The initial public offering (IPO) of Aeroflex Industries, which is backed by marquee investor Ashish Kacholia, will open for subscription on Tuesday, August 22. The issue will conclude on August 24 and the anchor investors' allocation will be done later today.

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Ahead of the subscription, shares of Aeroflex Industries are commanding a premium of Rs 58 in the grey market. However, it is important to note that grey market premiums are just an indicator of how the company's shares are stacked up in the unlisted market and are subject to change rapidly.

The Aeroflex Industries IPO is priced in the range of Rs 102-108 per share, where investors can bid for a minimum of 130 shares in one lot and in multiples thereafter.

Should you subscribe?

Given the company's strong growth trajectory and its niche segment demand, Mehta Equities has recommend investors to 'Subscribe' to the issue with a long-term perspective. "Due to the new segment, it has no immediate peers to compare and hence the issue is fetching demand on first mover advantage due to which there could be a good room for healthy listing gains," the brokerage said.

"We believe Aeroflex is well placed given the niche segment of manufacturing of stainless eco-friendly metallic flexible steel hoses, which is said to be an alternative to rubber based hoses," Mehta Equities said.

On valuation parse at upper price band of Rs 108 and based on annualised earnings and fully diluted post-IPO paid-up capital, the issue is asking for a market capitalisation of Rs 1,397 crore with P/E (price-earnings) of 46 times on consolidated basis, which seems the issue is aggressively priced, the brokerage stated.

About the offer

The company is looking to raise Rs 351 crore from its primary offering, which comprises of a fresh issue of equity shares worth up to Rs 162 crore and an offer-for-sale (OFS) of up to 1.75 crore equity shares by the promoter. Under the OFS, promoter SAT Industries will offload the 1.75 crore shares.

Net proceeds from the IPO will be used to the extent of Rs 35 crore for the prepayment of outstanding secured borrowings availed by the company, Rs 84 crore for funding its working capital requirements, and certain of the amount will be used for general corporate purposes and acquisitions for inorganic growth.

About 50 percent of the issue has been reserved for qualified institutional buyers, 15 percent for non-institutional investors. Retail investors will get the remaining 35 percent of the public offer.

Pantomath Capital is the sole book-running lead manager to the issue, while Link Intime India is the registrar. The company's shares are proposed to be listed on the BSE and NSE, with September 1 as the tentative date.

Company overview

Back in May this year, Ashish Kacholia along with Bengal Finance and Investments had picked up about 4.05 percent stake in Aeroflex, a subsidiary of Sat Industries, which is a listed company.

Aeroflex has reported a revenue of Rs 269.4 crore and a profit of Rs 30.1 crore for the fiscal ending March 2023.

The company exports make-in-India metallic flexible flow solutions to more than 85 countries, exports accounting for over 80 percent of the total revenues.

Established in 1993, Aeroflex manufactures and supplies environment-friendly metallic flexible flow solution products. The company was formerly known as Suyog Intermediates. Aeroflex Industries' manufacturing facility is located at Taloja, Navi Mumbai, Maharashtra.

First Published:Aug 21, 2023 4:16 PM IST