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Leading Indian supplier of Cryogenic Equipment: Inox India Ltd (Inox) is India’s largest supplier and amongst the top 10 global players offering customized cryogenic solutions across clean energy space. It manufactures cryogenic tanks/ systems for storage, transportation and distribution of Industrial Gas (64% of revenue), LNG (31%) and Cryo Scientific research application (5%). Order-book stands at ?10.4bn (1.8x FY23 OB/Rev) of which Cryo Scientific forms 22%, indicating huge opportunity in this niche segment. It is first Indian firm to manufacture trailer mounted hydrogen transport tank designed jointly with ISRO.

Diversified customer base: Inox has diversified end-industry mix with customers across energy, industrial gases, LNG/LCNG, steel, medical & healthcare, chemicals/fertilizers, pharma, aviation/aerospace and construction industry. Top 20 customer accounts for 66% of revenue while 49% of revenue is derived from repeat clients. Inox is the largest exporter, supplying to 66 countries and derives 45% of its revenue from exports.

Capitalizing on growth opportunities: Indian cryogenic equipment industry is expected to grow at 7.2% CAGR between CY23-28 driven by increase in industrial output, increase in investments in electronics and space sectors and shift towards cleaner fuel. Further, company plans to move revenue mix towards large turnkey margin accretive projects.

Financials: Inox has demonstrated consistent growth with Revenue/PAT CAGR of 28%/26% over FY21-23. It enjoys high and stable margin in the range of 21-23%. Its return ratios are healthy with RoE at 29% for FY23. Its net debt free and enjoys healthy free cash flow.

Issue Size: ?14.6bn IPO consists of entirely OFS (by promoters), which would result in promoter stake reducing to 74.9% from 99.3% pre-IPO. The market cap post listing would stand at ~?60bn.

View: We like Inox given its presence in the niche space of cryogenic equipment, leading position, diversified portfolio and robust financials. It will benefit from shift towards cleaner fuels, higher investment in electronics/space sectors & improving revenue mix towards high margin projects. The IPO is priced at 29x 1HFY24 P/E (on an annualized & diluted basis), which looks reasonable. Hence, we recommend Subscribe. Given the first of its kind listing and buoyant market, the issue could see listing gains as well.