Aeron Composite Limited, a part of the diversified 'A GROUP' involved in various industries such as ceramic refractories, FRP/GRP composites, ceramic tiles, and more, has launched its ₹56.10 crore IPO, with the subscription period running from August 28, 2024, to August 30, 2024. This IPO is structured as a Book Built Issue, entirely consisting of an Offer for Sale of 44.88 lakh shares, and will be listed on the NSE SME. The allotment is scheduled to be finalized on September 2, 2024, with the tentative listing date set for September 4, 2024.

The share price band for this IPO has been set between ₹121 to ₹125 per equity share, with a minimum lot size of 1,000 shares. Retail investors are required to make a minimum investment of ₹1,25,000, while High-Net-Worth Individuals (HNIs) must invest a minimum of ₹2,50,000 (2 lots). The lead book-running manager for the IPO is HEM Securities Limited, and the registrar for the issue is Maashitla Securities Private Limited.

Aeron Composite Limited's Financial Performance

Aeron Composite Limited was established with the objective of manufacturing high-quality products made from FRP/GRP (Fibre Reinforced Composites) for both industrial and recreational uses. The company prides itself on offering advanced composite solutions that comply with both national and international standards, catering to a wide range of customer specifications.

Financially, Aeron Composite has demonstrated steady growth. The company's revenue surged from ₹7,906.12 Lakhs in FY21 to ₹18,199.26 Lakhs in FY23, with an almost consistent performance in 11MFY24, recording ₹18,080.35 Lakhs. EBITDA also showed a significant increase from ₹652.66 Lakhs in FY21 to ₹1,648.02 Lakhs in 11MFY24. The Profit After Tax (PAT) witnessed a jump from ₹255.30 Lakhs in FY21 to ₹942.23 Lakhs in 11MFY24, reflecting the company's strong financial health and operational efficiency.

Aeron Composite IPO Pricing and Valuation

For investors, the pre-issue Earnings Per Share (EPS) is ₹7.52, while the post-issue EPS is expected to be ₹5.54. The pre-issue Price-to-Earnings (P/E) ratio stands at 16.62x, and the post-issue P/E ratio is 22.56x. The Return on Capital Employed (ROCE) for 11MFY24 is 29.67%, and the Return on Equity (ROE) is 31.33%, indicating a healthy return for investors.

Grey Market Premium (GMP) and Investment Consideration

The Grey Market Premium (GMP) for the Aeron Composite Limited IPO is expected to range between ₹10 to ₹20, suggesting potential listing gains of 10% - 16%. However, it is essential to note that GMP is highly speculative and should not be the sole factor in making investment decisions. The actual price discovery will occur upon the listing of shares on the stock exchange, and the GMP should be viewed as an informal indicator rather than a definitive measure of success.

Aeron Composite IPO Allotment Process

The allotment date for the Aeron Composite IPO is scheduled for September 2, 2024. Investors can check their allotment status by visiting the registrar's website and selecting "Aeron Composite Limited IPO" from the dropdown list of IPOs. By entering the application number, PAN, or DP Client ID, investors can quickly ascertain their allotment status.

Investment Recommendation

Considering Aeron Composite Limited's strong financial performance, steady growth, and fair valuation, the IPO presents a promising opportunity. However, given the speculative nature of the Grey Market Premium and the company's relatively short operational history, investors are advised to approach this IPO with caution. Those seeking short-term listing gains or long-term investments should carefully evaluate the company's fundamentals and market conditions before making a decision.

Overall, while Aeron Composite Limited's IPO appears attractive due to its robust financials and fair pricing, it is recommended to avoid the IPO for listing gains or long-term investment purposes. Investors should consider the company's growth prospects and financial health in conjunction with broader market trends before committing funds to this offering.

This detailed review of the Aeron Composite Limited IPO is intended to provide potential investors with a comprehensive understanding of the company's financial standing, IPO specifics, and investment implications. As always, thorough due diligence and careful consideration of personal financial goals are crucial when making investment decisions in the dynamic and often unpredictable world of IPOs.

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