Diffusion Engineers IPO: Review, Valuation, Date & GMP

Diffusion Engineers IPO-Complete Overview

Diffusion Engineers IPO a Mainboard IPO is a book-built issue of Rs.158 crore (0.94 crore Shares) by Diffusion Engineers Limited. The company began producing heavy machinery, wear plates and parts, and welding consumables for essential industries in 1982 and so its establishment in the same year.

The company provides specialist heavy machinery and equipment repair and refurbishment services. The business also sells welding and cutting equipment, as well as wear protection powders. The company offers the Super Conditioning process at its production facilities, which is a surface treatment for machine components that enhances reparability, reduces production costs, and eliminates tensions, hence increasing wear resistance.

The company generated the 3rd highest compound annual growth rate (CAGR) of 21% in operating income between fiscal 2021 and 2024, the 2nd highest CAGR of 38% in PAT, and the 3rd highest CAGR of 33% in EBITDA.

Unit IV in Khapri (Uma), Nagpur, Maharashtra is in charge of processing and manufacturing the products. Diffusion Engineers Limited has four manufacturing units: Units I, II, and III are situated in the Nagpur Industrial Area, Hingna, Nagpur, Maharashtra. 

The following is a breakdown of the manufacturing operations among the several units:

Unit I: Using electrodes for specific welding applications

Unit II: Fabrication and machining of flux-cored wires, wear plates, and wear parts

Unit III: Coatings for resistance to corrosion and abrasion

Unit IV: Wear plates, heavy engineering, and flux-cored wires (since the fiscal year 2024).

This new IPO is to be launched on 26 September 2024, and the initial public offering of this upcoming IPO will end on 30 September 2024.

Detailed Video:

 

Diffusion Engineers IPO Overview

The Rs.158 crore Diffusion Engineers IPO comprises an entirely fresh Issue of 0.94 crore Shares out of which 35% is allocated to retail investors, 50% to institutional investors, and 15% to non-institutional investors. 

The Diffusion Engineers IPO date is from 26 September to September 30, 2024. The IPO listing date is on Friday, October 04, 2024, and it will be listed on the BSE and NSE. Diffusion Engineers IPO price is between Rs.159 to Rs.168 for each Share.

If You want to apply for the IPO, Click Here to Open a Demat Account.

 

Diffusion Engineers: Product Portfolio

Wear plates and wear components, trading, heavy engineering equipment, welding consumables, and anti-wear consumables make up the company’s products and service range.

A) Welding and Anti-wear Consumables

i. Special Purpose Electrodes

A special-purpose electrode is a welding electrode designed specifically for maintenance that guarantees improved performance with the least amount of heat input. 

 

 

ii) Flux Cored Wire

One kind of welding consumable utilized in different welding techniques is flux-cored wire. It is a flux-filled tubular wire that can be used with gas metal arc welding as well as shielded metal arc welding procedures. Throughout the welding process, the flux inside the wire serves several purposes.

iii) Cold Repair Compounds 

These products are utilized for floor coatings, electrical insulation coatings, anti-corrosive coatings, structural coatings, and maintenance coatings.

 

 

B) Wear Plates / Wear Parts 

i) Wear Plates

Also referred to as abrasion-resistant plates, wear plates are used to lessen wear and tear on equipment surfaces brought on by the hard-working conditions that are common in industries. Assets are shielded by these wear plates against abrasion, impact, corrosion, high-temperature wear, and other threats.

ii) Wear Parts 

In order to maximize equipment availability and minimize downtime, they need to provide optimum wear resistance, ease of assembly, and a shorter repair time. These are essential parts of big machinery used in the steel, cement, and power plant industries, among other industries.

iii) Job work: Welding Service

To extend the life, cut life cycle expenses, and meet the need for spare parts in heavy machinery used by well-known key industries like steel, cement, and electricity in their welding service, job work welding service is done.

Company Financial

The Diffusion Engineers Limited’s revenue grew by 10% and PAT increased by 39% between FYs ended 31 March 2024 and 31 March 2023.

(Amount in Crore)

 

Diffusion Engineers: Valuation Metrics

 

Diffusion Engineers: Industry Analysis

 

 

Diffusion Engineers: Peers’ Returns

 

Revenue Bifurcation

Below is the revenue breakdown for various activities.

(Amount in million)

 

Product-wise revenue Bifurcation During the Last Three FYs

(Values in millions)

 

Market-wise Revenue From Operations Bifurcation During the Last Three FYs

(Values in millions)

 

Zone-wise Revenue Bifurcation of Sales During the Last Three FYs

(Values in millions)

 

Industry-wise revenue Bifurcation During the Last Three FYs

(Values in millions)

 

The Objective of The Issue

The company desires to use the Net Proceeds from the Issue to fulfill its following goals:

• Financing the necessary capital expenditures for the planned expansion of the current manufacturing facilities at Khasra Nos. 36, 38/1, 38/2, and 38/3, Khapri (Uma), Nagpur-441 501, Maharashtra, India.

