Aeroflex Industries IPO opens for subscription today, GMP jumps 63%; should you subscribe? Aeroflex Industries IPO: Aeroflex Industries’ Rs 351-crore IPO opened for subscription today, 22 August. The public offer comprises a fresh issue of shares worth Rs 162 crore and an offer-for-sale (OFS) component with promoters and shareholders offloading shares totalling Rs 189 crore. The firm has set the price band for the IPO at Rs 102-108 per equity share. Aeroflex Industries shares’ grey market premium gained 63% on Tuesday, commanding a premium of Rs 68 over upper end of the IPO price, implying a listing price of Rs 176 per share. Ahead of the issue opening, Aeroflex Industries raised Rs 103.68 crore from various anchor investors on 21 August. The IPO will close for subscription on 24 August. The date of allotment of units is projected to be 29 August, following which, the issue is expected to list on the bourses on 1 September. The issue was fully subscribed as of 10:54 a.m. on Tuesday, with retail investors and non-institutional investors bidding 1.46 times and 1.31 times for their portion each. “Aeroflex Industries Limited is a well-established company with strong financial growth, and it enjoys a monopoly in its business as there are high barriers to entry and exit. The company currently has no listed peers. It has an export-oriented business model, and it generates around 80% of its revenue from exports alone, but that exposes it to risks related to international operations. The company does not have any long-term contracts with either its supplier or customer, which is another concern related to this business. Despite these concerns, Aeroflex’s future strategies look promising. The company plans to expand its global and domestic businesses, and it is investing in new technologies to improve its products. We believe that these strategies have the potential to drive long-term growth and profitability for the company. Overall, we believe that the Aeroflex Industries Limited IPO is a good investment opportunity. We recommend SUBSCRIBE this IPO.” “On FY23 financials, the IPO is valued at 42x P/E, 26.6xEV/EBITDA and 5.3x EV/Sales. The company is likely to benefit from growth prospects in traditional industrial segments like manufacturing, automotive, oil & gas among others as well as emerging industries like solar, lithium-Ion battery management and robotics among others. Moreover, a strong track record of commercialising and scaling up new products and R&D capabilities puts the company in a good position to capture the requirements of diverse end user industrial sectors. In view of diversified product portfolio, strong financials, global footprint, focus on expanding its capacities, products and R&D capabilities, we recommend a SUBSCRIBE to the issue.”
Logistics, good or bad, are driven by the states and the commerce ministry has a LEADS (Logistics Ease Across Different States) report, based on perceptions. The 2023 version was released in December. Since states are heterogenous, in the reporting, they are divided into four groups—coastal, landlocked, north-east, and UTs. States that do well are called achievers. Nomenclature matters. Thus, states that are middling aren’t called average. They are called fast movers. States that are sub-par are called aspirers. Let me highlight coastal states, since 75% of export cargo is estimated to originate from them. Among coastal states, ones that do well are Andhra Pradesh, Gujarat, Karnataka, and Tamil Nadu. The ones that lag are Goa, Odisha, and West Bengal. While India’s logistics performance may have improved over time, that’s not true of every state. Some have slipped. Most states have a state-level logistics policy, including Goa and Odisha. West Bengal, bottom of the pecking order in the coastal category, doesn’t have one. To quote from LEADS 2023, “Looking ahead, the State (West Bengal) could benefit from formulating a State Logistics Master Plan and State Logistics Policy to drive efficiency improvements and facilitate investments within the logistics sector and undertake consultation with the logistics stakeholders for educating and informing them about the initiatives State is undertaking for the development and improvement of logistics sector.”
Logistics has been talked about for a long time and India has also focused on improving performance. We are now getting some precise data on measurement and quantification. That helps.
Bibek Debroy, chairman, EAC-PM. Views are personal.
Through the funds raised as a part of the fresh issue of equity shares, Paradeep Phosphates plans to part-finance the acquisition of the Goa Facility and repayment/prepayment of certain of the borrowings.