Telanagana-based Azad Engineering closed its Rs 740-crore public issue with robust subscription numbers on December 22 as investors rushed to bag a slice of the company that caters to original equipment manufacturers in the energy, aerospace, defence and oil & gas industries.
The public issue was subscribed by 80.6 times during December 20-22, with support from across categories of investors. Qualified institutional buyers were at the forefront among them, picking up 179.66 times the allotted quota.
High net-worth individuals and retail investors bought 87.55 times and 23.71 times the portions set aside for them, while employees bid 14.69 times the reserved portion.
Now, all these participants are keen to know the basis of allotment of IPO shares which is going to be finalised by December 26. After this, they can check their share allotment status either on the BSE website or the portal of the IPO registrar by following three easy steps.
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On the BSE website
1) Select 'equity' in issue type, and 'Azad Engineering Limited' in issue name
2) Enter either 'Application number' or 'PAN number'
3) Check box (I am not a robot) and click on 'search' button
On the IPO registrar's portal
1) Select IPO in the dropdown 'Azad Engineering Limited'
2) Select and accordingly enter either 'Application number', or 'Demat account', or 'PAN'
3) Enter 'captcha' and click on 'submit' button
Successful investors will get the shares allotted in their demat accounts by December 27, while the trading in the equity shares will commence on the bourses on December 28, following the T+3 timeline.
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Grey market investors seem to be very bullish on the IPO as Azad shares were available at a 75 percent premium over the upper price band in the grey market, analysts said on anonymity.
Robust subscription numbers, healthy financials, though there was volatility on the profit front, diversified product portfolio and expected growth in aerospace and defence space may be some of key reasons for the robust premium, experts said.
The grey market is an unofficial platform for trading in the IPO shares till the listing.
The engineered precision forged and machined components maker has delivered robust growth in financials with revenue clocking a CAGR of 43 percent and profit 33 percent during FY21-23. Its EBITDA margin jumped to 33 percent in the first half of FY24 from 22.9 percent in FY21, while the net debt-to-equity will get reduced to 0.1x after the IPO.
Motilal Oswal likes Azad because of its presence in the high-growth niche segment with high entry barriers, diversified product and client portfolio and robust financials. "It would benefit from industry tailwinds, especially in aerospace and defence, which could improve its revenue mix," it said.
Valuations are definitely a bit expensive, but "given the niche product profile with mission and life-critical components demand along with 80 percent export revenue and superior margin profile is commanding a higher valuation multiple", Mehta Equities said.
The Azad IPO was a mix of fresh issue of Rs 240 crore, and an offer-for-sale (OFS) of shares worth Rs 500 crore. The price band for the offer was Rs 499-524 per share.
The company plans to spend most of money raised from the fresh issue on capital expenditure and debt repayment, besides general corporate purposes, while the OFS funds will go to the selling shareholders.
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