PRO FX Tech

• PRO FX Tech is coming out with an initial public offering (IPO) of 46,32,000 equity shares in a price band Rs 82-87 per equity share.
• The issue will open on June 26, 2025 and will close on June 30, 2025.
• The shares will be listed on SME Platform of NSE.
• The face value of the share is Rs 10 and is priced 8.20 times of its face value on the lower side and 8.70 times on the higher side.
• Book running lead manager to the issue is HEM Securities.
• Compliance Officer for the issue is Deepika N Bhandiwad.

Profile of the company

PRO FX Tech is engaged in the distribution of AV (Audio-Video) products, including but not limited to amplifiers & processors, turn-tables, audio streamers, speakers, subwoofers, sound bars, and cables. In addition to distribution, it excels in designing and implementing customized AV solutions for home theatres, premium home automation, multi-room audio systems, and bespoke AV solutions for corporate customers. Its association with global suppliers/manufacturers of renowned brands such as Denon, Polk, Definitive Technology, KEF, Theory, Pro Audio Technology, JBL, and Revel provide it with distribution rights, ensuring its customers have access to the latest AV innovations and the highest quality international products. Moreover, it offers extensive after-sales support services to ensure optimal product performance and customer satisfaction.

It caters to the specialized needs of affluent households and corporate entities by providing AV and automation solutions designed to meet individual preferences and diverse user requirements. It operates six showrooms and two experience Centres across five cities in India, including Ernakulum, Mysore, Bangalore, Coimbatore and Chennai, showcasing its extensive range of products and solutions. Its experience Centres serve as immersive environments where clients can engage with its AV products and automation solutions firsthand. These live-in-person experiences allow clients to interact with the technology, test its functionality, and visualize its integration into their living or working spaces. Its showrooms offer a wide selection of AV products and automation solutions.

Its tailored residential solutions, such as home theatre systems (including projectors, amplifiers, processors, source equipments, speakers, subwoofers, sound bars, and cables) and automation solutions, are crafted to meet the unique lifestyle requirements of affluent consumers seeking premium AV and automation solutions, along with seamless installation, connectivity, programming, and reliable after-sales support. For corporate customers, it provides end-to-end AV and automation solutions for boardrooms, corporate lobbies, retail spaces, F&B establishments, hospitals, educational institutions, hospitality venues, places of worship, and beyond. Additionally, it has recently ventured into digital signage solutions.

Proceed is being used for:

• Repayment of a portion of certain borrowing availed by the company
• Funding capital expenditure towards setting-up of 3 new Showroom cum experience centres (Showroom)
• Working capital requirements
• General corporate purpose

Industry Overview

Home automation and IoT services are witnessing an increase in adoption in the Indian subcontinent with the advent of newer and more affordable technology innovations. Users are increasingly adopting smart speakers and voice-controlled technologies leading to smart revolution due to various associated benefits such as user convenience, enhanced security, and tremendous energy savings that can be achieved in the long run. In India, the home automation market is driven by the rise in the number of start-ups who are aiming to make affordable smart home products, which is attractive to a larger section of people. Efforts by the Indian government to encourage Make in India initiative as well as Digital India campaign along with the aim of smart city development are all influencing the adoption of smart devices into homes.

Meanwhile, the Electronics System Design & Manufacturing (ESDM) industry includes electronic hardware products and components relating to information technology (IT), office automation, telecom, consumer electronics, aviation, aerospace, defence, solar photovoltaic, nano electronics and medical electronics. The industry also includes design-related activities such as product designing, chip designing, Very Large-Scale Integration (VLSI), board designing and embedded systems. The Electronics System Design & Manufacturing (ESDM) market in India is anticipated to increase at a CAGR of 16.1% between 2019 and 2025, owing to strong demand, supportive government policies and increased digitalisation. India's electronics industry is targeting a manufacturing output of Rs 43,10,000 crore ($500 billion) by 2030, which requires a fivefold increase in production. This growth is also expected to create 12 million jobs by 2027.

The country's trillion-dollar digital economy includes $400 billion from electronics manufacturing, with mobile phones contributing 43%, consumer electronics 12%, automotive 8%, strategic sectors 5%, and IT hardware 4%. During FY24, the exports of electronic goods were recorded at $29.11 billion as compared to $23.57 billion during FY23. India emerged as the second-largest manufacturer of mobile phones in the world, with a production value of mobile devices reaching $49.16 billion in FY24. India’s export of electronic goods rose tremendously by $6.3 billion in 2013-14 to $23.57 billion in 2022-23. Mobile phones, IT hardware (laptops, tablets), consumer electronics (TV and audio), industrial electronics and auto electronics are key exports in this sector. India has made substantial cuts to import duties on mobile phones to enhance exports. In the last financial year, mobile phone exports reached Rs 1.2 lakh crore ($14.4 billion), and this upward trend is expected to persist.

Pros and strengths

Wide geographical reach and distribution & retail network: The company has distribution rights for renowned brands such as Denon, Polk, Definitive Technology, KEF, Theory, Pro Audio Technology, JBL, and Revel. Additionally, it has a wide network of dealers across India, ensuring that its customers have access to the latest innovations and superior quality products. Besides, it extensive dealer network, it also operates six showrooms and two experience Centres across five cities in India namely effectively catering to the discerning needs of its customers. Additionally, it has sourcing arrangements for projectors, screens, LED displays, automation controllers, cables, and more from brands such as Crestron, Lutron, and Unilumin, providing comprehensive solutions under one roof for its customers.