• The construction of a new manufacturing facility (Proposed Facility), situated at Plot Nos. 33-B/1/1/ & 33-B/1/1/Part, MIDC, Hingna, Sonegaon District, Nagpur-440 016, Maharashtra.

• Corporate Purposes.
  
  

Peers of Diffusion Engineers Ltd.

 

Note:-

The basic EPS of the peers is for the financial year ending 31 March 2024.

The peers' P/E Ratio is computed based on the closing market price of the Share as of 12 September 2024.

 

Evaluation

Diffusion IPO price is between Rs.159 to Rs.168 for each Share.

Evaluation of P/E Ratio

Considering the period of FY 2024, with an EPS of Rs.10.94 from the last year, the resulting P/E ratio is 15.36x.

Considering the weighted EPS of Rs.9.12 for the last three years, the P/E ratio is 18.42x.

Comparative Analysis with Listed Peers

The average P/E Ratio of the industry is 32.45x.

In simple words, the P/E ratio of Diffusion Engineers Ltd. IPO (15.36x), compared with the industry’s average P/E of 32.45x, has an undervaluation (on a P/E Ratio basis only). Hence the price of the Share seems fairly (fully) priced for the investors when considered based on the average P/E ratio of the industry. 

 

IPO's Strengths 

• Business models that work together and prioritize forward integration

• Directly and via OEM serving leaders in the industry

• Reliable financial results

• Established connections with clients from several industries

• A solid management team and seasoned promoters

 

IPO’s Weaknesses 

• The company's sales are becoming more and more reliant on the local market, so any decline there could reduce its market share.

• During some fiscal years, the company's operating, investing, and financing operations resulted in negative cash flows. Future negative cash flows would have a detrimental impact on the operating performance and financial situation.

• The company operates out of 4 manufacturing facilities, all of which are located in Nagpur, Maharashtra. Any localized social unrest, natural disaster, service outage, or other natural disaster in and around Nagpur, Maharashtra, as well as any disruption in production at, or shutdown of all of its manufacturing units, could harm its business and financial situation.

• The success of various other industries affects business. Economic cyclicality combined with a decline in demand in various other industries, either domestically or internationally, could be detrimental to the company. 

 

Diffusion Engineers IPO GMP Today

Diffusion Engineers Ltd IPO GMP today is Rs.50 as of 23 September 2024. With a price of Rs.168, the estimated IPO listing price is Rs.218 at the time of writing this information.

Diffusion Engineers IPO Timetable (Tentative)

The IPO open date is from September 26 to September 30, 2024, with IPO allotment on October 01, 2024, refund initiation on October 03, 2024, and listing on Thursday, October 04, 2024.

 

Diffusion Engineers IPO Details 

The Diffusion Engineers Ltd IPO size with a face value of Rs.10 is 9,405,000 Shares at a price band of Rs.159 to Rs.168 per Share with a Lot size of 88 Shares and will be listed at BSE and NSE.

Diffusion Engineers IPO Lot Details 

The IPO allows retail investors to invest in a minimum and maximum of 1 Lot (88 Shares) amounting to Rs.14,784 and 13 Lots (1144 Shares) amounting to Rs.1,92,192 respectively, while for HNI investors, the minimum Lot is 14 (1,232 Shares) amounting to Rs.2,06,976.

Diffusion Engineers IPO Reservation

Promoters and Management of Diffusion Engineers Ltd. 

• Mr. Prashant Garg

• Dr. Nitin Garg

• Ms. Chitra Garg

Diffusion Engineers IPO Lead Managers

• Unistone Capital Pvt Ltd.
  
  

Dividend Policy

 

Conclusion

The company has been reporting negative cash flows from investing activities over the past fiscal year(s). The company is opting for an IPO to generate the funds needed before it can meet its targets.

We hope this helps inform you on the financial statements of the company.

Because it will provide you with trustworthy information on the company's insights, financials, and historical performance. This blog will be very helpful to you if you're looking for information about the upcoming IPO.

 

Finowings IPO Analysis

Hope you enjoyed the Finowings IPO Analysis. We tried our best to give every required detail about the company that you should know before applying to the IPO. 

You must consult your financial advisor before making any financial decisions. 

To Apply for the IPO, Click Here.

To Read the Prospectus of the Company Click Here to Download the DRHP.

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