Omnitech Engineering IPO opens for subscription. Check brokerages review, GMP and other details

The IPO of Omnitech Engineering opened for subscription on Wednesday, with the precision engineering player aiming to raise Rs 583 crore through a mix of a fresh issue and an offer for sale. The issue, which will close on February 27, is priced in the band of Rs 216–227 per share. At the upper end, the company is valued at a pre-IPO market cap of Rs 2,807 crore.

The IPO comprises a fresh issue of Rs 418 crore and an offer for sale of Rs 165 crore. The lot size is 66 shares, and the shares are proposed to be listed on both BSE and NSE.

Grey market premium for the issue is currently hovering around 2%, indicating a mild listing pop if sentiment holds.

Business profile and growth

Omnitech Engineering is a manufacturing and engineering solutions company specialising in high-precision engineered components, turnkey industrial automation solutions and customised mechanical systems.

The company serves global customers across sectors such as energy, motion control, automation and industrial equipment systems, with products used in safety-critical applications. It operates manufacturing facilities in Gujarat and caters to both domestic and international markets.

Financial performance has been strong in FY25. Revenue rose sharply by 92% to Rs 349.71 crore in FY25 from Rs 181.95 crore in FY24. Net profit stood at Rs 43.87 crore in FY25 compared with Rs 18.91 crore in the previous year. EBITDA margins remained healthy at 33.64% in FY25.

Return on capital employed for FY25 is reported at 9.19%, while pre-IPO EPS stands at Rs 4.17.

Valuation and peer comparison

At the upper price band of Rs 227, the stock is valued at a post-issue P/E of roughly 50x–53x based on FY25 earnings. The pre-IPO P/E is indicated at 54.47x.

While this represents a premium valuation for a mid-cap engineering firm, it compares relatively lower than certain listed peers. As per the comparison table in the IPO note, Azad Engineering trades at a P/E of 103.30x and MTAR Technologies at 196.78x.

Swastika Investmart has assigned a "Subscribe" rating to the issue. In its note, the brokerage said Omnitech is a high-growth precision engineering player with a strong client base and healthy margins, though it flagged that debt, with a debt-to-equity ratio of 1.60x, needs monitoring.

Swastika said that at the upper price band, the valuation appears reasonable relative to peers, making it suitable for growth-focused investors with a 2-3 year horizon looking to participate in the Make in India theme.

Objects of the issue and risks

The proceeds from the fresh issue will be used for debt repayment or prepayment of existing borrowings, capital expenditure for new projects at proposed facilities and expansion of an existing facility, and general corporate purposes.

Key strengths include strong expertise in high-precision engineered components for safety-critical applications, a diversified global customer base across 24 countries, integrated manufacturing facilities in Gujarat and experienced promoter-led management with nearly two decades of industry presence.

However, the company faces certain risks. Revenue concentration from top customers could impact stability if any key client is lost. Manufacturing facilities are geographically concentrated in Rajkot, Gujarat. Significant borrowings increase financial and repayment obligations, and exposure to foreign exchange fluctuations may affect profitability.

Allocation and timeline

The issue allocation comprises 50% for qualified institutional buyers, 15% for non-institutional investors and 35% for retail investors. The basis of allotment is expected on March 2, refunds and unblocking of ASBA funds on March 4, credit of shares to demat accounts on March 4 and listing on March 5.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)