The initial public offering (IPO) of Pune-based Aeroflex Industries has gotten off to a robust start, with the issue being fully subscribed within an hour of opening on Monday.
The IPO received total bids for over 4.6 crore shares against the total issue size of 2.3 crore shares by noon on Day 1, translating to a subscription level of 2.01 times.
The stellar response highlights strong investor appetite for the IPO of the manufacturer of flexible metallic hoses and assemblies.
HNIs Lead Demand
Among investor categories, the portion reserved for non-institutional investors saw the highest demand, getting subscribed 3.2 times. This indicates strong interest from wealthy individual investors.
The retail portion was subscribed 2.64 times, underscoring bidding from small individual investors as well.
However, demand from institutional investors remained muted on Day 1. The qualified institutional buyers category was almost blank.
Overall, the robust opening day response sets the stage for the IPO to get fully subscribed over the 3-day bidding window.
IPO Details
Aeroflex Industries’ public issue comprises a fresh issue of equity shares aggregating up to ₹251 crore and an offer-for-sale of up to ₹100 crore by existing shareholders.
The price band for the IPO has been fixed at ₹102-108 per share with the minimum bid lot being 130 shares. At the upper end of the price band, the IPO is valued at around ₹850 crore.
The issue closes on August 24 after opening for subscription on August 22. The shares are expected to be listed on exchanges BSE and NSE in the coming weeks.
Objective and Valuations
The objectives of the IPO are paring debt, funding working capital needs, and financing general corporate purposes.
Up to 75% of the IPO proceeds will be used to repay certain outstanding borrowings availed by the company. Analysts feel the valuations demanded by the company are reasonable.
Aeroflex Industries is coming to market at a price-earnings ratio of 16 times FY22 earnings (annualized).
The company has exhibited a healthy revenue CAGR of 20% over FY17-22 along with double-digit growth in profitability.
About Aeroflex Industries
Incorporated in 2010, Aeroflex Industries manufactures a diverse range of flexible metallic hoses, assemblies, and bellows.
Its products find application across sectors like agriculture, infrastructure, automobiles, chemicals, pharmaceuticals, oil & gas, steel, and textiles among others.
The company has a global production and sales footprint, exporting its products to over 80 countries. Key export regions include Europe, the Americas, and Asia.
Aeroflex operates five strategically located manufacturing facilities in India, one each in Pune and Palghar in Maharashtra, Bhiwadi in Rajasthan, and two in Tamil Nadu.
The production sites boast advanced equipment, testing infrastructure, and quality certifications. The company employed 652 personnel as of March 2022.
Growth Plans Post-IPO
Aeroflex plans to utilize the IPO proceeds to expand its solution portfolio and global presence.
Other growth strategies include boosting in-house R&D capabilities, entering new geographies, diversifying the product mix, and investing in Industry 4.0 technologies.
The company aims to drive growth by tapping large addressable opportunities across diverse industrial verticals in both domestic and overseas markets.
Marquee Investors Anchor IPO
The Aeroflex IPO witnessed investment from big institutional investors even before opening to the public.
10 anchor investors brought in ₹103.7 crore, acquiring 95.5 lakh shares at the upper end of the price band.
Anchor investors included Nippon Life, Invesco Mutual Fund, Quant Mutual Fund, Bank of India MF, Societe Generale, and leading insurance companies.
The high-profile anchor participation sets a positive tone for the IPO. Retail and HNI response on Day 1 added to the momentum.
The company and bankers will hope the momentum sustains leading to a successful IPO. A good listing for Aeroflex will also boost sentiment for the IPO market.
