscal 2026. Nityas Gems cautioned that its business had scaled significantly over a relatively short period and that historical revenue growth, margins and profitability may not be sustained. That disclosure is material because Fiscal 2026 supplied the largest operating-profit figure in the newly qualifying three-year period.

What did the new IPO route change for investor allocations?

Nityas Gems' move to Regulation 6(1) raised the minimum share of the net issue available to retail individual bidders and reduced the maximum available to qualified institutional buyers. Under the Regulation 6(2) structure proposed in the DRHP, at least 75% of the net issue was to be allocated to qualified institutional buyers, no more than 15% to non-institutional bidders and no more than 10% to retail individual bidders.

Under Regulation 6(1), no more than 50% of the net issue is available to qualified institutional buyers, at least 15% is available to non-institutional bidders and at least 35% is available to retail individual bidders, subject to applicable law. Compared with the earlier structure, the maximum qualified-institutional allocation is 25 percentage points lower and the minimum retail allocation is 25 percentage points higher.

Qualified institutional buyers, non-institutional bidders and retail individual bidders are distinct IPO allocation categories under the SEBI ICDR Regulations. Nityas Gems said the revised allocation framework does not assure participation or adequate subscription from any category, including qualified institutional buyers, non-institutional bidders and retail individual bidders.

The route change therefore followed a specific replacement of financial years rather than a change to the stated thresholds. Fiscal 2023, which had Rs 1.244 crore of net tangible assets and Rs 35.1 lakh of operating profit, left the relevant period. Fiscal 2026, with Rs 71.12 crore of net tangible assets and Rs 27.951 crore of operating profit, entered it, enabling the Regulation 6(1) route and its corresponding allocation structure.

Conclusion

Nityas Gems' IPO eligibility now rests on a three-year financial window in which Fiscal 2026 materially changed both relevant deficiencies. The company moved from average operating profit of Rs 5.939 crore for Fiscal 2025 through Fiscal 2023 to Rs 15.139 crore for Fiscal 2026 through Fiscal 2024, while the net-tangible-assets test moved from a Fiscal 2023 shortfall to compliance in every relevant year.

The next disclosed matter to watch is whether Nityas Gems can sustain the performance that produced Fiscal 2026 operating profit of Rs 27.951 crore and revenue from operations of Rs 202.894 crore. Nityas Gems has stated that future operating profit and other financial parameters may not be maintained or improved, while the revised Regulation 6(1) allocation structure applies subject to applicable law.