Inox India IPO - Investment Rationale, Valuation, Financials, Peer Comparison: Motilal Oswal

Motilal Oswal's IPO Report

Inox India Ltd. launched 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.

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We like Inox given its presence in the niche space of cryogenic equipment, leading position, diversified portfolio and robust financials. It will benefit from shift towards cleaner fuels, higher investment in electronics/space sectors and improving revenue mix towards high margin projects. The IPO is priced at 29 times H1 FY24 profit to earn (on an annualised and diluted basis), which looks reasonable.

Hence, we recommend 'Subscribe'. Given the first of its kind listing and buoyant market, the issue could see listing gains as well.

Risk and concerns

• ~14% and ~56% of revenue is derived from largest customer and top 10 customers, respectively, for H1 FY24. Cancellation by customers or reduction in their orders could have adverse effect on the business.

• Inox’s raw materials include aluminium products, stainless steel products palladium oxide, etc. Any increase in raw material costs may adversely affect the pricing and supply of the products and have an adverse effect on the operations.

• Cryogen leakage from equipment poses health hazards, thus company’s products face inherent risk.

• All the manufacturing facilities are located in Gujarat and in the Union Territory of Dadra and Nagar Haveli, thus exposing to regulatory and other geography specific risks.

Click on the attachment to read the full IPO report:

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