Inox India’s 1,459-cr IPO opens today, gets thumbs up from analysts: Should you buy?

ICICI Securities Limited and Axis Capital Limited are the book-running managers

The Rs 1,459-crore Inox India IPO, which opens for subscription on December 14, has received favourable views from brokerages on the back of its strong market position in cryogenic equipment and technological prowess. Anand Rathi and Stoxbox advise investors to subscribe to the issue for the long term.

Inox India has fixed the price band at Rs 627-660 per share for the IPO. The offer concludes on December 18. The public issue is entirely an offer-for-sale of 2.21 crore shares by existing shareholders, and the company will not receive any proceeds.

Promoters Siddharth Jain, Pavan Kumar Jain, Nayantara Jain, and Ishita Jain will sell shares. Apart from them, Manju Jain, Lata Rungta, Bharti Shah, Kumud Gangwal, Suman Ajmera, and Rajni Mohatta, too, will offload shares.

Also read: Inox India IPO: 10 things to know before subscribing to Rs 1,459-crore issue

"As there is a global push to reduce carbon footprint and promote the use of clean sources of energy such as LNG and hydrogen, Inox India is expected to benefit from the long-term demand for cryogenic equipment", Parth Shah, research analyst at Stoxbox said. The broking ‘firm’ has a subscription recommendation on the issue.

Should you subscribe to Inox India IPO?

Shah adds that Inox's leadership position in cryogenic equipment in India, robust order book, strong product portfolio, marquee clients diversified across sectors, and focus on exports should help the company grow its scale of operations. Additionally, the company has delivered a healthy financial performance in the past, and is now focused on reduced borrowings. It has posted strong RoE and RoCE above 25 percent, thereby providing confidence about its sustained business performance.

Read more: DOMS Industries IPO: Should you subscribe to Rs 1,200 crore issue?

Domestic broking firm Anand Rathi is of the view that Inox is well-positioned to capture this global market growth with in-house technology as well as an LNG product range that includes the entire value chain. "On the valuation front, we believe that the company is fairly priced," analysts at the firm said in a recent note. "We recommend a 'subscribe for long term' rating to the IPO."

At the upper price band, the company is valued at a P/E of 39.2x with a market cap of Rs 5,990 crore after the issue of equity shares and return on net worth of 27.79 percent in FY23. The company's return on equity in FY23 was 28 percent, higher by almost 200 basis points from FY22.

Inox India is India's first company to manufacture a trailer-mounted hydrogen transport tank, which was designed jointly with the Indian Space Research Organisation. The company produced and shipped 238 kilolitres of liquid hydrogen storage tanks in South Korea. They also have recently produced and shipped four 311 kilolitres of liquid hydrogen storage tanks for another customer.

On the financial front, in FY23, the company registered a 17 percent on-year growth in net profit at Rs 152.7 crore. Its revenue during the period increased 23.4 percent to Rs 966 crore. Net profit in the six months ended September FY24 surged nearly 24 percent to Rs 103.3 crore and revenue jumped 16 percent over the last year to Rs 564.6 crore.

ICICI Securities Limited and Axis Capital Limited are the book-running managers of the Inox India IPO, while Kfin Technologies Limited is the registrar.

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