Polymatech is currently trading at around ₹44 per share in the unlisted market, down approximately 30% over the last six months. Many investors bought the shares because the company operates in the semiconductor industry. However, Polymatech’s core business has primarily focused on opto-semiconductors, a specialised segment of the semiconductor industry.
How Are Semiconductors Different from Opto-Semiconductors?
A semiconductor controls the flow of electrical current and is used in processors, memory chips and power electronics. An opto-semiconductor is a specialised semiconductor that converts electrical energy into light or light into electrical signals. Examples include LEDs, laser diodes and photodiodes.
Many investors associate Polymatech with the broader semiconductor industry, but its core business has been focused on opto-semiconductors, particularly LED-related components and lighting applications.
The global lighting market was valued at approximately ₹3.32 lakh crore and is expected to reach around ₹4.87 lakh crore by 2028. In India, the lighting market was valued at approximately ₹18,000 crore in 2022. China accounts for around 36% of the global opto-semiconductor market.
Opto-semiconductors are used in large-area lighting applications, including stadiums and other large venues, as well as in medical equipment. To address the medical applications market, Polymatech has been focusing on developing new products. Management has stated that the company launched a vein finder and wants to move beyond component manufacturing towards integrated technology products and systems. It is also developing applications for horticulture, healthcare and other industries.
What Does Polymatech Actually Manufacture?
Polymatech operates in two key product areas: opto-semiconductor chips and luminaires.
An opto-semiconductor chip is an electronic component that generates or detects light, such as an LED chip. A luminaire is a complete lighting fixture that uses LED chips along with drivers, optics and heat sinks to produce and distribute light. In simple terms, the chip is a component used to make light, whereas the luminaire is the finished lighting product.
Polymatech designs and packages its chips and sells them to companies that use them to manufacture lighting products. More recently, the company has moved towards chip-on-board (COB) packaging. Previously, it primarily supplied individual chips; now, it is also integrating chips onto a printed circuit board (PCB) and supplying the assembled product to customers.
For this purpose, Polymatech has established a unit in Singapore with an investment of US$25 million. The same facility is also being used to develop memory modules, which are used in AI, data centres and other applications.
How Has Polymatech Grown Over the Last Few Years?
Polymatech’s financial growth looks impressive at first glance. Revenue increased from ₹649 crore in FY23 to ₹1,903 crore in FY25, representing a compound annual growth rate (CAGR) of approximately 71%. Profit after tax (PAT) increased from ₹167 crore to ₹375 crore over the same period, representing a CAGR of approximately 50%.
The company also reported positive cash flow in FY25, generating net cash flow of approximately ₹370 crore. These numbers may look attractive to investors, but this is where a deeper examination of the company’s financial statements becomes important.
Why Is the Polymatech Unlisted Share Price Falling?
Polymatech unlisted shares have fallen by more than 28% over the past six months. The decline comes amid questions surrounding the company’s corporate governance and financial reporting practices, making these issues important to consider when examining the movement in its unlisted share price.
One significant development was in April 2024, when SEBI returned Polymatech’s draft red herring prospectus (DRHP), reportedly citing concerns relating to financial disclosures and undisclosed share trading by a family member connected to the company’s merchant banker at the time. This development added to the scrutiny surrounding the company and its proposed IPO.
Another development occurred in the same year when the company’s auditor, S.S. Kothari Mehta & Co., resigned. The stated concerns included the inability of the company’s finance team to submit the annual report within the regulatory timeline and difficulties in conducting the annual general meeting (AGM). These developments raised significant corporate governance questions about the company.
The FY25 annual report presents another area that deserves attention: the contribution of its overseas subsidiaries to the consolidated financial results.
Polymatech: Overseas Subsidiaries and Questions About Financial Transparency
Polymatech has three major overseas subsidiaries or subsidiary entities relevant to this discussion: Artificial Electronics Intelligent Material Pte. Limited in Singapore, Atri Company W.L.L. in Bahrain, and Nisene Technology Group, Inc. in California.
The auditor stated that these subsidiaries’ financial statements had not been independently audited by the auditor responsible for Polymatech’s consolidated financial statements. Instead, the consolidation relied on management accounts for the period ended 31 March 2025.
According to the figures cited in this analysis, these overseas operations contributed approximately ₹1,476 crore in revenue, accounting for around 62% of the group’s revenue. Their assets were also approximately ₹1,476 crore, representing around 48% of total group assets, while their contribution to group profit was approximately 71%.
Why were these subsidiaries not audited by the same auditor? The explanation provided was that they follow different financial year-ends for audit purposes, so the consolidated financial statements relied on their management accounts. However, the fact that the overseas entities were not audited by Polymatech’s group auditor does not necessarily mean they were unaudited altogether; the distinction is important because the consolidated figures relied on management accounts and it was aduited by another auditor .
Polymatech Overseas Acquisitions, New Plants and Employee Expenses:Figures Don’t Match
Polymatech has expanded its presence across several countries. In the United States, it acquired a testing and failure-analysis company. In Estonia, it has a business associated with PCBs and semiconductor substrates. In India, it operates a plant in Chennai focused on opto-semiconductor packaging and is developing a new facility in Chhattisgarh for gallium nitride (GaN) chips, with a planned investment of ₹1,143 crore.
The company also has a presence in Bahrain, where it has stated that it plans to invest an initial US$20 million in horticulture-related electronics chips and employ up to 50 people.
