Diffusion Engineers IPO Updates : The IPO of Diffusion Engineers Limited-the company behind heavy welding consumables and specialized repair services-was highly oversubscribed by investors. The IPO of the company, which started taking in applications from Thursday, September 26, 2024, was oversubscribed more than 114 times, and applications were closed on Monday, September 30, 2024. Now, with Nagpur’s Diffusion Engineers gaining impressive importance in the heavy welding consumables industry, this IPO will definitely become an important landmark in its trajectory of growth.
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Diffusion Engineers IPO : Summary and Subscription Status
Diffusion Engineers’ mainboard IPO sought to mop up ₹ 158cr by issuing fresh equity shares. The IPO generated a good amount of interest among different types of gullies, as the oversubscription rate makes it evident. By the final day, it had garnered 75,54,83,608 applications for the 65,98,500 that went on offer, taking its subscription rate to an overall 114.49 times.
There were set aside percentages of the offering to various categories of investors by the firm. The 15% of the shares was allocated to Non-Institutional Investors and 20% to Qualified Institutional Buyers. It allocated 50% of the offer to anchor investors and 35% to retail investors. The QIB portion was subscribed 95.74 times by close of day three, the NIIs had oversubscribed their share by 207.60 times, retail investors their share by 85.61 times while their employee quota, which carried high demand, was subscribed 95.03 times.
It was reflective across categories, as seen in the institutional and retail alike, showing this healthy demand. The issues were already oversubscribed 7.16 times on the first day of the IPO itself, thus setting up for the incredible final tally.
Grey Market Premium of Diffusion Engineers IPO
Grey market premium, also known as the grey market quotient, an unofficial market indicator that reflects the interest of investors in an IPO before its listing on the stock exchanges. The demand was much stronger during the IPO subscription process, but the GMP for Diffusion Engineers did fluctuate. It had begun at a pretty high level, but had dropped to ₹55 on the last day of the IPO.
Grey market price down: The grey market price dropped, as market analysts believed this reflected somewhat subdued investors’ interest, perhaps due to a bigger market scenario or fear of over valuation. In fact, Diffusion Engineers’ shares traded at an almost 32.74% premium in the grey market, trading ₹223 higher than the issue price of ₹168 per share. Through the grey market, the GMP for Diffusion Engineers had worked at a low of ₹50 and at a high of ₹90, and many analysts still could expect a healthy listing.
Diffusion Engineers’ IPO Details
Diffusion Engineers was a book-built issue that will raise ₹158 crore through fresh share issues. The company fixed the price band at ₹159 to ₹168 per equity share and would allow the investor to make bids in lots of 88 shares. The lead manager of the IPO was appointed as Unistone Capital, and the offer included the reservation of up to 50,000 shares for the employees at the reduced price of ₹8 per share.
However, the allotment of shares to Diffusion Engineers by the IPO is expected to close on Tuesday, October 1, 2024. The company’s shares would then be listed at both the Bombay Stock Exchange, BSE and National Stock Exchange, NSE with an almost confirmed listing date on Friday, 4th of October 2024.
Business Operations of Diffusion Engineers
The company was founded in Nagpur. Diffusion Engineers Limited manufactures a wide variety of heavy welding consumables, wear plates, and parts for core industries such as mining, steel, and power. Besides, the company provides specialized repair and reconditioning services of heavy machinery and industrial equipment, thus further expanding its role in the capital goods sector.
The company, Diffusion Engineers, has witnessed healthy growth of the financial performance between fiscal years ending March 31, 2023 and March 31, 2024. This has been on the backdrop of growing revenues to the tune of 10% and PAT was up 39%, as says effective cost management coupled with strong operational performance.
As part of the core manufacturing operations, Diffusion Engineers also trades in wear protection powders and welding and cutting machinery. It has pioneered a process called “super conditioning,” a surface treatment which gives the machine parts improved wear resistance. This method also cuts down on cost in production due to longer equipment life in heavy industries, thus making Diffusion Engineers a valued partner of companies in heavy industries.
Industry Outlook and Strategic Growth Plans
Diffusion Engineers operates in the Indian heavy engineering capital goods industry. The given estimate for this business stands at around ₹3,100-3,200 billion as of fiscal 2024. The industry is anticipated to gain around 7.5-8.5% CAGR in the next few years. And as of fiscal 2027, it is estimated to be around ₹3,800-3,900 billion. With this growing backdrop, Diffusion Engineers intends to increase its portfolio as well as market presence.
Key strategic thrusts for the company are manufacturing nickel, cobalt, and iron-based powders-this would upgrade its welding consumables offering. When the firm entered high-value materials such as these in nickel, cobalt, and iron-based powders, it is hoping to take advantage of an increasing and expanding sector of industries requiring specialty welding products.
Another strategic move of the company has been the expansion of its geographical presence by way of its subsidiaries and joint ventures. Diffusion Engineers is aligning itself to take advantage of international market prospects where the demand for high-quality welding and industrial consumables is increasing, with rising export operations.
The company also wants to increase the portfolio in the anti-wear solution as well as in the heavy engineering equipment business. This is a diversification move that will enable Diffusion Engineers to reach various sectors and meet the demands of various industries with products tailored to their specific needs. All these developments are anticipated to contribute toward future growth and profitability.
Expert Comments on Diffusion Engineers IPO
According to many market analysts who have analyzed Diffusion Engineers’ IPO, the company’s solid track record, growth prospects, and strategic initiatives form a good reason to invest in the stock. Domestic brokerage Master Capital Service Ltd said heavy engineering has been on investors’ favourite lists and further noticed that Diffusion Engineers is perfectly poised to tap the erstwhile consolidation in this space as the industry gears up for growth. The brokerage noted that the company will increase high-value welding consumables, too, and seek to raise exports, which are drivers of the future.
According to the brokerage, “the company’s diversification into anti-wear solutions and entering new industry segments is a wise step to help capture additional market share.” Investing in Diffusion Engineers’ IPO is a good option for investors who seek opportunities in the medium to long term, considering the good financial performance of the company and its bold expansion plans.
Conclusion
Diffusion Engineers IPO has gained great interest as shown by the 114.49 times oversubscription. Even though grey market premium shows some fluctuation, the current business model of the company is still strong and depicts great growth potential on favorable market conditions. Growth scope in the heavy engineering sector, within India and outside, gives new growth possibilities for the company to depend on, so it is interesting as a choice for long-term investors.