Inox India IPO: Ready to Capture Opportunities in the Green Hydrogen Sector

The Indian primary market is poised to re-enter the spotlight with 15 new issues expected to hit the street in the upcoming two months.

Companies coming out with their IPOs in 2023 in 2023 so far have raised around Rs 410 billion, with India emerging as a global leader.

With a strong pipeline ahead this week itself, three mainboard IPOs and four Small and Medium Enterprises (SME) companies are looking to raise funds via the primary route.

Approximately Rs 40 billion (bn) worth of funds will be raised by three mainboard companies.

One of the three mainboard IPOs is Inox India.

Here are the key details of the IPO.

Issue period: 14 December 2023 to 18 December 2023

Type of issue: Book Built Issue

Price band: Rs 627-660 per share

Face value: Rs 2 per equity share

Lot size: 22 Shares

Application limit: Maximum thirteen lots for retail investors. Retail investors can make an application for a minimum of Rs 14,520 for one lot (22 shares).

Tentative IPO allotment date: 19 December 2023

Tentative listing date: 21 December 2023

#1 About Inox India

INOX India stands out as a significant producer of cryogenic apparatus, holding a prime position among the global leaders in cryogenic tank manufacturing based on revenues in the year 2021.

With a history spanning more than three decades, the company specialises in providing comprehensive solutions encompassing the design, engineering, manufacturing, and installation of equipment and systems tailored for cryogenic environments.

The company's offerings encompass cryogenic tanks, beverage kegs, custom technology, and more.

Additionally, they undertake substantial turnkey projects utilised across a variety of industries. These sectors include industrial gases, liquefied natural gas (LNG), green hydrogen, and more.

By September 2023, the company had exported products and delivered services to 66 countries, including the United States, Saudi Arabia, and UAE.

#2 Objective of the IPO

• The company wants to carry out the offer for the sale (OFS) of up to 22,110,955 equity shares by the selling shareholder.
• The company expects that the proposed listing of its equity shares will enhance the visibility and brand image and provide a public market for its shares in India. The selling shareholders will be entitled to the entire offer proceeds after deducting the offer expenses and relevant taxes.

#3 A Look at the Financials

The company's revenue has grown at a CAGR of 17.1% in the last three years, while net profit has grown at a CAGR of 18.6% during the same period.

This is due to a rise in earnings from exports, escalating from 34% in 2021 to 45% in 2023, coupled with a gradual reduction in raw material costs over time.

For the financial year 2023, the company reported a 22.5% YoY jump in revenue to Rs 9.8 bn driven by increase in demand for cryogenic equipment.

The net profit also rose to Rs 1.5 bn, up 15% from the net profit of Rs 1.3 bn reported a year back.

Inox India Snapshot (2021-23)

Particulars	31-Mar-21	31-Mar-22	31-Mar-23
Revenues from Operations (Rs in bn)	6.1	8	9.8
Revenue Growth (%)	-	31.1	22.5
Net Profit (Rs in bn)	0.9	1.3	1.5
Net Worth (Rs in bn)	3.7	5	5.5

Data Source: Company's Red Herring Prospectus (RHP)

Going forward, the company plans on facility expansion and strategic acquisition for growth.

#4 Arguments in Favour of the Business

• Inox India is a leading supplier and exporter of cryogenic equipment and solutions in India. This expertise and dominance will help the company provide cutting-edge solutions.
• The company has an extensive portfolio of specialised cryogenic products adhering to global quality standards. This ensures that its products are at the forefront of technological advancements and comply with the highest industry benchmarks.
• The company has a diversified customer base spanning domestic and international markets across various industries. This mitigates market fluctuation and positions the company as a versatile and adaptable player in the global market.
• Inox India has a robust emphasis on product development and engineering sets the company apart in terms of innovation. This focus underscores its dedication to staying ahead of industry trends, providing customers with state-of-the-art solutions that address evolving challenges and requirements.

#5 Risk Factors

• The company is dependent on its manufacturing facilities and remains susceptible to various risks within the manufacturing process, including equipment breakdowns, industrial accidents, adverse weather conditions, and natural disasters. Any failures in it can pose challenges to the seamless operation of the manufacturing process.
• The company depends on multiple third-party suppliers for essential components, materials, stock-in-trade, and customer support services, including product repairs and returns. This introduces a company to chain disruptions, cost increases for components or raw materials, and other input cost fluctuations.
• The geographic locations of the manufacturing facilities in Gujarat and the Union Territory of Dadra and Nagar Haveli expose the company to regulatory and location-specific risks.
• A slowdown in exports due to tariffs, trade barriers, and international sanctions could adversely impact the company's business.

Conclusion

Going forward, the company plans to capitalise on opportunities in LNG and the green hydrogen sector as part of the global clean energy transition.

It plans to capture the full value chain across its product lines.

To broaden their international presence, the company plans to expand their standard cryogenic and non-cryogenic equipment business into global markets.

Furthermore, it plans on bolstering the large turnkey project business, reflecting a commitment to comprehensive project involvement.

Operational efficiency and productivity improvement remain a consistent priority, showcasing a proactive approach to refining internal processes.

Like any investment opportunity, Inox India bears its own set of advantages and disadvantages.

Therefore, one should conduct thorough research before applying for an IPO.

For more information on IPOs, check out the list of upcoming IPO's.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...