Diffusion Engineers IPO subscribed about 5x on Day 1 so far; check latest GMP

The initial public offering (IPO) of Diffusion Engineers saw a strong response from the investors during the initial few hours of the bidding process on day one. The issue, which kicked-off for bidding on Thursday, September 26, was mostly subscribed by retail and HNI investors. The issue was fully subscribed with one hour of bidding.
 

Nagpur-based Diffusion Engineers is selling its shares in the price band of Rs 159-168 apiece. Investors can apply for a minimum of 88 shares and its multiples thereafter. It is looking to raise Rs 158 crore via IPO, which is entirely a fresh share sale of 94,05,000  equity shares.
 

According to the data, the investors made bids for 3,19,47,432 equity shares, or 4.84 times, compared to the 65,98,500 equity shares offered for the subscription by 2.25 pm on Thursday, September 26. The three-day bidding for the issue will conclude on Monday, September 30.
 

The allocation for retail investors was subscribed 7.94 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 3.81 times. The allocation for employees was booked 12.52 times. However, the quota set aside for qualified institutional bidders (QIBs) quota was yet to see any bids for their allocations as of the time.
 

Incorporated in 1982, Nagpur-based Diffusion Engineers is active in the manufacture of welding consumables, wear plates and parts, and heavy machinery for core industries. The company offers specialized repair and reconditioning services for heavy machinery and equipment.
 

The grey market premium (GMP) for the Diffusion Engineers has been hinting for a strong gains for the investors on debut. Last heard, the company was commanding a premium of Rs 80 in the unofficial market, suggesting a listing pop of about 48 per cent for the investors.
 

Brokerage firms, largely have a positive view on the issue and suggest to subscribe for a long term citing its sound financial performance, expansion plans, strong hold in the market, rising demand and reasonable valuations. However, dependence on Indian clients, delay in setting facilities and approval related nature of business are the major concerns.
 

Diffusion's strategic expansion into manufacturing nickel, cobalt, and iron-based powders will enhance its portfolio, reduce import dependence, and align with the 'Make in India' initiative, boosting profitability through in-house production. Its proposed new facility in Nagpur and the expansion of its existing plant will significantly increase production capacity, said SMIFS.
 

"We recommend to subscribe to the issue as a good long term investment as the company is expected to clock steady growth rates aided by capex and expanding international footprint coupled with reasonable valuations and backward integration and product diversification aiding margin improvements," it said.
 

The issue includes a reservation of up to 50,000 shares for eligible employees of the company, who shall be offered at a discount of Rs 8 apiece. The company has reserved 50 per cent of the net offer for qualified institutional bidders (QIBs), while non-institutional investors (NIIs) have 15 per cent of the allocation. Retail investors will get the remaining 35 per cent of the net offer.
 

Diffusion manufactures welding consumables, wear plates, wear parts, and heavy engineering machinery for core industries. It has consistently increased its revenue and profit over the past few years, said SMC Global. "With the anticipated increase in infrastructure and industrialization spending, the company is wellpositioned forfuture growth" it added with a 'subscribe for long term' tag.
 

Unistone Capital is the sole book running lead manager of the Diffusion Engineers IPO, while Bigshare Services is the registrar for the issue. Shares of the company shall be on both BSE and NSE with October 4, Friday, as the tentative date of listing on the bourses.