Inox India’s three-day initial public offering (IPO) began accepting subscriptions on Thursday. The public may place bids on the issue through December 18. As a result of the issue’s reasonable values and excellent development possibilities in the future, analysts awarded it a positive review.
“The company’s wide range of products, varied clientele, healthy order book, and steady financial results attest to its competitive edge and room for expansion. For possible listing gains as well as long-term capital appreciation, we propose a “Subscribe” rating for the IPO, according to Swastika Investment.
Inox India
With over 30 years of experience, Inox India, one of the top producers of cryogenic tanks, provides solutions for the design, engineering, production, and installation of systems and equipment for cryogenic environments.” They plan to raise Rs 1,460 crore through an IPO, lowering the promoters’ ownership from 99.3% to 75%. The company’s goods might significantly reduce import dependency because they are essential to developing MRI cryostats, liquid hydrogen, and commercial LNG.
According to an ET analysis, the IPO may draw investor interest because Inox India has a history of paying dividends, is debt-free, and is a financially stable company.
With three sites in India, Inox India manufactures cryogenic tanks essential for applications involving temperatures below zero. It can hold 2.4 million disposable cylinder units and 3,100 comparable tank units. It is using internal funds to build a new facility worth Rs 200 crore. The company’s revenue streams are as follows: 25% comes from LNG tanks, 78% comes from industrial gases, including oxygen, nitrogen, and argon, and the remaining 25% comes from cryoscientific uses of ISRO equipment.
Inox India Financials
Between FY21 and FY23, revenue increased by 27% yearly to Rs 984 crore, while operating profit before depreciation and amortization, or Ebitda, increased by 22% yearly to Rs 222 crore, keeping a 22.6% margin. During this time, net profit increased by 26% to Rs 152 crore from Rs 96 crore.
Valuation And Risk
The top 10 customers account for about 56% of their income, and since half of the orders are recurring ones, there is a danger if an order is canceled or delayed. Since raw materials account for 65% of total sales, variations in their costs could have an impact on margins.
Having a P/E multiple for the first half of FY24 of 29 times annualized net profit, Inox India has no direct competitors in the Indian market. On the other hand, Indian peers like L&T and GMM Pfaudler trade at 30-45 times 1-year projected earnings, while foreign peers like CIMC Enric and Chart Industries trade at lower P/Es (10 and 21, respectively).
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