Aeroflex IPO versus Vishnu Prakash IPO: Which one should you choose?

Investors and traders are paying close attention to the primary markets as well apart global events such as Jackson Hole Economic Symposium on Friday, which would provide clues about the future path of interest rates.

There are two mainboard issues this week, Vishnu Prakash IPO, which will open for subscription today, and the Aeroflex Industries IPO, which started for subscription on Tuesday, August 22.

Also read: Aeroflex IPO versus Vishnu Prakash IPO: Which one should you choose?

Considering both the companies are from different industries where one is an Engineering, procurement, and construction (EPC) infrastructure company, while the other manufacturers stainless eco-friendly metallic flexible steel hoses, analysts are overall bullish on both but have there own top picks.

Lets take a look at key details of Vishnu Prakash IPO and Aeroflex Industries IPO;

Vishnu Prakash IPO

Vishnu Prakash IPO GMP: Vishnu Prakash R Punglia Limited IPO opens for subscription on today (Thursday, August 24) and will close on Monday, 28 August.

Vishnu Prakash Punglia IPO price band has been fixed in the range between ₹94 to ₹99 per equity share of face value of ₹10 each.

The ₹308.88 crore worth Vishnu Prakash IPO is entirely a fresh issue of up to 3.12 crore equity shares of face value of ₹10 each.

The offer also includes a reservation for a subscription by eligible employees. The company is offering an employee discount of ₹9 per share.

Vishnu Prakash IPO GMP or grey market premium on Wednesday was +54 higher than the previous trading sessions. This indicates Vishnu Prakash share price were trading at a premium of ₹54 in the grey market on Wednesday, according to topsharebrokers.com

Also Read: Vishnu Prakash IPO opens tomorrow: GMP, price, issue details, other key things to know

Aeroflex Industries IPO

Aeroflex IPO GMP: Ashish Kacholia backed Aeroflex Industries IPO opened for subscription on Tuesday, August 22 and will close today (Thursday, August 24).

Aeroflex Industries IPO so far has received overwhelming response from non-institutional investors (NIIS) and retail investors on both the days. Qualified institutional buyers also responded positively to the issue.

Aeroflex Industries IPO subscription status on day 2 was 21.10 times, and Aeroflex IPO was subscribed 6.72 times on day 1.

Aeroflex Industries IPO price band has been fixed at ₹102 to ₹108 per equity share for the proposed initial public offer.

Aeroflex Industries IPO comprises of fresh issue of equity shares up to the value of ₹162 crore and an offer-for-sale (OFS) of up to 1.75 crore equity shares by the promoters selling shareholders and promoter group make up the offer, which has a face value of ₹2 per equity share.

Aeroflex IPO GMP today or grey market premium is +72, similar to the previous sessions. This indicates Aeroflex Industries share price were trading at a premium of ₹72 in the grey market on Thursday, according to topsharebrokers.com.

Also Read: Aeroflex Industries IPO: Ashish Kacholia-backed issue subscribed 21.10 times on day 2; check details

Vishnu Prakash IPO versus Aeroflex Industries IPO: Here’s what analysts say

Vinit Bolinjkar, Head of Research, Ventura Securities

Vishnu Prakash R Punglia Ltd is an EPC infrastructure company, and it executes government projects in the segments of water supply/treatment, railways, roads and irrigation. Around 60-65% of the total projects are in the state of Rajasthan, while the remaining are in other states of India.

According to Vinit Bolinjkar, Head of Research, Ventura Securities, during FY21-23, the company’s revenue/EBITDA/PAT has grown at a CAGR of 55.1%/85.7%/118.4% to ₹1,168 crore/ ₹157 crore/ ₹91 cr respectively, while its EBITDA and PAT margins have improved by 406bps to 13.4% and 384bps to 7.8% respectively. The company’s current order book stands at ₹3,800 crore (3.3X of FY23 revenue), which provides strong revenue visibility of the upcoming years. The company has a net debt of ₹180 crore (as on 31st March 2023).

