Diffusion Engineers IPO open for subscription: Check price band, lot size & more

Diffusion Engineers Limited IPO is open for subscription. The manufacturer of welding consumables aims to raise ₹158 crore via the initial public offering (IPO). The mainboard issue of Diffusion Engineers Limited comprises 94 lakh shares. The IPO will remain open for susbcription till September 30.

Diffusion Engineers business model and key competitors

Founded in 1982, Diffusion Engineers Limited specialises in manufacturing welding consumables, wear plates and heavy machinery for core industries.

The company provides specialised repair and reconditioning services for heavy equipment and trades in wear protection powders and welding machines.

The company operates four manufacturing units in Nagpur, Maharashtra. It is primarily engaged in the production of special-purpose welding electrodes, flux-cored wires, wear plates, abrasion—and corrosion-resistant coatings, and flux-cored wires.

With over four decades of business operations, the company has established long-standing relationships with several clients. It served 503, 500 and 444 customers in FY 2024, 2023 and 2022, respectively. Meanwhile, its top 10 clients contributed 29.4%, 30.9% and 33.2% to overall revenue in the last three fiscal years. Cement, core engineering, and steel are three major industries in terms of revenue contribution.

Among the listed peers, the key competitors of Diffusion Engineers include ISGEC Heavy Engineering Limited, Esab India Limited, Ador Welding Limited, Ewac Alloys Limited and AIA Engineering Limited, among others.

Diffusion Engineers IPO price band, lot size and listing date

Subscriptions for Diffusion Engineers IPO will open on September 26 and close on September 30. The IPO share allotment status is expected to be finalised on October 1.

Refunds for non-allottees and shares credited to the demat accounts of successful bidders will be initiated on October 3. The IPO listing date has been tentatively fixed as October 4. The stock will be listed on the NSE and BSE.

The minimum application size for retail investors is a single lot of 88 shares, amounting to an investment of at least ₹14,784. For small and medium-sized institutional investors (sNII), the minimum investment is 14 lots (1,232 shares), totalling ₹2,06,976, while for big institutional investors (bNII), the minimum bid size is 68 lots (5,984 shares), amounting to ₹10,05,312.

The company has set aside up to 50,000 shares for employees at a discount of ₹8 per share compared to the issue price.

Bigshare Services Private Limited is the registrar for the Diffusion Engineers IPO, while Unistone Capital Private Limited is the bookrunning lead manager for the issue.

Diffusion Engineers IPO: Key Financial

For the financial year ending March 31, 2024, Diffusion Engineers Limited reported revenue of ₹278 crore, compared to ₹254 crore on March 31, 2023. The company also reported a net profit of ₹30.8 crore in FY24, compared to ₹22.15 crore in FY23.

Between FY22 and FY24, Diffusion Engineers saw a 10.8% CAGR growth in its revenue from operations, while its net profit grew at a CAGR of 21.9%. Moreover, India’s welding consumables market is estimated to grow at a CAGR of nearly 9% between FY24 and FY27, which could benefit the company.

Diffusion Engineers Limited Key strength and weakness

Strength

• Diffusion Engineers transitioned from welding consumables to comprehensive welding services and heavy equipment manufacturing.
• The company serves the steel, power and cement sectors.
• The company has a location advantage in its manufacturing units in Nagpur, Maharashtra. It has an enhanced logistics network and nationwide reach.
• The company has long-standing relationships with several Indian and global customers across industries. In the last three fiscal years, it served 503, 500, and 444 customers.
• Diffusion Engineers exports to over 25 countries and operates subsidiaries to diversify customer base and support sustained growth.

Weakness

• The company earns the majority of its revenue from the domestic market. Hence, any downturn or policy changes could adversely impact the business.
• All manufacturing facilities in Nagpur, Maharashtra, are at risk from social unrest, natural disasters, or production disruptions.
• Business revenue is dependent on five major industries, including cement, power, and others. Hence, any industry-specific slowdown could impact the company’s growth prospects.
• Plans for new production facilities involve significant financial investment and operational risks.
• Potential delays or issues in obtaining necessary approvals and licenses for new facilities could affect operations and financial outcomes.

Diffusion Engineers IPO objective

The company plans to use the net proceeds from the issue to fund capital expenditures for expanding its existing manufacturing facility at Khasra, Nagpur, Maharashtra. It will also use a portion of the funds to support the establishment of a new manufacturing facility at Sonegaon in Nagpur.

The proceeds will also address the company’s working capital needs and cover general corporate purposes.