Diffusion Engineers Limited, a prominent player in the welding and wear-resistant consumables market, is all set to launch its IPO on September 26, 2024. The company, which has been serving core industries for over four decades, is offering a fresh issue worth ₹158 crores through this IPO. Here’s an in-depth look at the IPO details and the company’s profile.

IPO Details and Timeline

• IPO Opening Date: September 26, 2024
• IPO Closing Date: September 30, 2024
• Allotment Date: October 1, 2024
• Listing Date: October 4, 2024 (on BSE and NSE)

Key Financial Information

The IPO is entirely a fresh issue of 94,05,000 shares, aimed at raising a total of ₹158 crores. The price band has been set between ₹159 and ₹168 per share, with a minimum lot size of 88 shares for retail investors. Below are the investment details for different categories:

• Retail Investors: Minimum investment is ₹14,784 for one lot (88 shares) and the maximum investment is ₹192,192 for 13 lots (1,144 shares).
• sNII (Small Non-Institutional Investors): Minimum 14 lots (1,232 shares), amounting to ₹206,976.
• bNII (Big Non-Institutional Investors): Minimum 68 lots (5,984 shares), amounting to ₹1,005,312.

The issue also includes a reservation of up to 50,000 shares for employees, offered at a discount of ₹8 per share.

Promoters and Shareholding Pattern

The promoters of Diffusion Engineers Limited are Mr. Prashant Garg, Dr. Nitin Garg, and Ms. Chitra Garg. The pre-issue shareholding stands at 93.10%, which will reduce to 69.70% post-issue.

Breakdown of Share Allocation

• Qualified Institutional Buyers (QIB): 18,71,000 shares (19.89%)
• Non-Institutional Investors (NII): 14,03,250 shares (14.92%)
  • sNII (< ₹10 lakh): 4,67,750 shares (4.97%)
  • bNII (> ₹10 lakh): 9,35,500 shares (9.95%)
• Retail Individual Investors (RII): 32,74,250 shares (34.81%)
• Anchor Investors: 28,06,500 shares (29.84%)
• Employees: 50,000 shares (0.53%)

The company successfully raised ₹47.15 crore from anchor investors on September 25, 2024, further strengthening its market position.

Company Overview

Founded in 1982, Diffusion Engineers Limited has carved a niche for itself in the manufacturing of welding consumables, wear plates and parts, and heavy machinery. The company’s specialized services extend to repair and reconditioning for heavy machinery used across various industries. It also trades in wear protection powders and welding and cutting machines.

The company’s manufacturing operations are spread across four units, all located in Nagpur, Maharashtra:

1. Unit I: Welding electrodes for special purposes.
2. Unit II: Flux cored wires, wear plates, and wear parts through fabrication and machining.
3. Unit III: Coatings for abrasion and corrosion resistance.
4. Unit IV: Flux-cored wires and heavy engineering components.

With a dedicated team of over 130 qualified engineers as of February 29, 2024, the company has been continually enhancing its capabilities to meet diverse industry needs.

Financial Performance

Diffusion Engineers Limited has shown steady growth over the years. Key financial indicators are as follows:

The company’s revenue grew by 10%, while the profit after tax (PAT) surged by 39% between FY 2023 and FY 2024. As of March 31, 2024, Diffusion Engineers boasts a market capitalization of ₹628.76 crore, a Return on Equity (ROE) of 18.52%, and a PAT margin of 10.79%.

Key Performance Indicators

• ROE: 18.52%
• ROCE: 20.63%
• Debt/Equity Ratio: 0.18
• P/BV: 2.47
• EPS Pre-IPO: ₹10.99
• EPS Post-IPO: ₹8.23
• P/E Ratio: 15.28 (Pre-IPO) | 20.41 (Post-IPO)

Objects of the Issue

The proceeds from the IPO will be utilized for the following purposes:

1. Funding capital expenditure for expanding the existing manufacturing facility at Khapri, Nagpur.
2. Setting up a new manufacturing unit at Hingna, Nagpur.
3. Funding working capital requirements.
4. General corporate purposes.

Conclusion

Diffusion Engineers Limited’s IPO offers a compelling opportunity for investors looking to capitalize on the growth of the specialized manufacturing and heavy engineering sector. With a robust financial performance, clear expansion plans, and a strong promoter team, the IPO is poised to attract attention from retail and institutional investors alike.