Adroit Industries (India) is set to raise ₹151 crore through its initial public offering, with a price band fixed between ₹126 and ₹134 per share. The manufacturer of driveline components plans to use the funds to expand manufacturing capacity and reduce debt. Subscription for the public offering begins this Wednesday.
Adroit Industries (India) is entering the capital markets with a public offering worth ₹151 crore. The company, which specializes in manufacturing driveline components—the parts that transfer power from an engine to the wheels—has set its price band at ₹126 to ₹134 per equity share. The IPO subscription process is scheduled to open this Wednesday, marking a new chapter for the manufacturer.
Use of IPO Funds
The company has outlined a clear plan for how it intends to use the money raised from the public. A significant portion of the net proceeds is earmarked for capital expenditure, specifically to buy new machinery for its manufacturing facility in Dewas. Additionally, the firm plans to invest in its subsidiary, Adroit Driveshafts, to upgrade machinery at its Pithampur site.
Beyond expansion, a part of the proceeds will be used to pay off certain existing borrowings. For investors, reducing debt is generally viewed as a positive step as it can improve the company’s balance sheet and reduce interest costs, which helps in better profit management. However, investors often watch to see if debt reduction is followed by improved cash flows and better return ratios in subsequent quarters.
Business Model and Market Presence
Adroit Industries has been operating for over four decades, establishing a long-standing history in the manufacturing sector. The company manages a vast portfolio of more than 5,000 product parts, known as Stock Keeping Units or SKUs. These components are supplied to a wide range of clients, including commercial vehicle manufacturers, heavy machinery makers, and defense contractors.
A key aspect of the company’s business is its export capability, with its products reaching clients across 32 countries. The company emphasizes that its operations are vertically integrated, meaning it handles multiple stages of production—such as forging, heat treatment, and precision testing—in-house. This strategy is often used by manufacturing firms to control quality and potentially improve profit margins by reducing reliance on outside suppliers.
What Investors Should Track
Moving forward, investors will likely focus on several operational factors. The company’s ability to execute its expansion plans without delays is crucial. As with most manufacturing businesses, the company is exposed to risks such as fluctuations in raw material prices and the health of the automotive and heavy machinery sectors. Additionally, since the company supplies to both domestic and international markets, global economic conditions can influence demand.
Another important aspect is the company's relationship with its main clients, known as Original Equipment Manufacturers or OEMs. Deepening these relationships is a stated goal of the management, led by Chairman and Managing Director Saurabh Sangla. Monitoring the order book growth and the actual utilization of the new machinery once installed will be key indicators for assessing the company’s future growth performance.