Bumper debut | Aeroflex Industries lists at Rs 197, over 82% premium to IPO price

Aeroflex Industries, supported by Ashish Kacholia, had a successful IPO, listed at a premium of 82.78 percent over its issue price of Rs 108. On the BSE, the stock opened at a price of Rs 197.40, while on the NSE, it was priced at Rs 190.

In light of the company’s first-mover advantage, strong subscription demand for the IPO, and strong financial performance marked by a decreasing debt-to-equity ratio, this was to be expected.

Investors responded enthusiastically to the Rs 351-crore public offering, subscribing 97.11 times between August 22 and 24. A total of 194.73 times the reserved portion was purchased by qualified institutional buyers, 126.13 times by high net worth individuals, and 34.41 times by regular investors.

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Aeroflex Industries, a provider of flexible flow solutions, is a division of Sat Industries. It designs and produces flexible corrugated hoses, assemblies, and fittings made from metal that are safe for the environment.

To ensure the free movement of solids, liquids, and gases, we supply vital components to a wide range of businesses. We serve several different markets, including the steel, oil and gas, fire sprinkler, and solar ones. Asad Daud, managing director of Aeroflex Industries, has stated that the company is also exploring opportunities in the electric vehicle mobility, semiconductor, and new-age sectors.

As of March 31, 2023, the company’s product portfolio included more than 1,700 SKUs (Stock Keeping Units) and 51 nations received exports. The company relies on exports for more than 80% of its income.

The financials

Financially, between FY21 and FY23, the company had an increase in sales of 36.43 percent, an increase in EBITDA of 55.54 percent, and a rise in PAT of 123.97 percent.

In FY23, the company’s EBITDA margin was 20.5%, and its PAT margin was 11.1%.

At its current price of Rs 108, the company has a price-to-earnings ratio of 41x. As observed by experts from several broking houses, “the company has a monopoly in the industry, with no listed peers in India, and future expansion plans with decent financials, so investors can have a long term perspective on the stock.”

According to Pravesh Gour, Senior Technical Analyst at Swastika Investmart, “The company operates in an industry with substantial entry and exit barriers.” It is investing in new technology to enhance its products and grow both internationally and domestically, ensuring the company’s continued success.

Investors with a “medium- to long-term horizon” can also buy the shares, he said.

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