Aequs IPO: 'Subscribe' Says DRChokesy — Check Issue And Other Key Details

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DRChoksey Report

Aequs Ltd. launched it's initial public offering today, December 03 and the offer will close for subscription on Dec. 05.

The Bengaluru-based precision component manufacturer specialising in aerospace solutions has fixed the price band in the range of Rs 118 to Rs 124 per equity share.

Aequs' Rs 921.81-crore IPO, comprises of Rs 670-crore fresh Issue and Rs 251.81-crore offer-for-sale.

JM Financial Ltd. is the book-running lead manager, while the issue registrar is Kfin Technologies Ltd.

Aequs shares will be listed on both the National Stock Exchange and the BSE on Dec. 10.

Objects of the Issue

Analysis of Proceeds

Aequs plans to utilize the gross proceeds from the fresh issue for a combination of debt reduction, capital expenditure, and strategic initiatives.

Risk Factors

• High Revenue Concentration

The company’s heavy dependence on the Aerospace Segment (89.19% of revenue in FY25) and a few key customers makes it highly vulnerable to downturns in that industry or the loss of a major client.

• History of Losses and Negative Cash Flow

The consistent net losses and the negative operating cash flow in FY24 raise significant concerns about the company’s financial sustainability and its unproven path to profitability.

• High Capital Expenditure Requirements

The business is capital-intensive, requiring continuous and significant investment to maintain and upgrade machinery, which can strain financial resources and hinder free cash flow generation.

• Requirement-Based Contracts

Customer contracts do not obligate them to place fixed orders, which introduces significant uncertainty in revenue forecasting and makes production planning and inventory management challenging.

• Execution Risk on Expansion

The company’s future growth hinges on its ability to successfully utilize IPO proceeds for capacity expansion and inorganic growth, which carries inherent risks of delays, cost overruns, and failure to achieve projected returns. These risks are managed by the company’s leadership team, whose experience is a key factor in the investment decision.

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