Extensive service infrastructure: The company delivers quality products and comprehensive after-sales services to its customers, ensuring that the performance of its products does not deteriorate over time. It takes pride in offering a suite of support services tailored to meet the diverse needs of its customers. Its service infrastructure spans 28 service centres, comprising both 10 company managed and 18 franchised facilities, ensuring its customers receive high standards of support services, including installation, connectivity, programming, and after-sales support. As it focuses on premium and luxury product segments, maintaining quality and performance is essential. Its team of technicians ensures high standards, providing its customers with the best possible experience.

Robust marketing strategies and proactive customer engagement: It has a dedicated in-house marketing team that uses various methods to promote its brand and engage with customers. It utilizes press releases, magazines, social media, the company’s website, trade shows, exhibitions, and in-store materials to increase its brand’s visibility in the market. Its marketing strategies are driven by the need to capture its target audience's attention. Through press releases and social media, it shares compelling stories and updates about its products and services, boosting brand awareness and customer engagement. Its website serves as a digital store, showcasing its offerings and attracting visitors. Additionally, participating in trade shows allows it to demonstrate its products and connect with potential customers and stakeholders.

Risks and concerns

Significant portion of revenues derived from a limited number of customers: The company has derived 26.48%, 26.11% and 25.72% of its total revenue from top 10 customers in FY25, FY24 and FY23 respectively. Its revenues may be adversely affected if there is an adverse development with such customer, including as a result of a dispute with or its disqualification by such major customers which may lead to decline in its revenue, cash flows and liquidity. Further, if its customers are able to fulfil their requirements through any of its existing or new competitors providing services with better quality and lower commission and fee, it may lose significant portion of its business and revenue.

Dependency on certain suppliers: A substantial portion of the company’s purchases of Audio-Video (AV) products has been dependent upon a few suppliers. It is dependent on a certain number of suppliers, for procurement of goods required for its distribution and sale of Audio-Video (AV) Products. During period ended March 31, 2025 March 31, 2024, March 31, 2023, top ten suppliers accounted for 73.69%, 73.61% and 74.95% of its total purchases respectively. It has not entered into long term contracts with its suppliers and prices for goods are normally based on the quotes it receives from various suppliers. Inadequate and timely unavailability substandard quality of the goods, could have a material adverse effect its business. Further, any discontinuation of supply of goods by these suppliers or a failure of these suppliers to adhere to the delivery schedule or the required quality and quantity could hamper its business.

Substantial and increasingly intense competition in the Audio-Video Industry: The company faces competition from organized and unorganized players in the AV (Audio-Video) industry & Automation Industry which have a presence across multiple regions in India. There are various companies offering products and services similar to it. The critical factors that determine the success of a product or service vary by geographical market and product and service segment. The principal elements of competition in the industry are price, durability, product quality, user experience, operational efficiency, timely delivery and reliability and most importantly its pace in keeping up with the changing technology in the industry. Due to the intensity, complexity and diversity of the competition overall, the competitive landscape in the industry or in specific industry segments can change very rapidly.

Outlook

PRO FX Tech distributes AV products like amplifiers, processors, turntables, audio streamers, speakers, subwoofers, sound bars, and cables. The company designs custom AV solutions for home theatres, automation, multi-room audio, and corporate clients. The company has extensive service infrastructure. It also has robust marketing strategies and proactive customer engagement. On the concern side, the company’s reliance on overseas procurement exposes it to risks such as geographical concentration and foreign currency exchange fluctuations, which could adversely impact its business, results of operations, and financial condition. Moreover, the company’s business is dependent on certain suppliers and the loss of one or more of them would have a material adverse effect on the business.

The company is coming out with a maiden IPO of 46,32,000 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 82-87 per equity share. The aggregate size of the offer is around Rs 37.98 crore to Rs 40.30 crore based on lower and upper price band respectively. On performance front, During the financial year 2024-25, the net revenue from operation of company increased to Rs 12,937.54 Lakh as against Rs 11,047.73 Lakh in the financial year 2023-24 representing an increase of 17.11%. The main reason of increase was due to increase in the sales by the company. Moreover, the Company reported restated profit after tax for the financial year 2024-25 of Rs 1223.75 Lakh in comparison to Rs 943.65 lakh in the financial year 2023-24, representing an increase of 29.68%. 

The company takes pride in having the distributorship of a diverse and robust portfolio of international brands such as Denon, Polk, Definitive Technology, KEF, Theory, Pro Audio Technology, JBL, and Revel. It also deals in brands such as Crestron, Lutron, and Unilumin in the retail segment. Continuously seeking to enhance its offerings, it is actively engaged in negotiations with other prominent international brands to secure retail and distribution rights. By expanding its brand portfolio, it aims to further fortify its position in the market and provide its customers with an even wider selection of premium products. Furthermore, the expansion of its brand portfolio is expected to drive positive growth in terms of revenue and profitability.