Here are 10 key things to know before subscribing to the offer:

1) IPO Dates

Starting on August 22 and ending on August 24, bids will be accepted for the offer.

2) Price Band

The share price range for the book-built issuance is 102-108 Indian Rupees.

3) Offer Details

The Mumbai-based provider of flexible flow solutions plans to collect Rs 351 crore through a public issue, targeting the high end of the price range. Both new shares worth Rs 162 crore and 1.75 crore shares being offered for sale (OFS) by promoter firm Sat Industries are part of the IPO.

Prior to submitting the misleading prospectus to RoC, the company sold 86.9 million shares of stock to institutional investors like Ashish Kacholia, Carnelian Structural Shift Fund, Bengal Finance, Mitul Prafulbhai Mehta, Samedh Trinity Partners, Jagdish Master, Shyamsundar Basudev Agarwal, and VPK Global Ventures Fund, netting them a total of Rs 76.14 crore.

4) Objectives of Issue

Excluding offer expenses, the proceeds from the new offering will be used to repay certain borrowings totaling Rs 32 crore, meet working capital requirements of Rs 84 crore, and for other general corporate purposes and acquisitions.

The selling shareholder will receive the money from the sale offer.

5) Lot Size

The minimum number of shares an investor can purchase is 130, and subsequent purchases must be in 130-share increments. Therefore, the lowest amount an individual retail investor could invest is Rs 14,040 (1 lot = 130 shares x Rs 108 issue price per share), while the highest amount would be Rs 1,96,560 (14 lots).

The minimum investment for high net worth persons is Rs 2,10,600 (15 lots), while the highest investment is Rs 9,96,840 (71 lots).

Qualified institutional buyers (QIBs) will receive 50% of the offer size, high net worth individuals (non-institution investors) would receive 15%, and retail investors will receive the remaining 35%.

6) Company Profile

Aeroflex produces metallic flexible flow solution products, such as braided hoses, unbraided hoses, solar hoses, gas hoses, vacuum hoses, braiding, interlock hoses, hose assemblies, lancing hose assemblies, jacketed hose assemblies, exhaust connectors, exhaust gas recirculation (EGR) tubes, expansion bellows and compensators, for a wide variety of industries around the world.

Products are exported to over 80 countries, including Europe, the United States, and others. Exports account for approximately 80% of the company’s revenue.

The company, which has its manufacturing facility in Taloja, Navi Mumbai (Maharashtra), increased its client base from 606 in FY22 to 723 in FY23 (including 506 customers in the domestic market) because to the success of its products.

7) Financial

In the fiscal year ending in March of FY23, Aeroflex’s income from operations was Rs 269.5 crore, a growth rate of 36.43 percent from the previous fiscal year. During the same time period, net income jumped by 124 percent to Rs 30.15 crore, while EBITDA grew by 55.54 percent to Rs 54.03 crore. From FY22’s 19.39% and FY21’s 15.43%, the EBITDA margin increased to 20.05 in FY23.

However, both ROE and ROCE decreased from FY22 levels (31.9 and 36.29 percent, respectively) to FY23’s 26.43 and 31.91 percent.

The debt-to-equity ratio decreased to 0.39 in FY23 from 0.45 in FY22, and further reduction is possible as debts are expected to be repaid by free cash flow issue money.

8) Promoters and Management

Sat Industries, which is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), owns 84.57 percent of Aeroflex. Meanwhile, prominent investors like Ashish Kacholia and Vikas Khemani’s Carnelian Structural Shift Fund own 8.91 percent.

Mustafa Abid Kachwala is the company’s CFO and works full time alongside Asad Daud, the Managing Director.

Company Secretary and Compliance Officer Kinjal Kamlesh Shah is situated in Mumbai.

9) Risk Factors

Here are certain risk factors to consider:

a) More over 80% of revenue from operations came from exports, with the United States accounting for 28% of that.

b) The majority of the company’s raw material suppliers are located in China.

c) The company needs a lot of money to keep running, and a lot of that money goes towards paying for trade receivables and stock.

d) Both international and domestic rivals, both large and little, threaten to disrupt the company’s operations and bottom line.

e) Its cash flows have been negative in the recent past, and they may be so in the future as well.

f) Aeroflex’s top five customers in India and throughout the world account for a sizable chunk of the company’s total income.

