Diffusion Engineers IPO to open on September 26, price band at Rs 159-168 per share

Diffusion Engineers IPO

Diffusion Engineers, which provides repairs and reconditioning services for heavy machinery and equipment, will open its Rs 158-crore initial public offering for subscription on September 26.

The IPO comprises entirely fresh issue of 94.05 lakh equity shares by the company, with no offer-for-sale component. Hence, the entire issue proceeds will go to the company.

The price band for the issue has been fixed at Rs 159-168 per share. Investors can bid for a mininum of 88 equity shares and in multiples of 88 shares thereafter. The minimum and maximum investment in the IPO by retail investors would be Rs 14,784 and Rs 1,92,192, respectively.

The Maharashtra-based company has reserved 50,000 equity shares for its employees and these shares will be offered at a discount of Rs 8 per share to the final issue price.

Half of the net public issue (excluding employees' reserved portion) has been reserved for qualified institutional buyers, 15 percent for non-institutional investors, and the remaining 35 percent shares for retail investors.

The maiden public issue will close on September 30, while its anchor book will be opened for a day on September 25.

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Incorporated in 1982, Garg family-owned Diffusion Engineers manufactures welding consumables, wear plates and wear parts and heavy engineering machinery for core industries. It also trades in anti-wear powders and welding and cutting machinery.

With four manufacturing units in Nagpur (Maharashtra), the company intends to expand portfolio of welding consumables by manufacturing of powders for corrosion and abrasion resistance to be used in welding applications into its product line.

More than 90 percent of its business comes from the domestic market and the remaining from the export market. The company recorded revenue at Rs 278.1 crore for the year ended March 2024, growing 9.1 percent over Rs 255 crore in the previous year.

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Profit for the fiscal 2024 increased significantly by 39.1 percent year-on-year to Rs 30.8 crore driven by strong operating performance. EBITDA (earnings before interest, tax, depreciation, and amortisation) for the year grew by 39.4 percent to Rs 38.9 crore with margin expansion of 310 bps at 14 percent compared to previous fiscal 2023.

Diffusion Engineers will spend Rs 71.38 crore out of the net fresh issue proceeds for expansion of its existing manufacturing facility, Rs 30.38 crore for setting up of a new manufacturing facility, and Rs 22 crore for working capital requirements. The remainder IPO funds will be used for general corporate purposes.

Trading in its equity shares will commence on the BSE and NSE, effective October 4. Unistone Capital is acting as the sole book running lead manager to the issue, while Bigshare Services is the registrar.