Aeroflex Industries IPO subscribed 97.07 times at close

Aeroflex Industries IPO worth ₹351 crore, consisted of a combination of fresh issue and offer for sale. The fresh issue was to the tune of ₹162 crore while the offer for sale (OFS) was worth ₹189 crore. The IPO pricing was done in the band of ₹102 to ₹108 with the final price to be discovered through the process of book building. While the QIB portion only picked up traction on the last day, the retail portion and the HNI / NII portion got fully subscribed on the first day of the IPO itself. In fact, even the overall IPO had been fully subscribed on the first day of the IPO itself, although most of the traction was only seen on the last day. The build-up of subscriptions is as under over the last 3 days.

As can be seen from the day-wise analysis of subscription of Aeroflex Industries IPO, most of the traction in the QIB and HNI segment was seen only the last day, while the retail portion saw a steady growth over the 3 days.

Quick update on the overall IPO response

The IPO saw fairly strong response on Day-1 and Day-2 of the IPO and closed with rather healthy subscription numbers at the close of Day-3. In fact, the company got fully subscribed on the first day of the IPO itself. As per the combined bid details put out by the BSE at the close of Day-3, Aeroflex Industries Ltd IPO was subscribed 97.07X overall, with best demand coming from the QIB segment, followed by the HNI / NII segment and the retail segment in that order. In fact, the institutional segment saw some very good traction on the last day. The HNI portion did do well and a lot of the surge of funding applications and corporate applications did come in on the last day of the IPO. Retail portion got fully subscribed on Day-1 and built up heft gradually. Firstly, let us look at re the details of overall allocation.

As of close of 24th August 2023, out of the 232.18 lakh shares on offer in the IPO, Aeroflex Industries Ltd saw bids for 22,537.18 lakh shares. This implies an overall subscription of 97.07X overall. The granular break-up of subscriptions was in favour of the QIB investors followed by the HNI / NII investors while the retail portion got the lowest subscription among the various categories. QIB bids and NII bids typically gather most of the momentum on the last day, and that was the case in this issue also in the case of QIB bids. Both the QIB and the NII bids picked momentum on the last day and added to its heft of the previous days. Here are the details of the category-wise subscription.

Subscription status of QIB Portion

Let us first talk about the pre-IPO anchor placement. On 21st August 2023, Aeroflex Industries Ltd did an anchor placement with 29.54% of the IPO size getting absorbed by the anchors. Out of the 3,25,00,000 shares on offer, the anchors picked up 95,99,980 shares accounting for 29.54% of the total IPO size. The anchor placement reporting was made to the BSE late on 21st August 2023. The IPO of Aeroflex Industries Ltd opened on 22nd August 2023 in the price band of ₹102 to ₹108 and closed for subscription on 24th August 2023 (both days inclusive). The entire anchor allocation was made at the upper price band of ₹108. Here are the details of the 11 major anchor investors who accounted for 94.97% of the overall anchor allocation of shares.

Data Source: BSE Filings

The QIB portion (net of anchor allocation as explained above) had a quota of 62.77 lakh shares of which it has got bids for 12,222.31 lakh shares at the close of Day-3, implying a subscription ratio of 194.73X for QIBs at the close of Day-3. QIB bids typically get bunched on the last day and while the heavy demand for the anchor placement had given an indication of the institutional appetite for the Aeroflex Industries Ltd IPO subscription overall, the actual demand did turn to be quite robust for the IPO.

Subscription status of HNI / NII Portion

The HNI portion got subscribed 126.10X (getting applications for 6,219.49 lakh shares against the quota of 49.32 lakh shares). That is a very strong response at the close of Day-3 largely because this segment normally sees the maximum response bunched on the last day. Bulk of the funded applications and corporate applications, come in on the last day of the IPO, and that was visible as the overall HNI / NII portion added to its heft on the last day of the IPO. Apart from the QIB portion, even HNIs saw good traction on the last day.

Now the NII/HNI portion is reported in two parts viz. bids below ₹10 lakhs (S-HNI) and bids above ₹10 lakhs (B-HNI). The bids above the ₹10 lakh category (B-HNIs) typically represents most of the major funding customers. If you break up the HNI portion, the above ₹10 lakh bid category got subscribed 125.80X while the below ₹10 lakh bid category (S-HNIs) got subscribed 126.69X. This is just for information and is already part of the overall HNI bids explained in the previous para.

Subscription status of Retail Individuals

The retail portion was subscribed just 34.35X at the close of Day-3, showing steady to strong retail appetite. It must be noted that retail allocation is 35% in this IPO. For retail investors; out of the 115.09 lakh shares on offer, valid bids were received for 3,952.88 lakh shares, which included bids for 3,374.15 lakh shares at the cut-off price. The IPO is priced in the band of (₹102 to ₹108) and has closed for subscription as of the close of Thursday, 24th August 2023.

Brief on the business model of Aeroflex Industries Ltd

Aeroflex Industries Ltd was incorporated in the year 1993 and the company is into the manufacture of environment-friendly metallic flexible flow solution products. These products are principally made of stainless steel. Its product catalogue 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, and related end fittings. Using steel hoses makes the products safer and also globally more acceptable. The company has more than 1,700 Product SKUs (Stock Keeping Units) in its product catalogue. Its manufacturing plant is located at Taloja, Navi Mumbai; an industrial district adjacent to the Greater Mumbai and Thane districts. Its client list includes distributors, fabricators, Maintenance Repair and Operations Companies (MROs), Original Equipment Manufacturers (OEMs), and companies in a host of other industry groups.

Aeroflex Industries Ltd has established itself as one of the leading manufacturers globally of flexible hoses and currently exports its products to more than 80 countries across the globe. Stainless steel hoses, in which Aeroflex Industries Ltd specializes, is capable of handling high temperatures as well as shocks and vibrations. The demand for stainless steel hoses is expected to increase by 50-60% in the next 3 years, so the business volumes are expected to expand rapidly too. SAT Industries, which is listed on the NSE and on the BSE, is the holding company of Aeroflex Industries Ltd.

The issue will be lead managed by Pantomath Capital Advisors Private Ltd. Link Intime India Private Ltd will be the registrar to the issue. The company will use the fresh funds to prepay / repay some of its outstanding secured borrowings and also for working capital needs.