Aequs IPO GMP surges ahead of launch: Should you bid?
What's the story
Aequs, a prominent player in the precision component manufacturing industry, will launch its initial public offering (IPO) on Wednesday. The ₹922 crore share sale will close on December 5. The price band for the issue is set at ₹118-124 per share, valuing the company at over ₹8,300 crore at the upper end. Ahead of the IPO, Aequs' grey market premium has risen sharply, signalling strong demand. The GMP has climbed to 35%, indicating a potential listing price of ₹167.5.
Offer details
Aequs's IPO structure and sellers
The Aequs IPO comprises a fresh share sale of ₹670 crore and an offer for sale of up to 2.03 crore shares by promoter and investor selling shareholders. The sellers in this IPO include Amicus Capital Private Equity, Amicus Capital Partners, Melligeri Private Family Foundation, and Raman Subramaniam who are the promoters and individual selling shareholders, respectively.
Fund utilization
Aequs's IPO objectives and financial performance
The funds raised from the fresh share sale will be used by Aequs for repaying certain borrowings availed by the company and its subsidiary. The money will also go toward funding capital expenditure for purchasing machinery and equipment, inorganic growth through unidentified acquisitions, and general corporate purposes. However, despite its strong market position, Aequs has been struggling financially with a loss of ₹102 crore in FY25 as compared to a loss of ₹14.24 crore in FY24.
Business challenges
Aequs's customer base and market risks
Aequs has long-standing relationships with high-entry-barrier customers such as Airbus, Collins Aerospace, Spirit Aerosystems Inc., Safran and Boeing in the Aerospace Segment. The company also caters to Hasbro, Spinmaster, Wonderchef and Tramontina in the Consumer Segment. The company's product range spans aerospace parts such as engine, landing-gear, cargo, interior, structural and assembly components, as well as turned parts. For consumer markets, it manufactures components for electronics, plastics, and a wide range of durable goods.