As the initial public offering (IPO) of Diffusion Engineers Ltd reaches its subscription deadline today, September 30, the offering has garnered strong responses across all investor segments. The company, known for its manufacturing of welding consumables, wear plates, and heavy engineering machinery for core industries, has particularly piqued the interest of non-institutional investors, followed closely by retail investors. Before the IPO opened for public subscription on September 26, the company secured Rs 47.14 crore from anchor investors.

The price band for the Diffusion Engineers IPO has been set between Rs 159 and Rs 168 per equity share. If the upper end of the price range is realized, the offering is expected to raise Rs 158 crore. Investors are required to bid for a minimum of 88 equity shares and in multiples of 88 shares thereafter. The IPO is being conducted through a book-building process, with allocations structured as follows: 50% of the net issue for qualified institutional buyers (QIBs), 15% for non-institutional bidders, and 35% for retail individual bidders.

The company’s listed peers include Ador Welding Ltd and AIA Engineering Ltd, with respective price-to-earnings (P/E) ratios of 29.01 and 35.88, which provides a benchmark for potential investors assessing Diffusion Engineers’ valuation.

Subscription Status

By the third day of the bidding process, the Diffusion Engineers IPO was oversubscribed 82.53 times as of 2:54 pm, according to BSE data. The offering received bids for 54,45,65,120 shares against the 65,98,500 shares on offer. Retail investors showed exceptional interest, with their portion being oversubscribed by 73.16 times. Non-institutional investors displayed even greater enthusiasm, with subscriptions reaching 176.73 times. The QIB section saw a solid subscription rate of 28.48 times, while the employee portion was also robustly subscribed at 74.75 times.

Earlier in the bidding, on the second day, the IPO had a subscription status of 27.19 times, with retail investors oversubscribing their portion by 33.91 times. Meanwhile, the QIB part was booked at 28%, indicating a steady rise in demand as the bidding period progressed. On the opening day, the IPO had already achieved a subscription rate of 7.16 times.

Use of Proceeds

The Diffusion Engineers IPO consists entirely of new issuance of 98.5 lakh equity shares. Proceeds from this IPO will be directed towards expanding the company’s current manufacturing facility and establishing a new facility in Maharashtra.

Grey Market Premium (GMP)

The grey market for Diffusion Engineers IPO is currently showing a premium of Rs 58, suggesting that the shares are expected to trade at a higher price than the issue price. Based on the upper end of the IPO price band and the current grey market premium, the estimated listing price of Diffusion Engineers shares could be around Rs 226 per share, which represents a substantial 34.52% increase over the IPO price of Rs 168 per share.

Story first published: Monday, September 30, 2024, 15:29 [IST]