Aeroflex Industries Limited is manufacturers and suppliers of environment friendly metallic flexible flow solution products including braided hoses, unbraided hoses, solar hoses, gas hoses, vacuum hoses, braiding, interlock hoses, hose assemblies, lancing hose assemblies, jacketed hose assemblies, exhaust connectors, exhaust gas recirculation (EGR) tubes, expansion bellows, compensators and related end fittings collectively known as flexible flow solutions catering to global as well as domestic markets. They export the products to more than 80 countries including Europe, USA and others. For Fiscals 2023, 2022 and 2021 the exports were Rs 2,171.80 million, Rs 2,035.59 million and Rs 1,171.15 million which constituted 80.60%, 84.53%, and 80.90% of the revenue from operations respectively. Company supplies the products to a wide spectrum of industries for controlled flow of all forms of substances including air, liquid and solid. For example, flow solution products are required in fire sprinklers, gas supply, flow of air (conditioned / controlled) in aircrafts, fueling and hydraulics in aircrafts. For the Fiscals March 31, 2023, 2022 and 2021, they served total 723, 606 and 538 customers out of which they served 217, 190 and 169 customers across 51, 49 and 43 countries respectively and 506 , 416 and 369 domestically. As on March 31, 2023, they had more than 1,700 Product SKUs (Stock Keeping Units) in the product portfolio. Company is into metallic flexible flow solutions made of SS. They have recently developed products made of bronze as well. The products replace flow solutions made of rubber and polymers. The flexible flow solutions made with stainless steel corrugation conform to BS 6501 Part 1, ISO 10380 and PEDCE and are manufactured as per type A, B, and C flexibility. They offer a range of metallic flexible corrugated hoses with diameters starting from ¼ inch to 14 inches. The solutions are capable to handle varied environmental and work conditions and are designed to handle temperatures levels from negative 196 degrees celsius to 982 degrees celsius and pressure handling capacity of upto 300 bars. Aeroflex provides complex flow solutions for applications in challenging environments. Such curated solution capabilities enables the Company serve 153 clients as a Solutions Company and not merely a Products Company. Complexity of the research and product development, varying product applications, necessary technical expertise, precision involved, lengthy and stringent customer qualification processes, are some of the entry barriers (to new entrants) as well as exit barriers (to existing customers) in the business. Aeroflex is the manufacturer of metallic flexible flow solutions with an installed capacity of 11 million meters per annum. The manufacturing facility, located at Taloja, Navi Mumbai, Maharashtra, is spread across 3,59,528 square feet of area and is equipped with mechanical and hydraulic corrugation machines, interlocking machines, braiding machines, bobbin machines and assemblies equipment capable to manufacture range of customised hoses, braiding, assemblies and fittings. They have 34 mechanical corrugation machines, 20 hydraulic corrugation machines, 4 interlocking machines and 28 braiding machines. The manufacturing facility also has an in-house Design and R&D laboratory, product testing department, dedicated finished product storage area, storage area for raw materials, spares and consumables. Current capacity utilization is around 83%, so for further growth company need to expand manufacturing capacity. As per financial performance, Aeroflex Industries Limited has posted total income / net profits of Rs 144.83 Cr / Rs 6.01 Cr (FY21), Rs 240.99 Cr / Rs 27.50 (FY22) and Rs 269.47 Cr / Rs 30.15 Cr (FY23). So as per previous financials data, company has shown good growth. Company has an average EPS of Rs 2.21 and average RoNW of 25.56% for last three fiscals. Issue is priced at P/BV of 5.06 as per NAV of 21.35 as on post issue. If we attribute latest earnings of FY22 on fully diluted equity post issue, then asking price is at a P/E of around 50.78, and as per FY23 earnings, asking price is at a P/E of around 46.32, which looks fully priced. As per RHP, there are no listed peers. On BRLM's front, one lead managers are associated with this IPO, and have handled around 5 IPOs in last three fiscals. Pantomath Capital Advisors Private Limited : This is 6th IPO from this BRLM. From last 5 IPOs, all are above issue price or at par on the day of listing. As of now, from last 5 IPOs, two are trading below issue price and remaining are trading above issue price or at par. (As on 16.08.2023) As per financials, Aeroflex Industries Limited has shown good growth, RoNW is 26.43% and P/E is respectively 50.78 and 46.32 as per FY22 and FY23 earnings, which looks fully priced. Company is in business of manufacturing and supplying of environment friendly metallic flexible flow solution products. As per RHP, this sector has entry barriers then also company is not able to generate higher margins. So we give "SUBSCRIBE FOR LISTING GAINS" rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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