United Heat Transfer’s IPO is generating interest, with the company being a manufacturer of critical heat transfer equipment for a variety of industries, including automotive, marine, and energy. The company is launching its IPO to raise ₹30.00 crore, which will help fund the repayment of debt, working capital needs, and other corporate expenses.
IPO Details
| Particulars | Details |
|---|---|
| IPO Date | 22 Oct 2024 – 24 Oct 2024 |
| Price Band | ₹56 – ₹59 per share |
| Lot Size | 2000 shares |
| Total Issue Size | ₹30.00 crore |
| Market Maker | 256,000 shares |
| Listing Exchange | NSE SME |
| Face Value | ₹10 per share |
| Promoters | Yogesh Patil, Vivek Patil, Shatanik Patil, Durva Patil |
| Market Cap | ₹112.12 crore |
Also Read: Danish Power IPO Review
About United Heat Transfer
United Heat Transfer Ltd, founded in 1995, specializes in manufacturing shell and tube heat exchangers, pressure vessels, and air-cooled exchangers, catering to industries such as automotive, marine, and energy. The company’s products serve critical applications in railway engines, ships, yachts, and power generation sets, among others.
With two manufacturing facilities located in Nashik, Maharashtra, the company has certifications that showcase its commitment to quality and compliance with global standards.
Strengths of United Heat Transfer
- Quality Compliance and Certifications:
The company holds prestigious certifications such as ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018 for quality, environmental, and safety management systems. Additionally, it is accredited with ASME ‘U’, ‘R’, and ‘NB’ stamps, vital for the design and manufacturing of pressure vessels and heat exchangers. - Modern Manufacturing Facilities:
United Heat Transfer’s infrastructure and advanced machinery enhance productivity and efficiency, enabling the production of high-quality heat exchangers. The facilities adhere to industry standards such as TEMA and API, which makes them competitive in the global market. - Growth in Profitability:
Despite fluctuations in revenue, the company has shown consistent growth in profitability. PAT has grown from ₹1.53 crore in FY22 to ₹6.24 crore in FY24, reflecting an improved bottom line.
Also Read: IPO GMP
Risks
- Revenue Dependency on Few Customers:
A significant portion of the company’s sales comes from a handful of customers, making it vulnerable to revenue concentration risks. The top five customers contributed over 55% of the company’s revenue in recent years. - Geographical Concentration:
United Heat Transfer relies heavily on a few Indian states for its revenue. Over 90% of the company’s domestic sales come from Maharashtra, Gujarat, and three other states, exposing it to potential regional economic downturns. - Debt Levels:
The company has outstanding financial debt amounting to ₹32.02 crore. Any inability to manage or repay this debt could strain the company’s financials. - Legal Proceedings:
The company and its promoters are involved in several legal cases. Unfavorable outcomes in these proceedings could negatively affect the company’s business operations and reputation.
Financial Performance Overview
| Particulars | FY22 | FY23 | FY24 |
|---|---|---|---|
| Revenue (₹ Cr) | 47.65 | 69.95 | 60.19 |
| Profit After Tax (₹ Cr) | 1.53 | 2.11 | 6.24 |
| Total Assets (₹ Cr) | 62.62 | 64.81 | 70.47 |
The company has managed to grow its bottom line significantly, particularly in FY24, but its revenue growth has been somewhat inconsistent.
Also Read: Subscription
Objects of the IPO
The net proceeds from the IPO will be utilized for:
- Repayment of debt.
- Working capital requirements.
- General corporate purposes.
IPO Lot Size and Application Details
| Investor Type | Price Band | Investment |
|---|---|---|
| Retail (Min) | ₹56 – ₹59 | ₹118,000 |
| HNI (Min) | ₹56 – ₹59 | ₹236,000 |
Retail investors can apply for a minimum of 2000 shares in a single lot, while HNIs can apply for two lots, with a minimum investment of ₹236,000.
Promoter Shareholding
- Pre-IPO Shareholding: 91.59%
- Post-IPO Shareholding: 67.09%
Key Financial Metrics
| Key Performance Indicators | Values |
|---|---|
| ROE | 8.46% |
| ROCE | 10.79% |
| Debt/Equity Ratio | 1.12 |
| PAT Margin | 11.44% |
Should You Apply?
The decision to invest in United Heat Transfer’s IPO should depend on your risk appetite and long-term investment goals. Here are some factors to consider:
- Pros:
- Strong product portfolio in the heat exchanger industry.
- Impressive profitability growth in FY24.
- Good credentials in terms of global certifications.
- Cons:
- High reliance on a few customers and geographic regions.
- Inconsistent revenue growth and legal risks.
- Competitive and fragmented market.
United Heat Transfer IPO Registrar
Link Intime India Private Ltd
Phone: +91-22-4918 6270
Email: merchantbanking@swastika.co.in
Website: https://linkintime.co.in/initial_offer/public-issues.html
Conclusion: Well-informed investors with a long-term horizon and moderate risk appetite may consider parking funds in this IPO. However, potential investors should be aware of the inherent risks related to debt, customer concentration, and legal proceedings.
FAQs about United Heat Transfer IPO
What is the price band of United Heat Transfer IPO?
The price band is set at ₹56 to ₹59 per share.
What is the minimum investment required for retail investors?
Retail investors need to invest a minimum of ₹118,000 for 2000 shares.
When will the United Heat Transfer IPO open and close?
The IPO will open on October 22, 2024, and close on October 24, 2024.
What are the risks involved in investing in United Heat Transfer IPO?
Some risks include customer concentration, geographic dependency, legal proceedings, and high debt levels.
What will the company use the IPO proceeds for?
The proceeds will be used for debt repayment, working capital needs, and general corporate purposes.
Who is the registrar for the IPO?
Link Intime India Private Ltd is the registrar for this IPO.
1 thought on “United Heat Transfer IPO Review: Should You Apply?”