IPO listed on 1 Sep'23
Aeroflex Industries Ltd
Minimum Investment
₹ 14,040 / 130 shares
Grey market premium
₹ 68 (63% premium)
Issue price
₹ 108
Listing price
₹ 197
Listing gains
89 (83%)
Listing on
August 31, 2023
Our Verdict:
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- Aeroflex Industries holds a unique position as the sole player in its domain, facing no local competition. Furthermore, it benefits from highly profitable replacement sales and maintains an extended customer relationship, with cycles spanning over 10 years. The firm has also shown strong upward trends in both revenue and profit, with decent return ratios and margins.
- From a valuation standpoint, the P/E multiple works out to 46x on post-issue capital. Thus, the IPO seems fully priced discounting all near-term triggers.
- However, we remain confident about the long-term prospects of the company given its scalable business model, dominant presence in the export market and product monopoly in India. Based on these factors, investors may consider subscribing to this IPO from a long-term perspective.
About the company
Founded in
19 Oct'93
Managing director
Asad Daud
- Aeroflex Industries Ltd (AIL) specializes in producing eco-friendly metallic flexible flow solutions. Their product range encompasses hoses, exhaust connectors, tubes, compensators, and associated end-fittings.
- With a global outreach, AIL has a presence in over 80 countries spanning Asia, the Americas, Europe, and Africa. Their diverse market approach is supported by a vast array of over 1,700 SKUs (Stock Keeping Units) in their product lineup, serving more than 700 clients.
- AIL operates as a subsidiary of Sat Industries Ltd that launched the IPO of Sah Polymers Ltd in January this year. Notably, the company had marked its stock market debut with a notable 30% premium on the exchanges.
STRENGTHS
- Robust Financial Performance: AIL has experienced a significant revenue increase of 36% CAGR, escalating from Rs 144.8 crore in FY21 to Rs 269.5 crore in FY23. Concurrently, the net profit surged from Rs 6 crore to Rs 30.2 crore, marking a CAGR of 124% over the same timeframe.
- Healthy return ratios: In FY23, the company posted an impressive Return on Equity at 26.4% and a Return on Capital Employed of 31.9%.
- Marquee clientele: Its customers include reputed companies like ONGC, Arcelor Mittal, HAL, ISRO, Tata Steel, Indian Oil, Linde, SAIL, etc.
RISK FACTORS
- Debt trends: Total borrowings saw an increase in FY23, climbing to Rs 45 crore, especially after it previously dropped from Rs 53 crore in FY21 to Rs 39 crore in FY22. Nonetheless, Rs 32 crore of debt is likely to be retired from IPO proceeds.
- Inconsistency in return ratios: The Return on Equity declined to 26.43% in FY23, which rose sharply from 10.24% in FY21 to 31.90% in FY22. Similarly, the Return on Capital Employed for FY23 settled at 31.91%, after a noticeable rise from 17.13% in FY21 to 36.29% in FY22.
- Substantial working capital needs: AIL has high working capital requirements, largely tied up in trade receivables and inventories. Any shortcomings in meeting these needs or in liquidating receivables and inventories could negatively impact business performance.
Issue details
Issue type
Mainstream
Issue size
₹ 351 crore
Fresh Issue
₹ 162 crore
OFS
₹ 189 crore
Price range
₹ 102 - 108
Lot size
130 shares
Issue Objective
Net proceeds from the fresh issue will be utilised towards:
- Repayment and/or pre-payment of certain outstanding borrowings availed by the company,
- Funding working capital requirements of the company; and
- General corporate purposes and unidentified inorganic acquisitions.
Dates
Bidding open
22 Aug'23
Bidding close
24 Aug'23
Allotment date
29 Aug'23
Refund date
30 Aug'23
Listing
1 Sep'23
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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