Diffusion Engineers IPO Garners Strong Interest on Opening Day

The initial public offering (IPO) of Diffusion Engineers Limited has commenced, marking its entry into the Indian primary market on September 26, 2024. The subscription window for the public issue is set to remain open until September 30, 2024. The company has established a price band ranging from ₹159 to ₹168 per equity share and aims to raise a total of ₹158 crore by issuing fresh shares.

In a promising start, the IPO was subscribed 1.93 times by 11:18 AM on the first day of bidding. Retail investors showed significant interest, with their portion being subscribed 3.26 times, while the non-institutional investors (NII) segment was filled 1.29 times.

According to market observers, shares of Diffusion Engineers are being traded at a premium of ₹78 in the grey market as of the current subscription date. This grey market premium (GMP) suggests positive sentiment around the company’s market debut, although GMPs must be interpreted with caution as they can fluctuate rapidly.

Diffusion Engineers is known for manufacturing welding consumables, wear plates, and heavy engineering machinery. The company boasts a synergistic business model that emphasizes forward integration, providing it with a competitive edge in catering to diverse sectors such as cement, steel, and power.

The company has allocated the IPO shares as follows: 50% for qualified institutional buyers (QIB), 15% for non-institutional investors, and 35% for retail investors. An additional reservation of up to 50,000 shares has been made for employees, offered at a discount of ₹8 per share.

Prior to the IPO launch, Diffusion Engineers raised ₹47.15 crore from four anchor investors on September 25. HDFC Mutual Fund emerged as the largest investor, acquiring 10.8 lakh equity shares valued at ₹18.14 crore. This investment was complemented by purchases from 3P India Equity Fund I, Saint Capital Fund, and Craft Emerging Market Fund PCC.

The funds raised through the IPO will be allocated towards meeting working capital requirements and catering to general corporate purposes. The financial year 2024 saw the company’s consolidated revenue increase by 10% year-on-year, reaching ₹285 crore, with net profits registering a 39% year-on-year rise to ₹30.8 crore.

Unistone Capital has been appointed as the book-running lead manager for the IPO, while Bigshare Services Private Limited will serve as the registrar. The IPO is slated for listing on both BSE and NSE, with October 4, 2024, being the tentative listing date.