IPO NOTE : Aeroflex Industries Limited By SBI Securities
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Company Overview:
Incorporated in 1993, Aeroflex Industries Ltd is a part of SAT Group since 2018. The company manufactures and supplies environment-friendly metallic flexible flow solution products. Their product list includes braided hoses, unbraided hoses, solar hoses, gas hoses, vacuum hoses, braiding, interlock hoses, hose assemblies, lancing hose assemblies, jacketed hose assemblies, exhaust connectors, exhaust gas recirculation (EGR) tubes, expansion bellows, compensators and related end fittings collectively known as flexible flow solutions catering to global as well as domestic markets. They supply products to a wide spectrum of industries for the controlled flow of all substances, including air, liquid and solid. As on 31st Mar’23, the company has more than 1,700 Product SKUs (Stock Keeping Units) in their product portfolio.
Key Highlights:
Strong Clientele: The company has a strong domestic presence with major supplies of its product to Oil & Gas players (IOCL, BPCL, ONGC), Large steel players (TATA Steel etc.) and Aviation Players (HAL etc). They have exported products to more than 80 countries including Europe, USA and others. Some of the major international clients include Victaulic etc. More than 50% hose exported from India are by Aeroflex Industries.
Manufacturing facility: The company’s manufacturing facility is located at Taloja, Navi Mumbai, and is spread across 3,59,528 square feet of area. The manufacturing facility is equipped with mechanical and hydraulic corrugation machines, interlocking machines, braiding machines, bobbin machines and assembly equipment.
Quality inspection and assurance: Each product is subject to stringent quality testing and assurance processes before being packed and dispatched to customers. The quality control and assurance team comprise of 25 members. Based on the type of the product, the testing and quality team performs various tests on the finished products including Leakage Test, Ultrasonic Test, Vacuum Test, Leak Tightness Test, Pressure Resistance Test, Elongation Test, Burst Test, Pliable or Static Bend Test, Fatigue Tests or U-Bend Test, Cantilever Bend Test, Electrical Conductivity Test and Non-Volatile Residue Test. All these tests confirm to the requirements and standards of ISO 10380:2012
Strong R&D team: The company have an in-house Design, Research and Development team of 7 members which assists in designing the products based on the technical specifications received from the customers, conducts research on existing and new materials, production processes improvement, emerging product types and end applications and develop new products.
Valuation:
At CMP, the company is valued at a PE multiple of 46.3x based on its FY23 earnings at the upper price band on post-issue capital. The company don’t have any listed peer in India. The company has a unique business model in the Flexible Flow solution area. With decent return ratios and margins, the risk reward ratio for long term investors looks favourable. The investors can subscribe to the IPO for a long- term investment perspective.
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