Aequs IPO EXPLODES: Investor Demand Reaches Fever Pitch, Oversubscribed 22X!

Aequs' Initial Public Offering (IPO) is witnessing an overwhelming response from investors, having been oversubscribed by an impressive 22 times as of 12:08 IST on its third day of bidding. The issue received bids for 99.4 crore shares against the 4.20 crore shares available.

Subscription Snapshot

• Retail Investors: This category saw the highest demand, with their quota oversubscribed by a remarkable 52 times. They placed bids for 39.8 crore shares against the 76.92 lakh shares reserved for them.
• Non-Institutional Investors (NIIs): NIIs also showed strong interest, subscribing 45 times. They bid for 51.9 crore shares against 1.15 crore shares on offer.
• Employees: The company's employees demonstrated significant interest, with their quota being oversubscribed 23 times, bidding for 44.1 lakh shares against 1.9 lakh shares reserved.
• Qualified Institutional Buyers (QIBs): While still oversubscribed, QIBs showed the least interest among the categories, with their quota subscribing 4.6 times, receiving bids for 10.3 crore shares against 2.3 crore shares reserved.

IPO Structure and Valuation

• The Aequs IPO comprises a fresh issue of shares worth up to INR 670 crore and an offer for sale (OFS) of up to 2.03 crore shares.
• The company has set its IPO price band at INR 118-124 per share.
• At the upper end of this price band, Aequs would be valued at approximately INR 8,316 crore, which is about $930 million.

Anchor Investor Funding

• Prior to the public issue opening, Aequs successfully raised INR 413.9 crore from anchor investors on December 2.
• A total of 33 investors participated in the anchor book, subscribing to 3.3 crore equity shares.
• Domestic mutual funds accounted for a significant portion, around 57%, of the allocation in the anchor book.

Company Background and Financials

• Founded in 2006 by Aravind Melligeri, Aequs is a diversified contract manufacturer known for producing customized components for major Original Equipment Manufacturers (OEMs) in the aerospace sector, including industry giants like Airbus, Boeing, Safran, and Collins Aerospace.
• Beyond aerospace, Aequs also supplies parts to clients in the toy and consumer durables sectors.
• Its manufacturing footprint extends globally, with facilities located in India, France, and the United States.
• Financially, Aequs has shown improvement. For the first half of FY26 (H1 FY26), the company managed to reduce its consolidated loss by 76.2% to INR 17 crore, down from INR 71.7 crore in the year-ago period.
• Its revenue for H1 FY26 saw a substantial increase of 17%, reaching INR 537.2 crore from INR 458.9 crore in H1 FY25.

Market Expectations

• Aequs' shares are anticipated to list on the stock exchanges on December 10, marking its debut as a publicly traded company. The strong subscription levels suggest significant investor confidence in the company's future prospects.

Impact

• The strong investor demand indicates positive sentiment towards Aequs and the contract manufacturing sector, particularly within aerospace and related industries. A successful listing could boost investor confidence and potentially impact the valuation of other similar companies. The robust subscription might lead to a strong debut on the stock exchanges, offering potential gains for investors who participated in the IPO.
• Impact Rating: 8/10

Difficult Terms Explained

• IPO (Initial Public Offering): The process by which a private company first offers its shares to the public, allowing it to raise capital from public investors.
• Oversubscribed: Occurs when the demand for shares in an IPO exceeds the number of shares being offered.
• Retail Investors: Individual investors who buy or sell securities for their own account, typically investing smaller amounts compared to institutional investors.
• Non-Institutional Investors (NIIs): Investors who are not Qualified Institutional Buyers (QIBs) and typically invest larger amounts than retail investors. This category often includes high-net-worth individuals and corporate bodies.
• Qualified Institutional Buyers (QIBs): Large institutional investors such as mutual funds, pension funds, insurance companies, and foreign institutional investors, who are considered sophisticated investors.
• Fresh Issue: When a company issues new shares to raise capital. The proceeds go directly to the company.
• Offer for Sale (OFS): When existing shareholders (promoters, early investors) sell a portion of their stake to the public. The proceeds from an OFS go to the selling shareholders, not the company.
• Anchor Investors: A select group of institutional investors who commit to buying shares before the IPO opens to the public, providing a floor for the issue.
• OEMs (Original Equipment Manufacturers): Companies that manufacture products or components sold under their own brand name, often supplying to larger brands.
• Consolidated Loss: The total loss incurred by a company and all its subsidiaries combined, after accounting for all revenues and expenses.
• Top Line: Refers to a company's gross revenue or total sales, typically found at the top of its income statement.