IPO: INOXCVA

INOXCVA, a cryogenic equipment manufacturer, is coming out with its IPO (initial public offering) on December 14, 2023. Here's a breakdown of the company's strengths, weaknesses and growth prospects to help investors make an informed decision. In a nutshell Quality : Its three-year average ROE and ROCE are 28 per cent and 31 per cent, respectively. It also reported positive cash flow from operations in each of the last three financial years. Growth : Its revenue and net profit have grown by 28 and 26 per cent annually over the last three years. Valuation : The stock will be valued at a P/E and P/B of 35 and 11 times, respectively. Overview: Demand for clean energy and the government's recent push to increase the share of natural gas in its energy basket should drive growth. However, the strict regulatory environment of the segment and high working capital requirements are a concern. About INOXCVA INOXCVA is a leading global cryogenic equipment manufacturer, primarily specialising in cryogenic tanks. It also provides end-to-end cryogenic solutions for the storage, transportation and distribution of industrial gases. Additionally, it is involved in the procurement, liquefaction, storage, transportation, and regasification of natural gas. It has three primary revenue sources: Industrial gas (70 per cent of FY23 revenue) Liquified natural gas (24 per cent) Cryo scientific division (4 per cent) Strengths of INOXCVA It is the largest Indian supplier of cryogenic equipment by revenue. In FY22, its revenue was four times higher than the second-largest player in the segment. High customer retention . Repeat customers accounted for 49 per cent of its FY23 revenue. Weaknesses of INOXCVA Revenue concentration : Its top 10 customers accounted for 47 per cent of FY23 revenue. High working capital requirement . It has a high cash conversion cycle, around 147 days in FY23, and has to rely on debt for working capital requirements. IPO details Total IPO size (Rs cr) 1459.3 Offer for sale (Rs cr) 1459.3 Fresh issue (Rs cr) - Price band (Rs) 627-660 Subscription dates Dec 14 to Dec 18, 2023 Purpose of issue Offer for sale Post IPO M-cap (Rs cr) 5990.4 Net worth (Rs cr) 554.238 Promoter holding (%) 75.2 Price/earnings ratio (P/E) 34.7 Price/book ratio (P/B) 10.8 Financial History Key financials 2Y CAGR (%) TTM FY23 FY22 FY21 Revenue (Rs cr) 27.5 1043.7 965.9 782.7 593.8 EBIT (Rs cr) 24.