The Rs 351-crore initial public offering (IPO) of Aeroflex Industries kicked off on Tuesday as the Ashish Kacholia-backed company is selling its shares in the range of Rs 102-108 apiece. The issue has received strong response from investors and it was oversubscribed within an hour of bidding. The issue is open till August 24.
Aeroflex Industries IPO includes a sale of fresh equity shares worth Rs 162 crore, while its promoter Sat Industries will offload 1.75 crore equity shares with Rs 189 crore through the offer-for-sale (OFS). By 11:45 AM on day one of bidding, the public issue has been subscribed 1.74 times whereas its retail portion has been subscribed 2.33 times. The NII portion of the book build issue has been subscribed 2.70 times.
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The company has reserved 50% of the offer for qualified institutional investors (QIBs), while 15% of shares will be offered to the non-institutional investors (NIIs). Retail investors will get the remaining 35% of the net offer. Pantomath Capital Advisors is the sole manager to the issue, while Link Intime India has been appointed as the registrar to the issue. The company will be listed on both BSE and NSE, with September 1 as the tentative date of listing.
Shares of Aeroflex Industries Ltd are commanding a grey market premium (GMP) of Rs 65 today (August 22), said market observers. Aeroflex Industries IPO GMP has risen from Rs 60 last week to Rs 65 on Tuesday.
The company has reserved 50% of the offer for qualified institutional investors (QIBs), while 15% of shares will be offered to the non-institutional investors (NIIs). Retail investors will get the remaining 35% of the net offer.A bidder will be able to apply in lots and one lot of the public offer will comprise 130 company shares. As one lot of the public issue comprises 130 shares, a retail investor would require at least Rs 14,040 (Rs 108 x 1300) to apply for the public offer.
The tentative date for share allotment is August 29, 2023. The company will be listed on both BSE and NSE, with September 1 as the tentative date of listing. A day before its IPO, Aeroflex Industries mopped up Rs 103.68 crore from 15 anchor investors by allocating them 95,99,980 equity shares at a price of Rs 108 apiece, said a BSE circular.
In multiple pre-IPO rounds, marquee investors of Dalal Street including Ashish Kacholia, Jagdish Master, Vikas Khemani-led Carnelian Fund and others picked up around 7% stake in Aeroflex Industries. The company has no listed peers in the segment and enjoys a virtual monopoly in the business.
Incorporated in 1993, Aeroflex Industries manufactures and supplies environment-friendly metallic flexible flow solution products. The Navi Mumbai based company exports India-made metallic flexible flow solutions to more than 85 countries and derives about 80 per cent of its total revenue from overseas selling. The company was formerly known as Suyog Intermediates.
Majority of the brokerage firms are positive on the issue and have suggested to 'subscribe' for it citing its unique business model, nearly monopoly status, global footprints, strong financials, decent margins and fair pricing. However, a high dependence on exports and select clients pose a threat to the company, they highlighted as the key risks.
Aeroflex Industries has a 'make in India' model with no listed peers with advanced manufacturing facilities and R&D infrastructure. "At the upper price band, the company is valuing at P/E of 46 times FY23 earnings with a market cap of Rs 1,396.6 croee post issue of equity shares and return on capital employed of 31.91 per cent. We believe that issue is fairly priced and recommend 'subscribe-long term' rating to the IPO," said Anand Rathi Shares & Stock Brokers.
According to Reliance Securities, Aeroflex Industries is likely to benefit from growth prospects in traditional industrial segments like manufacturing, automotive, oil & gas among others as well as emerging industries like solar, lithium-Ion battery management and robotics among others. In view of diversified product portfolio, strong financials, global footprint, focus on expanding its capacities, products and R&D capabilities, the brokerage gave 'Subscribe' rating to the issue.
The company is valued at a PE multiple of 46.3 times based on its FY23 earnings at the upper price band on post-issue capital. The company doesn't have any listed peers in India. The company has a unique business model. With decent return ratios and margins, the risk reward ratio for long-term investors looks favourable, said SBI Securities with 'subscribe for long term' tag on the issue.
Aeroflex is a well-established company with strong financial growth, and it enjoys a monopoly in its business as there are high barriers to entry. "The company plans to expand its global and domestic businesses, and it is investing in new technologies to improve its products. We believe that these strategies have the potential to drive long-term growth and profitability for the company. Overall, we believe that the Aeroflex Industries Limited IPO is a good investment opportunity," said Swastika Investmart giving a 'Subscribe' rating to the issue.
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