The gray market premium for the issue is currently hovering around 2%, suggesting the quote will rise slightly if sentiment holds.
Company profile and growth
Omnitech Engineering is a manufacturing and engineering solutions company specializing in precision engineered components, turnkey industrial automation solutions and custom mechanical systems.
The company serves global customers in industries such as energy, motion control, automation and industrial equipment systems, with products used in safety-critical applications. It operates manufacturing facilities in Gujarat and caters to both domestic and international markets.
Financial performance was strong in FY25. Revenue rose sharply by 92% to Rs 349.71 crore in FY25, compared to Rs 181.95 crore in FY24. Net profit stood at Rs 43.87 crore in FY25, compared to Rs 18.91 crore in the previous year. EBITDA margins remained healthy at 33.64% in FY25.
Return on capital employed for FY25 is reported at 9.19%, while pre-IPO earnings per share is Rs 4.17.
Appreciation and peer comparison
At the top price band of Rs 227, the stock is valued at a post-issue price-to-earnings ratio of around 50x-53x, based on FY25 earnings. The pre-IPO P/E is indicated at 54.47x.While this represents a premium valuation for a mid-cap engineering firm, it ranks relatively lower than certain listed peers. According to the comparison table in the IPO note, Azad Engineering is trading at a price-to-earnings of 103.30x and MTAR Technologies is trading at 196.78x.
Swastika Investmart has assigned a ‘Subscribe’ rating to the issue. In its note, the broker said Omnitech is a fast-growing precision engineering player with a strong customer base and healthy margins, although it stressed that debt, with a debt-to-equity ratio of 1.60x, needs to be monitored.
Swastika said the valuation at the higher end of the price range appears reasonable compared to peers, making it suitable for growth-oriented investors with a two- to three-year horizon who want to participate in the Make in India theme.
Objects of the problem and risks
Proceeds from the new issue will be used for the repayment of debt or early repayment of existing loans, capital expenditures for new projects at proposed facilities and expansion of an existing facility, and for general corporate purposes.
Key strengths include strong expertise in precision-engineered components for safety-critical applications, a diversified global customer base across 24 countries, integrated manufacturing facilities in Gujarat and experienced promoter-led management with nearly two decades of industry presence.
However, the company faces certain risks. Revenue concentration of top customers can affect stability if a key customer is lost. Manufacturing facilities are geographically concentrated in Rajkot, Gujarat. Significant borrowings increase financial and repayment obligations, and exposure to currency fluctuations can affect profitability.
Allocation and timeline
The issue allocation is 50% for qualified institutional buyers, 15% for non-institutional investors and 35% for retail investors. The basis of allotment is expected on March 2, redemptions and unblocking of ASBA funds on March 4, crediting of shares in demat accounts on March 4 and listing on March 5.
(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of the Economic Times)
#Omnitech #Engineerings #IPO #opens #subscription #today #Check #brokers #rating #GMP #details