On the other side, Aeroflex Industries Ltd designs and produces environmentally friendly metallic flexible solutions for fluid and gas transportation for both international and domestic markets. Their products are distributed to over 80 countries, including Europe and the USA.

During FY21-23, the company’s revenue/EBITDA/PAT has grown at a CAGR of 36.4%/54.8%/124.4% to ₹270 crore/ ₹54 crore/ ₹30 crore respectively, while its EBITDA and PAT margins have improved by 451 basis to 20.2% and 706 basis to 11.2% respectively. The company has a net debt of ₹39 crore (as on 31st Mar 2023), explained Bolinjkar.

“We believe that IPO of Vishnu Prakash R Punglia Ltd (VPPL) is better than the IPO of Aeroflex Industries Ltd (AIL). VPPL is a domestic infrastructure play and available at a cheaper valuation (9.4X FY23 EV/EBITDA), while AIL is an export story and it is significantly overvalued (26.4X FY23 EV/EBITDA). Moreover, VPPL is raising ₹309 crore through 100% fresh issue for capex and expansion, while AIL’s IPO is a mix of fresh issue ( ₹162 crore for debt repayment) and OFS ( ₹189 crore, promoters are selling),” said Bolinjkar.

Prashanth Tapse, Research Analyst, Senior Vice President of Research at Mehta Equities

Tapse believes that Aeroflex is well placed in a niche segment of manufacturing of stainless eco-friendly metallic flexible steel hoses, which is said to be an alternative to rubber based hoses.

“We like Aeroflex’s diversified portfolio of products catering to diverse industry segments, each following stringent quality standards and undergoing rigorous regulatory scrutiny and approvals. This characteristic creates a significant barrier to entry for potential competitors, further solidifying their dominance in this specialized sector. We think as an export oriented business model Aeroflex holds the potential to amplify its global presence by expanding its geographic footprint. The company has further strategy to increase their product portfolio and it is seen in their increased spending in R&D of the new products,” added Tapse.

According to Tapse, looking at the financials, Aeroflex has delivered remarkable growth between FY2021 and FY2023 achieving a CAGR of 36.43%/55.54%/123.97% in Revenue/EBITDA/PAT for Fiscal 2021 and Fiscal 2023. On Valuation parse at upper price band of ₹108/- and based on annualized earnings and fully diluted post-IPO paid-up capital, the issue is asking for a Market Cap of ₹1,397 Cr with P/E of 46x on consolidated basis, which seems the issue is aggressively priced-in.

Given the company’s strong growth trajectory and its niche segment demand, he is inclined to recommend investors to ‘Subscribe’ to the Aeroflex Industries Ltd IPO with a long-term perspective. Due to the new segment it has no immediate peers to compare and hence the issue is fetching demand on first mover advantage due to which there could be a good room for healthy listing gains.

On the other side, according to Tapse, Vishnu Prakash IPO is well-positioned within the Indian infrastructure sector, benefitting from government initiatives and a substantial order book of ₹3,799.53 crore as of July 15, 2023. With over 36 years of experience, the company has a proven track record in executing Water Supply Projects (WSPs), enjoying a visible growth trajectory across segments. It’s unique in-house integrated approach not only reduces dependence on external sources but also enhances the efficiency of material logistics, thereby strengthening project management.

“Their investments in advanced technology and equipment further reflect their dedication to staying competitive. Looking at all these factors, we recommend considering a long-term investment in Vishnu Prakash IPO, acknowledging both its growth potential and the inherent industry-related risks. As per valuation parse, the company is trading at a PE of 13.61 on FY23 earnings, which leaves room for investors for some listing gains, and by looking at its long-term potential growth, we recommend investors to ‘Subscribe for long time’,” added Tapse.

Also Read: Pyramid Technoplast IPO allotment: Latest GMP, here’s how to check allotment status

Updated: 24 Aug 2023, 10:07 AM IST