Aequs IPO Explodes: Over 18X Subscribed! Retail Frenzy & Skyrocketing GMP Hint at Blockbuster Listing!

Aequs' Rs 922-crore Initial Public Offering (IPO) has concluded with overwhelming investor interest, subscribed over 18 times its offer size by the final day of bidding. Strong demand, particularly from retail investors, and a significant grey market premium (GMP) suggest a potentially strong listing.

The IPO, open from December 3 to December 5, attracted bids for nearly 77.58 crore shares against an offer size of 4.20 crore. Retail investors exhibited remarkable enthusiasm, booking their reserved portion more than 45 times. Non-Institutional Investors (NIIs) subscribed over 35 times their quota, while Qualified Institutional Buyers (QIBs) subscribed 78% of their allotted portion.

Grey Market Premium (GMP)

Ahead of its stock exchange debut, Aequs' unlisted shares were trading at a substantial grey market premium. Data from Investorgain indicated a GMP of around 33.87%, while IPO Watch reported a 34.67% premium over the IPO price band of Rs 118-124. This premium indicates strong market sentiment and anticipation for the company's performance post-listing.

IPO Structure and Financial Strategy

Aequs aimed to raise approximately Rs 922 crore through a combination of a fresh issue of Rs 670 crore and an offer-for-sale (OFS) of Rs 251.81 crore. A significant portion of the IPO proceeds, Rs 433 crore, is earmarked for debt repayment. This strategic move is expected to significantly reduce the company's interest burden and improve its near-term profitability.

Company Profile and Business Operations

Aequs is a contract manufacturing firm with operations spanning consumer durables, plastics, and advanced aerospace components. The company holds a leading position in vertically integrated aerospace component manufacturing within a Special Economic Zone (SEZ), serving global Original Equipment Manufacturers (OEMs) such as Airbus, Boeing, and Safran. Its aerospace segment reported consistent operational profitability with 19.4% EBITDA margins in FY25.

Analyst Views and Valuation

Analysts have noted Aequs' strong structural advantages in India's aerospace precision manufacturing sector. Abhinav Tiwari from Bonanza highlighted its leading position and service to global OEMs. He pointed out that debt reduction through IPO proceeds will enable near-term PAT profitability. Angel One assigned a 'Subscribe with caution' rating for long-term investors, citing Aequs' integrated aerospace ecosystem and growth potential. However, they also flagged concerns regarding elevated leverage, continued losses, and the allocation of IPO proceeds primarily towards debt repayment rather than expansion, suggesting a long-term investment perspective.

At the upper price band of Rs 124, Aequs was valued at 9.94 times Price-to-Book (P/B), with Price-to-Earnings (P/E) being irrelevant due to current losses. The valuation reflects its integrated aerospace ecosystem, asset base, and long-cycle growth potential.

Listing Details

Allotments for the IPO are likely to be finalized by December 8, with the shares scheduled to list on the BSE and NSE on December 10.

Impact

• The strong subscription figures and high GMP suggest robust investor confidence in Aequs and its business model.
• A successful listing could further invigorate the Indian aerospace and precision manufacturing sectors.
• The company's focus on debt reduction is viewed positively, enhancing its financial stability and long-term growth prospects.
• Impact Rating: 8/10

Difficult Terms Explained

• IPO (Initial Public Offering): The first time a private company offers its shares for sale to the public to raise capital.
• GMP (Grey Market Premium): The unofficial trading price of an IPO's unlisted shares before they are listed on stock exchanges, indicating market sentiment.
• Subscription: The process by which investors apply for shares offered in an IPO. An oversubscribed IPO means more shares were applied for than were available.
• OFS (Offer for Sale): A type of IPO where existing shareholders sell their shares to the public, rather than the company issuing new shares.
• Retail Investors: Individual investors who apply for shares valued up to Rs 2 lakh in an IPO.
• NII (Non-Institutional Investors): Investors applying for shares worth more than Rs 2 lakh in an IPO, excluding QIBs and retail investors.
• QIB (Qualified Institutional Buyers): Large institutional investors such as mutual funds, insurance companies, and foreign institutional investors.
• OEMs (Original Equipment Manufacturers): Companies that manufacture components or systems used in another company's final product.
• SEZ (Special Economic Zone): A designated geographical region within a country offering economic incentives and relaxed regulations to attract business and investment.
• EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization; a measure of a company's operating performance.
• PAT (Profit After Tax): The net profit a company earns after all expenses, taxes, and interest have been deducted.
• P/B (Price-to-Book): A valuation ratio comparing a company's market capitalization to its book value.
• P/E (Price-to-Earnings): A valuation ratio comparing a company's share price to its earnings per share.