Aeroflex Industries IPO: All You Need To Know
The proceeds will be used for repayment of outstanding borrowings and funding working capital requirements.
Aeroflex Industries Ltd. will hold its initial public offering between Aug. 22 and 24.
The manufacturer of stainless steel hoses will have an IPO issue size of Rs 351 crore. It consists of a fresh issue of Rs 162 crore and an offer for sale of Rs 189 crore by the promoter group, at a price band of Rs 102–108 apiece.
The shares of the Sat Industries Ltd. subsidiary will list on both the BSE and the NSE on Sept. 1.
Issue Details
Issue opens: Aug. 22.
Issue closes: Aug. 24.
Total issue size: Rs 351 crore.
Face value: Rs 2 per share.
Fresh issue size: Rs 162 crore.
Shares for fresh issue: 1.5 crore.
Offer for sale size: Rs 189 crore.
Shares for offer for sale: 1.75 crore.
Price band: Rs 102 to Rs 108 per share.
Lot size: 130 shares and its multiples.
Listing date: Sept. 1.
Listing: BSE and NSE.
Promoters, including Sat Industries, have diluted their stake from 98.7% to 91.1% since May. On May 15, Sat Industries sold a 4.05% stake to ace investor Ashish Kacholia and Bengal Finance and Investment Pvt. for Rs 40.6 crore.
On June 13, Sat Industries sold a 3.55% stake for Rs 35.6 crore to Carnelian Structural Fund, Rosy Blue India Pvt., VPK Global Ventures Fund, Samedh Trinity Partners, and marquee investors Shyam Agarwal, Mitul Prafulbhai Mehta and Rajnik Savaliya.
The market value of the company at the upper price band would come to Rs 1,396.7 crore.
Business
Aeroflex Industries manufactures and supplies stainless steel corrugated flexible hoses (with and without braiding), stainless steel interlock hoses, hose assemblies and related end fittings, collectively known as flexible flow solutions.
The company caters to over 80 export markets, accounting for 81% of the revenue at Rs 217.2 crore in the previous fiscal. The U.S. is the largest export market that constituted 28% of the revenue in FY23 and 32% in FY22.
The products are supplied to a wide spectrum of industries for the controlled flow of all forms of substances including air, liquid and solid. The company's products are used in new-age industries like electric mobility, robotics, heating, ventilation, and air conditioning, semiconductor and aerospace as well as in traditional industries like metal, steel and petrochemicals.
Aeroflex has a single manufacturing facility in Navi Mumbai, with an installed capacity of 11 million metres per annum. The company's capacity utilisation stood at 83.1% in FY23 and 90.4% in FY22.
The company is promoted by Sat Industries, which is listed on the BSE and the NSE. Sah Polymers, another subsidiary of Sat Industries, also got listed in exchanges in January, with the IPO being subscribed 17.46 times.
The company has no listed peers in India. However, globally, there are listed companies that are engaged in a business similar to Aeroflex, namely Parker Hannifin Corp. in the U.S. and Senior PLC in the U.K.
Use Of Proceeds
Full or partial repayment of outstanding borrowings: Rs 32 crore.
Funding working capital requirements: Rs 84 crore.
Unidentified inorganic acquisitions.
General corporate purposes, not exceeding 25% of the gross proceeds of the offer.
Risk Factors
Aeroflex exports contribute over 80% of the revenue, out of which the U.S. constituted 28% for FY23.
The company doesn't sign long-term contracts with raw material suppliers and is dependent on China for a significant portion of raw material supplies.
Aeroflex is dependent and will continue to depend on one manufacturing facility in Navi Mumbai, with a total installed capacity of 11 million metres. Capacity utilisation in the facility was 83% for FY23.
The company requires a significant amount of working capital. A significant portion of the working capital is consumed in trade receivables and inventories.
The company does not have long-term contracts with most customers and relies on purchase orders for delivery of their products.
The company has experienced negative cash flows in the recent past and may have negative cash flows in the future.
The proposed deployment of net proceeds with respect to unidentified acquisitions are based on management estimates and have not been independently appraised by a bank or a financial institution.
Aeroflex derives a significant portion of its revenue from five top customers located in India and globally.