As an investor, it can be very challenging to decide whether the Omnitech Engineering IPO is a good or bad investment. Not anymore. On this blog, we will provide you with all the necessary details related to the Omnitech Engineering IPO to help you decide whether to Apply or Not. Read on to learn about the IPO risks, strengths, valuation, financial details, and expert opinion to help you make a better investment decision.Â
Strengths:
- A proven track record of 19 years in the machinery industry, and maintains a strong order book of â‚ą1,764.75 crore
- The IPO is a major fresh issue, meaning the firm will utilize the funds towards setting up new projects.
- A proven track record of offering a wide range of products due to its skill and ability to develop new products.
- Over the past 3 years, the firm has maintained a good return on equity (ROE) of 35.1%.
Weaknesses:Â
- Around 56.04% of the company’s revenue comes from the top 10 customers, and the loss of any of these customers can impact the business and financial condition.
- In FY25, around 74.95% of revenue comes from outside of India.Â
- In FY25, the firm has experienced a negative cash flow of â‚ą68.985 crore. If continued in the future, it can adversely impact the business and financial condition.
- Around 80% of its revenue is generated from repeat customers only. Meaning losing any of those customers or failing to attract new ones can impact the business.Â
Omnitech Engineering IPO ReviewÂ
| Reviewer | Recommendation |
| IPO Watch | May Apply |
| Swastika Investmart | Apply |
| DRChoksey FinServ | |
| Emkay Global | |
| Hem Securities | |
| IDBI Capital | |
| Marwadi Shares | |
| Nirmal Bang | |
| SBICAP Securities | |
| Sharekhan | |
| SMC Global | |
| Sushil Finance | |
| Ventura Securities | |
| Geojit | |
| Reliance Securities | |
| Capital Market | |
| BP Wealth | |
| ICICIdirect | |
| Choice Broking |
Promoters & Track Records, if anyÂ
- Udaykumar Arunkumar Parekh, aged 46 years, is the Promoter, Chairman, and Managing Director of the Company. He holds 97,919,876 of Equity shares, representing 93.04% of Pre-Offer equity capital.
- Dharmi A Parekh, aged 48 years, is the Promoter and Non-Executive Director of the Company.Â
Peer Comparison with the Company
| Name of the Company | Face Value(â‚ą) | Basic EPS (â‚ą) | Diluted EPS(â‚ą) | RONW (%) | P/E Ratio | NAV(â‚ą) |
| Omnitech Engineering | 5 | 4.26 | 4.26 | 21.46% | 54.47 | 19.82 |
| Listed Peers | ||||||
| Azad Engineering Limited | 2 | 14.66 | 14.66 | 6.21% | 103.30 | 215.70 |
| Unimech Aerospace and Manufacturing Limited | 5 | 17.59 | 17.59 | 12.48% | 56.68 | 131.53 |
| PTC Industries Limited | 10 | 41.37 | 41.33 | 4.40% | 428.48 | 925.42 |
| MTAR Technologies Limited | 10 | 17.19 | 17.19 | 7.26% | 196.78 | 236.97 |
| Dynamatic Technologies Limited | 10 | 63.39 | 63.39 | 6.00% | 139.28 | 1,056.48 |
Industry Peer Group P/E ratioÂ
The engineering and manufacturing sector industry’s P/E ratio ranges from a low of 56.68 to a high of 428.48, with an average P/E ratio of 184.90.
Expansion
- The Proceeds of â‚ą50 crore from the fresh issue will be used towards the repayment/prepayment of existing borrowings taken by the company.
- A portion of â‚ą132.84 crore will be used towards setting up New Projects at Proposed Facility 1.
- A fund of â‚ą100.71 crore will be utilized towards setting up New Projects at the Proposed Facility 2.
- Moreover, the proceeds of ₹18.70 crore will be used towards Capital Expenditure at Existing Facility 2
- Lastly, the remaining funds will be used for inorganic growth through unidentified acquisitions and general corporate purposes.
Omnitech Engineering IPO—Should You Apply or Not?
Omnitech Engineering is stepping into the primary market with its â‚ą583 Crore IPO opening on February 25. From manufacturing precision-engineered components, turnkey industrial automation solutions, to designing customized mechanical systems for various industries. This Rajkot-based company supplies engineered components to 24 countries. The firm operates its business in a B2B model. In terms of financials, in FY25, the revenue increased to â‚ą349.71 crore from â‚ą181.95 crore in FY24, nearly doubling the amount. Moreover, the PAT also increased to â‚ą43.87 crore from â‚ą18.91 crore in FY24, indicating strong profitability growth over the years.Â
Moreover, Omnitech Engineering’s IPO P/E ratio is at 54x; if compared to the industry’s average P/E, the IPO seems to be priced slightly higher compared to the industry average. Also, we cannot ignore some red flags, like the debtor’s days increasing from 98.1 to 136 days. While its working capital days also increased from 0.50 days to 68 days. As of February 24, the Omnitech Engineering IPO GMP is â‚ą7, indicating a listing gain of around 3-4%.
Overall, Omnitech Engineering IPO features stable financials, a diversified customer base, and the good use of IPO proceeds supports a growing precision engineering company. However, we cannot ignore some risks like negative cash flow, high-debt levels, and high geographical concentration.
If the overall market sentiment and GMP stay in support, then investors can subscribe for the IPO for short-term gains. While cautious investors must analyze the risks associated with companies before subscribing.
Please note:Â
Investors are advised to make their own decisions and apply entirely at their own risk. This article is written using information from the company’s RHP (Red Herring Prospectus) data and online sources. If you have any queries, kindly contact the IPO Watch Team.
