Inox India Limited IPO of Rs 1,459.32 crores, is it good or not to invest?

Incorporated in 1976, Inox India Limited manufactures and supplies cryogenic equipment.

The company’s business comprises three divisions:

1. Industrial Gas: The division designs, produces, and installs cryogenic tanks and systems for the storage, transportation, and distribution of industrial gases, including green hydrogen and oxygen.

2. LNG: This division designs, manufactures, supplies, and installs both standard and engineered equipment for LNG storage, distribution, and transportation, as well as small-scale LNG infrastructure solutions that are suitable for industrial, marine, and automotive applications.

3. Cryo Scientific: This department provides equipment and turnkey solutions for scientific and industrial research involving cryogenic distribution with a focus on technology-intensive applications.

The product portfolio includes standard cryogenic tanks and equipment, beverage kegs, bespoke technology, equipment and solutions, as well as large turnkey projects which are used in diverse industries such as industrial gases, liquified natural gas (“LNG”), green hydrogen, energy, steel, medical and healthcare, chemicals and fertilizers, aviation and aerospace, pharmaceuticals and construction. In the six months ending September 30, 2023, and Fiscal 2023, Fiscal 2022 and Fiscal 2021, the company provided its equipment and systems to 1,255 domestic and 254 international customers across our three divisions. The company’s major customers include Air Liquide Global E&C Solutions India Private Limited, Caribbean LNG Inc, 2G Energy Inc, ISRO, Hyundai Engineering and Construction Co Ltd, and many more. By September 2023, the company exported products and services to 66 countries, including the United States, Saudi Arabia, the Netherlands, Brazil, Korea, the United Arab Emirates, Australia, and Bangladesh. The manufacturing facilities are in Kalol, Kandla Special Economic Zone (Kandla SEZ), and Silvassa in the Union Territory of Dādra and Nagar Haveli. As of September 2023, the company’s order book comprises ₹10,366.09 million.

Objects of the Issue (Inox CVA IPO Objectives)

The objectives of the Offer are to

• Carry out the Offer for Sale of up to 22,110,955 Equity Shares by the Selling Shareholders; and
• Achieve the benefits of listing the Equity Shares on the Stock Exchanges. Further, the Company expects that the proposed listing of its Equity Shares will enhance the visibility and brand image as well as provide a public market for the Equity Shares in India. The Selling Shareholders will be entitled to the entire Offer proceeds after deducting the Offer expenses and relevant taxes.

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit of Rs. 609.00 cr. / Rs. 96.11 cr. (FY21), Rs. 803.71 cr. / Rs. 130.50 cr. (FY22), and Rs. 984.20 cr. / Rs. 152.71 cr. (FY23). For H1 of FY24 it earned a net profit of Rs. 103.34 cr. on a total income of Rs. 580.00 cr. Thus is has posted steady growth in its top and bottom lines for the reported periods.

For the last three fiscals, the company reported an average EPS of Rs. 14.97 and an average RoNW of 26.86%. The issue is priced at a P/BV of xx based on its NAV of Rs. 61.06 as of September 30, 2023.

If we attribute FY24 annualized earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 29.

For the reported financial periods, the company has posted PAT margins of 15.78% (FY21), 16.24% (FY22), 15.52% (FY23), 17.82% (H1-FY24), and RoCE margins of 35.15%, 33.70%, 36.53%, 23.75% respectively for the refer periods.

DIVIDEND POLICY:
The company paid a dividend of 75% (FY22), 550% (FY23), and 550% (FY24) till the filing of this offer document. It has already adopted a dividend policy in July 2022, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per offer document, the company has no listed peers to compare with.

MERCHANT BANKER’S TRACK RECORD:
The two BRLMs associated with the offer have handled 71 public issues in the past three fiscals (including the ongoing one), out of which 21 issues closed below the offer price on listing date.