TechEra Engineering (India) Limited, a major player in India's Aerospace, Defence, and Automation sectors, launched its IPO on September 25, 2024, receiving positive traction from investors. By the end of the first day, the IPO was subscribed 1.94 times, reflecting considerable interest in the ₹35.89 crore issue. The IPO consists of a Fresh Issue of 43.77 lakh shares and will be listed on the NSE SME exchange.

The price band for the TechEra Engineering IPO is set between ₹75 to ₹82 per share, and the minimum investment required for retail investors is ₹1,31,200 for one lot of 1,600 shares. High-Net-Worth Individuals (HNIs) must invest in at least 2 lots, amounting to ₹2,62,400. The subscription period closes on September 27, 2024, and the listing date is tentatively set for October 3, 2024.

Grey Market Premium (GMP):

The Grey Market Premium (GMP) for TechEra Engineering’s IPO is currently ranging between ₹10 to ₹13, signaling potential listing gains of 10%-15%. While the Grey Market Premium can offer insights into the unofficial demand for the company’s shares, investors should exercise caution, as GMP does not always correlate with the actual listing price on the stock exchange. The GMP is provided for informational purposes only.

Financial Overview:

TechEra Engineering has demonstrated impressive growth over the past few years. For FY24, the company reported a revenue of ₹3,907.66 lakhs, an increase from ₹2,659.13 lakhs in FY23, and ₹736.74 lakhs in FY22. The company’s EBITDA also surged to ₹901.38 lakhs in FY24, from ₹424.74 lakhs in FY23, after posting a negative ₹-357.69 lakhs in FY22.

The company turned profitable, reporting a Profit After Tax (PAT) of ₹482.25 lakhs in FY24, a significant leap from ₹130.50 lakhs in FY23 and a loss of ₹628.70 lakhs in FY22. These financial indicators suggest that TechEra Engineering is in a robust growth phase, especially within the competitive Aerospace & Defence sector.

In terms of valuation, TechEra Engineering's pre-issue EPS is ₹4.14, and post-issue EPS is ₹3.83. The pre-issue P/E ratio stands at 19.80x, while the post-issue P/E ratio is 21.40x, compared to the industry average of 84.98x. The company’s Return on Capital Employed (ROCE) is a healthy 23.47%, while the Return on Equity (ROE) is an impressive 30.33%. These strong fundamentals suggest that the IPO is fairly priced.

Anchor Investors:

Prior to the IPO launch, TechEra Engineering India raised ₹10.22 crore from Anchor Investors at a price of ₹82 per share. A total of 12,46,400 equity shares were allocated to Anchor Investors in consultation with the Book Running Lead Manager, SKI Capital Services Limited. This move reinforces confidence in the IPO’s potential and reflects institutional interest in the company’s growth trajectory.

How to Check TechEra Engineering India IPO Allotment Status:

The allotment status for the TechEra Engineering India IPO will be available on September 30, 2024. Investors can check their status on the Registrar’s website, following these steps:

Visit the IPO allotment status page.

Select TechEra Engineering India Limited IPO from the dropdown list.

Enter your Application Number, PAN, or DP Client ID.

Submit the details to see your allotment status.

With this information, investors can promptly determine whether they have been allotted shares and proceed with their investment strategies.

Objectives of the IPO:

The proceeds from the TechEra Engineering India IPO will be directed toward multiple business objectives:

₹2,000.00 lakhs will be used for capital expenditure, specifically for the purchase of new machinery to enhance manufacturing capabilities.

₹600.00 lakhs will be allocated to working capital requirements, ensuring smooth operations as the company expands.

₹500.00 lakhs will be used for repayment of certain outstanding borrowings, strengthening the company’s balance sheet.

A portion of the funds will be used for general corporate purposes.

Issue expenses will also be covered from the IPO proceeds.

IPO Review and Recommendation:

TechEra Engineering operates in a critical industry, contributing to India's aerospace, defence, and automation sectors. Given the company’s strong financial performance, experienced leadership team, and promising growth in a high-demand industry, the IPO presents a unique investment opportunity. However, the Grey Market Premium suggests only modest listing gains of 10%-15%, and the IPO valuation seems reasonable when compared to industry peers.

While the company’s financial performance is improving, the price-to-earnings ratio is slightly on the higher side relative to its pre-issue EPS and post-issue EPS. Therefore, for those seeking short-term listing gains, the IPO might not offer significant returns. However, for long-term investors with an eye on the defence and aerospace sectors, this IPO could be worth considering as part of a diversified portfolio.

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