As the IPO landscape continues to evolve, TechEra Engineering (India) Limited stands out with its upcoming initial public offering (IPO) scheduled from September 25 to September 27, 2024. With a total issue size of ₹35.90 crore, this IPO is attracting attention from investors keen on the aerospace and defense sectors.
About TechEra Engineering
Founded in 2018, TechEra Engineering specializes in manufacturing, designing, and supplying precision tools and components specifically for the aerospace and defense industries. Their diverse product lineup includes:
- Assembly tools
- Jigs and fixtures
- Maintenance and Repair (MRO) equipment
- Ground support systems
- Precision-machined parts
- Automation system solutions
The company’s focus on high-quality production is underscored by its certifications, including ISO 9001:2015 for quality management and AS9100D:2018, an international standard for aerospace and defense industry quality management systems.
Financial Performance and Growth Trajectory
TechEra Engineering has demonstrated substantial growth in revenue over the past few years:
- FY22: ₹7.18 crore
- FY23: ₹26.43 crore
- FY24: ₹38.75 crore
Moreover, the company has successfully turned around its profitability, moving from a loss of ₹6.29 crore in FY22 to a profit of ₹4.82 crore in FY24, showcasing its ability to navigate the complexities of the aerospace and defense sectors effectively.
Strengths of TechEra Engineering
- Quality Certifications: TechEra’s adherence to ISO and AS9100 standards establishes its credibility and commitment to delivering quality products.
- Advanced Manufacturing Technologies: The company has invested in modern manufacturing technologies, including 5-axis machining and AR/VR for design visualization, which enhances its capacity to undertake complex engineering projects.
- Diverse Product Portfolio: The range of tools and components positions TechEra well in both aeronautics and automation sectors, catering to various client needs.
- Notable Projects: The company has successfully participated in significant projects, showcasing its capability to handle high-precision tasks.
Risks to Consider
While TechEra Engineering boasts several strengths, there are notable risks:
- Customer Concentration: A large portion of revenue is derived from its top 10 customers, who contributed 91.75% of the revenue in FY24. A downturn in orders from these customers could significantly impact financial stability.
- Single Manufacturing Unit Dependency: TechEra relies entirely on its sole manufacturing facility in Pune. Any disruption at this location could adversely affect production and operational capabilities.
- Market Segment Vulnerability: The company’s revenue is heavily tied to two business segments—aeronautics and automation. Changes in customer preferences or increases in manufacturing costs could impact these revenue streams.
- Outstanding Debts: As of March 31, 2024, TechEra has total borrowings of ₹14.30 crore. Inability to manage these debts could lead to financial strain.
Key Financial Metrics
The company’s financial standing is reflected in its key performance indicators:
- Market Capitalization: ₹135.47 crore
- Return on Equity (ROE): 30.33%
- Return on Capital Employed (ROCE): 23.47%
- Debt/Equity Ratio: 0.9
- Profit After Tax Margin: 12.45%
These metrics suggest a healthy and growing company, albeit with a moderate level of financial leverage.
Application Details
Investors looking to participate in the TechEra Engineering IPO should note the following key details:
- IPO Date: September 25, 2024 – September 27, 2024
- Listing Date: October 3, 2024
- Face Value: ₹10 per share
- Price Band: ₹75 – ₹82 per share
- Lot Size: 1,600 Shares
- Total Issue Size: 4,377,600 shares (aggregating up to ₹35.90 crore)
Investment Options:
| Application Type | Price Band | Apply Upto |
|---|---|---|
| Regular | ₹75 – 82 | ₹2 Lakh |
| High Networth Individual | ₹75 – 82 | ₹2 – 5 Lakh |
Minimum and Maximum Investment for Retail Investors
| Application | Lots | Shares | Amount |
|---|---|---|---|
| Retail (Min) | 1 | 1600 | ₹131,200 |
| Retail (Max) | 1 | 1600 | ₹131,200 |
| HNI (Min) | 2 | 3200 | ₹262,400 |
Analyst Insights
Dilip Davda, an industry analyst, has observed that TechEra Engineering is strategically positioned within the aerospace and defense sectors, and its recent improvements in MRO capabilities add to its potential. While the IPO is considered fully priced based on FY24 earnings, well-informed investors may find it worthwhile to invest moderate funds for the medium term, particularly given the company’s growth trajectory.
Conclusion
In summary, TechEra Engineering’s IPO offers an intriguing opportunity for investors looking to engage with the aerospace and defense manufacturing sector. With its impressive financial recovery, advanced manufacturing capabilities, and commitment to quality, TechEra Engineering is a company worth considering as part of a diversified investment portfolio.
For further inquiries, investors can contact the registrar, Kfin Technologies Limited:
- Phone: 04067162222, 04079611000
- Email: teil.ipo@kfintech.com
- Website: Kfin Technologies
As the bidding dates approach, TechEra Engineering stands out as an IPO to watch, especially for those interested in a sector poised for growth.