Can Omnitech’s IPO deliver long-term growth for investors?

ET Intelligence Group: Omnitech Engineering, a manufacturer of high-precision manufactured components, plans to raise `418 crore through a fresh issue to fund new facilities and repay debt. It will also raise `165 crore through a sale offer. The promoter group’s stake will drop from 94.1% to 74.2% after the IPO. The company has a loyal customer base and 97% of its revenue comes from returning customers. With approximately 79% of its revenue coming from exports, 58% of which comes from the US, the company faces geographic and tariff-related risks. Moreover, it showed a longer working capital cycle and had negative cash flow from operations in FY25. Given these factors, investors can wait for clarity in the financial sector. Company

Founded in 2006, Omnitech caters to customers in various industries such as energy, motion control and automation, industrial equipment systems, metal forming and others. It has three manufacturing units, all in Gujarat, creating geographical concentration risks. For example, flooding due to heavy rainfall in FY25 disrupted operations. It has a leased warehouse in Houston, USA. The company imports approximately 37% of its materials and uses hedging techniques to reduce currency risks.

Financial data
Between FY23 and FY25, revenue grew 39.1% annually to `342.9 crore and net profit rose 16.5% to `43.9 crore. About 30% of turnover comes from the three largest customers. The company has a longer working capital cycle: net working capital days are 256 in the six months to September. This can increase the need for working capital, increasing interest expenses.

Cash flow from operations stood at `11.8 crore in the first half of FY26, but the company faced an operating cash flow deficit of `69 crore in FY25, which was lower than the positive cash flow of `39.4 crore in FY23. While return on equity (ROE) fell sharply from 53.9% in FY23 to 21.6% in FY25, it remains well above the comparable range of 6-13%. For the six months ended September 2025, the company’s revenue and net profit stood at `228.2 crore and `27.8 crore, respectively.

Valuation
Taking into account shareholders’ equity and annualized earnings for FY26, the price-to-earnings ratio (P/E) is 50, compared to over 66 for peers such as Azad Engineering, Unimech Aerospace and Manufacturing and PTC Industries.