With operations and expansion plans across multiple locations, employee expenses become an important number to examine. Despite reporting revenue of approximately ₹1,902 crore in FY25, the company spent only around ₹18 crore on employee expenses, equivalent to approximately 1% of revenue. The company has also reported having only around 20 directly employed staff, with other work outsourced.
Management has explained that the company operates a highly automated, or “dark factory”, model, which requires less labour. That explanation may account for some of the difference, but it raises further questions when considered alongside the company’s reported research and development expenditure of ₹121 crore and its operations across multiple countries.
The employee expenses reported for FY22 were also approximately ₹74 lakh, despite revenue of ₹128 crore in FY23. This is another figure that deserves closer examination.
If the company operates highly automated facilities, power and fuel expenses are also worth examining. The company reportedly incurred power and fuel expenses of just ₹9.87 lakh in FY22, when revenue was ₹128 crore. In FY25, power and fuel expenses were approximately ₹2.22 crore against revenue of ₹1,902 crore.
These figures appear unusually low relative to the scale of the reported business. Automation may reduce labour requirements, but investors may still want greater clarity on the operating costs of the company’s facilities across different countries.
Polymatech: Rising Receivables, Inventory and a Lengthening Cash Conversion Cycle
The concerns do not end with employee and power expenses. Polymatech’s receivables, inventory and cash conversion cycle also warrant attention.
In FY25, revenue increased from ₹1,221 crore in FY24 to ₹1,903 crore. During the same period, receivables increased from ₹519 crore to ₹1,252 crore. Receivable days rose from 155 days to 240 days, indicating that the company was taking longer to collect money from customers.
Inventory also increased from ₹267 crore to ₹731 crore, while inventory days rose from 139 days to 213 days. As a result, the cash conversion cycle increased from 151 days to 251 days.
For comparison, ams OSRAM, another company operating in the optoelectronics industry, reported a cash conversion cycle of around 100 days. The difference highlights how much longer Polymatech’s cash may remain tied up in receivables and inventory.
Rising revenue is encouraging, but when receivables and inventory grow significantly alongside it, investors need to understand whether the reported sales are translating into cash collection and whether the inventory can be sold as expected.
Polymatech: Ambitious Revenue Targets vs. Actual Performance
Management’s statements about future growth have also attracted attention.
In a 2024 interview with Communication Today, management said the company would achieve US$2.5 billion in revenue by FY26, increase capacity from 2 billion chips to 10 billion chips by the end of the year, and undertake US$1 billion in capital expenditure by the end of FY25.
At that time, the company had revenue of approximately ₹649 crore and a balance sheet of around ₹1,600 crore. Management also stated that its pre-IPO fundraising round had attracted interest of US$1 billion for a proposed US$250 million round.
These were ambitious targets. Comparing such statements with the company’s subsequent reported financial performance and actual capacity expansion is important when assessing whether management’s projections were realistic.
More recently, management has discussed investing up to US$2 billion over two years in the memory chip market. It has also stated an ambition to generate US$10 billion in revenue by 2030, with each plant expected to generate approximately US$1.5 billion in revenue.
Management has again indicated plans for an IPO during the current financial year. However, ambitious targets and management statements should not be confused with achieved results or confirmed IPO timelines.
When Will Polymatech’s IPO Take Place?
Management has indicated that it is planning an IPO during the current financial year. However, the timing remains uncertain, and an IPO should not be considered confirmed until the necessary regulatory and procedural steps have been completed.
The company’s earlier DRHP was returned by SEBI in 2024, making its financial disclosures and corporate governance particularly important areas to monitor. Investors should look for clear updates on the company’s IPO plans, regulatory filings and financial reporting before drawing conclusions about when it might list.
Until a confirmed timeline is available, investors should be cautious about relying solely on management’s IPO statements.
Credit Rating Downgrades and Promoter Support
Another point worth examining is Polymatech’s credit rating. According to the information cited in this analysis, Acuité initially rated the company B+ and subsequently downgraded its rating to B. The stated reason for the downgrade was the company’s lack of cooperation in providing financial information to the rating agency.
A downgrade associated with a lack of cooperation in providing financial information is a concern because lenders and investors depend on timely and transparent disclosures to assess a company’s financial position.
The FY25 figures also raise questions about promoter support. Despite reporting approximately ₹370 crore in cash flow, the company received an interest-free loan of around ₹53 crore from the promoter. Investors may reasonably ask why such support was necessary and what it indicates about the company’s access to funding.
The availability of bank facilities is another issue to examine. The information cited here indicates that no bank facilities had been sanctioned for the company to obtain short-term loans. Understanding why a company reporting ₹1,903 crore in revenue has limited access to such facilities would help investors assess its financial position more clearly.
Conclusion: What Should Unlisted Investors Watch?
Polymatech’s reported revenue and profit growth are impressive, and its expansion into chip-on-board packaging, memory modules, medical applications and other technology products could provide opportunities for future growth.
However, the company’s corporate governance history, questions surrounding overseas subsidiary financial statements, unusually low reported employee and power expenses, rising receivables and inventory, longer cash conversion cycle, credit rating downgrades and ambitious management targets all deserve careful examination..
For investors holding Polymatech shares in the unlisted market, the key is to look beyond the semiconductor industry narrative and headline revenue growth. Examine the financial statements, cash flows, disclosures, subsidiary accounts, credit rating reports and actual progress against management’s stated targets.