Aeroflex delivers robust listing gains. Should you wait for more upside?

Shares of Aeroflex Industries witnessed heavy selling after a bumper stock market debut on Thursday. The stock, which was last trading 16% lower on BSE, had listed at a robust premium of 83% following a solid response to its IPO.

Analysts say the impressive listing performance can be attributed to its dominant position in the market, characterized by substantial entry and exit barriers.

Aeroflex Industries has an export-oriented business model, and it generates around 80% of its revenue from exports alone.

“The company plans to expand its global and domestic businesses, and it is investing in new technologies to improve its products. We believe that these strategies have the potential to drive long-term growth and profitability for the company,” said Pravesh Gour, Senior Technical Analyst, Swastika Investmart.

Gour advised investors to sit on the gains and wait for further upside with a stop loss at Rs 170.

Aeroflex Industries is a market leader in metallic flexible flow solutions, offering a comprehensive range of products including corrugated stainless steel hoses and interlock flexible metal hoses.

Just days before the IPO, ace investors including Ashish Kacholia and Jagdish Master had picked up stakes in the company. Aeroflex is a subsidiary of Sat Industries which is also a listed company.”Post the strong debut, we see valuations to be stretched and investors should look to book profits. Hence we recommend allotted investors to book profits and those who look to buy should wait and watch before buying at debut price,” said Prashanth Tapse, Research Analyst-Sr VP Research, Mehta Equities.

The IPO of Aeroflex Industries saw a robust response, driven by healthy demand across categories. The issue was subscribed 97 times overall at close.

The proceeds from the issue will be utilised to the extent of Rs 35 crore for the prepayment of outstanding secured borrowings availed by the company, Rs 84 crore for funding its working capital requirements, and certain of the amount will be used for general corporate purposes and acquisitions for inorganic growth.

For the financial year ending March 2023, the company has clocked revenue from operations of Rs 269.4 crore and a profit of Rs 30.1 crore.

It has grown at more than 37% revenue CAGR in the last 3 years, operating at more than 4.85 times asset turnover, over 20% EBITDA margins and generating approximately 32% ROCE.

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