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10) Listing Date

By August 29, the company will have finalised the basis of allotment of IPO shares in conjunction with BSE, transferred equity shares to the demat accounts of eligible investors by August 31, and refunded unsuccessful investors by August 30.

According to anonymous analysts, Aeroflex Industries shares traded at a premium of roughly 60% over the upper price band of Rs 108 per share in the grey market before its launch on the BSE and NSE on September 1. Until an initial public offering (IPO) is officially listed for trading, shares may be traded on the grey market.

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The public offering consists of a fresh issuance of Rs 162 crore worth of shares by the company and an offer to sell Rs 1.75 crore worth of equity shares by the listed promoter Sat Industries.

The offer included a reservation of up to 5 million equity shares for the holding company’s shareholders.

The offer will end on August 23, while bidding for the anchor book will occur for one day on August 18, a day prior to the issue’s release.

The anchor book is comprised of qualified institutional investors who have reserved fifty percent of the IPO. The remaining 35 percent is reserved for retail investors.

The manufacturer of flexible hoses will use the proceeds from the new offering for debt repayment, working capital requirements, general corporate purposes, and unidentified inorganic acquisitions.

According to the draught red herring prospectus filed in March of this year, promoters SAT Industries owned 92.18 percent of Aeroflex’s shares and Italica Global FZC held 6.52 percent. The remaining 1% is held by the general public.

Prior to filing the red herring prospectus with the RoC, Sat Industries sold 86.95 lakh equity shares to a handful of investors in May and June of this year, including Ashish Kacholia (2.03 percent of total paid-up equity), Bengal Finance and Investment (2.03 percent), Carnelian Structural Shift Fund (1.1 percent), Jagdish N Master (1.14 percent), and Rosy Blue (India 1 percent), at a price of Rs 87.56 per share. As a consequence, Sat Industries raised a total of Rs 76.13 billion.

The provider of flexible flow solutions, which earned more than 80 percent of its revenue from exports to over 80 countries, posted a 9.6 percent year-on-year increase in consolidated profit to Rs 30.15 crore for the fiscal year ending in March FY23, with revenue rising 11.9 percent to Rs 269.5 crore and EBITDA (earnings before interest, tax, depreciation, and amortisation) increasing 15.7 percent to Rs 54.03 crore. The EBITDA margin increased by 66 basis points year-over-year to 20.05 percent in the prior fiscal year.

The merchant banker for the offering is Pantomath Capital Advisors, while Link Intime India is the offer’s registrar.

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The IPO will consist of a fresh issuance of equity shares valued at Rs 160 crore and an offer-for-sale of 1.75 crore equity shares by founders SAT Industries and Italica Global FZC, and is expected to raise Rs 350 crore for the firm.

According to the public processing status report, the company submitted its draught IPO documents to Sebi on March 31st, and the regulator issued its observation letter for the IPO on July 31st.

According to the Sebi, the company can proceed with the proposed initial share offering after the observation was issued over the draught offer document.

The listed subsidiary of the diversified business group SAT Industries plans to utilise the proceeds from the new issue to pay down debt, fund working capital needs, and make further corporate investments and inorganic purchases.

More than 80 countries receive goods from this corporation, which carries 1,700 SKUs (stock keeping units). For the 10 months leading up to January 2023, 80.85% of its revenue came from exports. 

Flexible flow solutions play a critical role in transfer of substances (air, liquid and solid) in any industrial or commercial ecosystem, connecting the origin and end-points of various processes. For instance, flow solution products are required in fire sprinklers, gas supply, flow of air in aircraft, fueling and hydraulics in aircraft.

Promoters SAT Industries held 92.18 percent stake in Aeroflex and 6.52 percent shares were with other promoter Italica Global FZC at the time of filing the draft papers. The remaining 1 percent was held by public.

In May and June this year, SAT Industries entered secondary transactions with investors such as Ashish Kacholia, Carnelian Structural Shift Fund, VPK Global Ventures Fund and Samedh Trinity Partners. The company has transferred 86.95 lakh equity shares to these investors at a price of Rs 87.56 per share, and raised Rs 76.13 crore.

Pantomath Capital Advisors is the merchant banker for the issue.

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