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Aeroflex Industries IPO entails to raise ₹351 crore and comprises fresh issue portion comprises the issue o1.50 crore shares i.e. ₹162 crore and offer for sale (OFS) portion of the IPO comprises 1.75 crore shares translating to ₹189 crore. Aeroflex Industries Ltd manufactures environment-friendly metallic flexible flow solution products made of stainless steel. Its product range includes braided hoses, un-braided hoses, solar hoses, gas hoses, vacuum hoses, interlock hoses, hose assemblies, lancing hose assemblies, jacketed hose assemblies, exhaust connectors, exhaust gas recirculation tubes, expansion bellows, related end fittings etc.. 

About Pyramid Technoplast:

• Aeroflex Industries Limited was incorporated in the year 1993.
• It was acquired by Sat Industries Ltd in April, 2018
• Aeroflex Industries Limited manufacturers and supplies environment friendly metallic flexible flow solution products including 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, compensators and related end fittings collectively known as flexible flow solutions catering to global as well as domestic markets.
• Aeroflex is into metallic flexible flow solutions made of Stainless Steel . They have recently developed products made of bronze .
• Metallic flexible flow solutions made with stainless steel produce significantly lower carbon emissions than those made with synthetic rubber making their products environment friendly and business model green & sustainable.
• As on March 31, 2023, they had more than 1,700 Product SKUs (Stock Keeping Units).
• Aeroflex operates from owned and single manufacturing facility located at Taloja, Navi Mumbai.
• As of March 31, 2023, they have an aggregate installed capacity of 11 million metre per annum. The facility is equipped with mechanical and hydraulic corrugation machines, interlocking machines, braiding machines, bobbin machines and assemblies’ equipment capable to manufacture range of customised hoses, braiding, assemblies, and fittings.
• They have 34 mechanical corrugation machines, 20 hydraulic corrugation machines, 4 interlocking machines and 28 braiding machines.
• As on March 31, 2023, 383 permanent people were employed at their manufacturing facility.
• The manufacturing facility also has an in-house Design and R&D laboratory, product testing department, dedicated finished product storage area, storage area for raw materials, spares, and consumables.
• They also have an NABL accredited laboratory at their manufacturing facility with analytical instruments to ensure quality control.

Aeroflex Industries IPO: Financials

Anchor Investors

Aeroflex Industries IPO: Salient Points

• The demand for stainless steel hoses is expected to increase by 50-60% in the next 3 years.
• Aeroflex is an export-oriented company and they export their products to more than 80 countries including Europe, USA and others.
• For Fiscals 2023, 2022 and 2021 company’s exports constituted 80.60%, 84.53%, and 80.90% of the revenue from operations respectively.
• To serve their export markets better and on real time basis, Aeroflex has incorporated a wholly owned subsidiary in the United Kingdom (UK) in the name of “Aeroflex Industries Limited” in 2019.

• Company proposes to utilise the Net Proceeds towards funding the following objects:

• The capacity utilisation at their sole plant has ranged from 70-90%.
• Promoter has sold 7.5% stake in the company to private investors in June 2023. The shares were sold at Rs. 87.56 per share which is at a discount to present IPO price.

• There are High entry and exit barriers as Metallic flexible flow solutions require rigorous product approval systems and stringent design, engineering, and use specifications by customers.
• Since FY20, revenues have grown at 23% CAGR.
• EBITDA margin during this period increased from 15% in FY20 to 20% in FY23,
• The operations of company are working capital intensive marked by high debtor days.
• On FY23 earnings Aeroflex Industries IPO is valued at 45x P/E.
• Based on Q1-FY24 performance of Sat Industries Ltd of which Aeroflex Industries as a subsidiary of SIL has reported a net profit of Rs. 11 cr.+ and if this is annualized, Aeroflex Industries is being offered at PE of 31x.
• Sah Polymers which is a group company, raised Rs. 66 cr via IPO some months back. It listed at good premium despite rich valuations.
• I intend to apply in Aeroflex Industries IPO. Presence of marquee investors in pre IPO round is likely to draw investors towards this IPO.
• GMP as reported on social media is Rs. 60+ and has been moving up steadily.
• Please do your own diligence. There is good amount of risk in all equity investments including IPOs.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.