INOX India shares debut below the expectations. Should investors buy, hold, or book profits?

21/12/2023

INOX India listing: The unexpected market downturn on Wednesday impacted the listing of INOX India, a leading cryogenic tank manufacturer, as it debuted today at a 44% premium, but fell below Dalal Street expectations.

After the listing, INOX India shares experienced a 1.6% decline, trading around Rs 918 on BSE. Despite a robust subscription demand of 61.28x, the company’s debut was affected by the sudden reversal in the secondary market environment and profit booking sentiments triggered by Covid-related news, according to an ET report.

“We believe the company’s strategic position in the niche market with global footprint and commitment to innovations can command higher valuation multiple going forward. We had recommended short term investors to book profits on listing day while long term investors can HOLD considering healthy long term growth in leading supplier and exporter of cryogenic equipment and solutions,” said Prashanth Tapse of Mehta Equities.

Investors who were not allotted shares in the public offering can consider accumulating on any subsequent declines post-listing for satisfactory long-term returns, according to Mehta.

INOX India, a prominent cryogenic equipment supplier in the country, is capitalising on increasing demand in sectors such as healthcare, space exploration, and food processing. The company possesses a well-diversified product portfolio and a robust order book. “With strong fundamentals and a growing market, the company has the potential for long-term value creation; thus, we recommend holding it with a long-term view. Also, fresh buying at a lower level can be considered,” said Shivani Nyati, Head of Wealth, Swastika Investmart.

The offering consisted entirely of an offer for sale (OFS) of 2.21 crore shares with a face value of Rs 2 each. As the issue is solely an OFS, the Vadodara-based company will not receive any proceeds, and all funds will be directed to the selling shareholders.

The company holds an order book valued at Rs 1036 crore, encompassing expected revenues from the yet-to-be-fulfilled segments of ongoing contracts as of September 2023.

During the six-month period concluding in September 2023, the company experienced a 17% year-on-year increase in total income, reaching Rs 580 crore. Simultaneously, net profit saw a notable 24% surge, reaching Rs 103 crore.

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