Inox India IPO - Investment Rationale, Issue Details, Financials, Strategies, Risks: Anand Rathi

Anand Rathi Report

Inox India Ltd. will launch its initial public offering today. The IPO issue will close on Dec 18. The largest supplier of cryogenic equipment in India has fixed a price band in the range of Rs 627-660. The minimum bid lot is 22.

IPO comprises a offer for sales of 2.21 crore shares, amounting to up to Rs Rs 1459.3 crore. The company does not have any fresh issue.

Objects of the Issue

Offer for sale:

• Achieve the benefits of listing equity shares on the stock exchanges.

• The company expects that the proposed listing of its equity shares will enhance the visibility and brand image.

Strengths

• Leading Indian supplier and exporter of cryogenic equipment and solutions.

• Large portfolio of specialised cryogenic equipment engineered to global quality standards.

• Diversified domestic and international customer base across industry sectors.

• Strong product development and engineering focus.

Key Strategies

• Capitalise on opportunities in LNG and hydrogen as part of the global clean energy transition.

• Capture the full value-chain across our product lines.

• Expanding our standard cryogenic and non-cryogenic equipment business into international markets.

• Expanding their large turnkey project business.

• Continue to improve operational efficiency and productivity.

Valuation and Outlook

Inox India is well positioned to capture this global market growth with in-house technology as well as LNG product range that includes the entire value chain As on Sep-23, company has an order book of Rs10,366 million.

The 'order book' comprises anticipated revenues from the unexecuted portions of existing contracts. At the upper price band company is valuing at price/earning of 39.2 times with a market cap of Rs 59,901 million post issue of equity shares and return on net worth of 27.79% in FY23.

On the valuation front, we believe that the company is fairly priced. Thus, we recommend an 'Subscribe – Long Term' rating to the IPO.

Key Risks

• The company derives 11.56% and 46.52% of its revenue from its largest customer and top 10 customers, respectively, as of FY23. Reduction or cancellation of orders from any of these customers can have a significant impact on the business.

• Any increase in the raw material cost or other input costs may adversely affect the pricing and supply of the company’s product having an adverse effect on the business.

• The company is exposed to geographical and regulatory risks from the facilities located in Gujarat and the Union Territory of Dadra and Nagar Haveli.

• Exports constitute a major portion of the company’s revenue (45.83% as of FY23). Any slowdown in exports due to tariffs, trade barriers and international sanctions could adversely affect the business.

• The company relies on several suppliers for key components, materials and stock-in-trade as well as customer support services including product repairs and returns. If any of these suppliers are unable to deliver their services, it could have an adverse effect on the business.

• The firm's business is dependent and will continue to depend on its manufacturing facilities, and the company is subject to certain risks in its manufacturing process such as the breakdown or failure of equipment, industrial accidents, severe weather conditions, and natural disaster.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.