CFF Fluid Control IPO: Driving India's Defence Manufacturing Growth

Overview of the IPO
CFF Fluid Control Limited, a specialist in manufacturing and servicing shipboard machinery and critical fluid control systems for the Indian Navy, successfully completed its Initial Public Offering (IPO) in 2023.

This IPO was entirely a fresh issue, with 52 lakh shares offered to the public at a fixed price of ₹165 per share, aggregating ₹85.80 crore. This capital raise aims to fund working capital needs, repay loans, acquire new machinery and technology, and support general corporate purposes.

Key IPO Details

• IPO Date: May 30 to June 2, 2023

• Listing Date: June 12, 2023 (BSE SME)

• Issue Price: ₹165 per share

• Lot Size: 800 shares (₹1,32,000 minimum retail investment)

• Total Issue Size: 52,00,000 shares, aggregating ₹85.80 crore

• Registrar: Cameo Corporate Services Limited

• Lead Manager: Aryaman Financial Services Limited

• Market Maker: Aryaman Capital Markets Limited

• BSE Script Code: 543920

Allocation Details

• Retail Individual Investors (RII): 24,69,600 shares (47.49%)

• Non-Institutional Investors (NII): 24,69,600 shares (47.49%)

• Market Maker: 2,60,800 shares (5.02%)

Promoter Holding

• Pre-Issue: 99.99%

• Post-Issue: 73.30%

• Promoters: Sunil Menon and Gautam Makkar

IPO Timeline

• Open Date: May 30, 2023

• Close Date: June 2, 2023

• Allotment Finalised: June 7, 2023

• Refund Initiation: June 8, 2023

• Demat Credit: June 9, 2023

• Listing Date: June 12, 2023

Listing Performance

• Issue Price: ₹165

• Opening Price: ₹175

• Listing Day High: ₹183.75

• Listing Day Low: ₹175

About CFF Fluid Control Limited
Incorporated in 2012, CFF Fluid Control Limited has emerged as a trusted manufacturer of critical component systems and test facilities for submarines and surface ships of the Indian Navy. The company also serves industries such as Nuclear and Clean Energy.

CFF Fluid Control was established to support the Scorpene Submarine Program of India, with its Khopoli facility spread over 6,000 sq. mtrs, equipped with state-of-the-art machinery and testing facilities.

Core Products and Services Include:

• Fluid Control Systems

• Distributor and Air Panels

• Weapons and Control Systems

• Steering Gear

• Propulsion Systems

• High-Pressure Air Systems

• Hydraulic Systems

• Breathing and Diving Air Systems

• Integrated Platform Management Systems

Approvals and Certifications:

• Approved by Indian Navy, Mazagon Dock Shipbuilders Limited (MDL), and Naval Group (France).

• Certified for ISO 9001:2015 for Quality Management Systems.

Financial Performance

Key Performance Indicators:

• Market Capitalisation at IPO: ₹321.32 crore

• ROE: 0.52%

• ROCE: 0.31%

• Debt/Equity: 1.22

• RoNW: 52.56%

• EPS (Pre-IPO): ₹5.46

• P/E Ratio: 30.22

Use of IPO Proceeds:

• Working Capital Funding

• Loan Repayment

• Purchase of Machinery and Equipment

• Acquisition of Technology for Towed Wire Antenna (TWA)

• General Corporate Purposes

Subscription Status

• Overall: 2.21 times

• Retail: 1.67 times

• NII: 2.75 times

• Total Applications: 1,906

Investment Rationale
CFF Fluid Control Limited serves a highly specialised segment with high entry barriers due to defence-grade specifications. Its Make-in-India focus and approvals from top naval authorities position it as a key beneficiary of India’s defence modernisation plans.

However, investors should also consider risks such as cyclical defence budgets, execution delays, competition, and sector-specific policy changes.

IPO Review and Analyst Views
Market experts offered mixed views. Some flagged the issue as aggressively priced compared to peers and highlighted the need for investors to evaluate the financials and valuations carefully before investing.

Stock Performance Post-Listing

As of July 2024, the stock price fluctuated between ₹392.00 (52-week low) and ₹932.95 (52-week high), demonstrating significant post-IPO volatility typical for SME-listed stocks.

Investor Suitability

• Defence Sector Investors: Looking to tap into India's indigenous defence manufacturing growth.

• Long-Term Investors: Believing in the Make-in-India theme.

• High-Risk Appetite Investors: Comfortable with SME listing dynamics and sector-specific risks.

Conclusion

The CFF Fluid Control Limited IPO represents a strategic move for investors seeking exposure to India's growing defence and industrial fluid control systems sector. While the company brings solid credentials and niche expertise, careful assessment of valuation, financial strength, and market conditions is recommended before investing.

Disclaimer:

This article is intended for informational and educational purposes only and does not constitute investment advice. Readers are advised to consult their financial advisor before making any investment decisions. Investments in securities are subject to market risks. Please read all related documents carefully before applying for the IPO. The data provided is based on publicly available information and may be subject to change.

The Upcoming IPOs in this week and coming weeks are  Asston Pharmaceuticals, CFF Fluid Control, Smarten Power Systems, Glen Industries, Travel Food Services, Anthem Biosciences, Chemkart India.

The Current active IPO are Crizac, Meta Infotech, Happy Square Outsourcing Services, Cryogenic OGS.

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