Diffusion Engineers IPO: Important Things to Know

Diffusion Engineers Limited IPO is offering a 100% book-built public issue. This upcoming IPO is offering a fresh issue of up to 9,847,000 equity shares. The face value is reported as Re 1 for each share. This new IPO issue is being made through the book-building process with a reservation of not more than 50% of the new offer reserved for Qualified Institutional Investors, not less than 15% reserved for NII and the remaining 35% or more reserved for Retail Individuals. Application for public issue and subscription opening/closing dates and other important dates will be declared soon; however, keep in mind that the public offering is proposed to be listed on both the exchanges, i.e. NSE and BSE.

About the Company

The company manufactures welding consumables, wear plates, wear parts, and heavy engineering machinery for core industries. With over four decades of experience, the company is dedicated to providing specialized repairs and reconditioning services for heavy machinery and equipment. They provide a super conditioning process at their manufacturing facilities, a surface treatment solution for machine components that enhances wear resistance, eliminates stress and improves their repairability, ultimately extending their lifespan and reducing production costs. The company have developed a synergistic system of forward integration whereby they manufacture special-purpose electrodes and flux-cored wires, which are utilized for manufacturing wear resistance plates (commonly known as wear plates). This forward integration helps us achieve efficiency in the production process and gain a competitive advantage, reducing product costs, enhancing supply chain control and reducing our dependency on third-party suppliers for our operations.

Objectives of the Public Offering 

The company proposed to allocate the Net Proceeds from the issue towards several strategic objectives. Firstly, a portion will be dedicated to funding the capital expenditure needs for the expansion of the current manufacturing facility situated at Nagpur, Maharashtra, India, termed the "Proposed Expansion." Secondly, they plan to establish a new manufacturing facility at Hingna, Sonegaon District, Maharashtra, labelled as the "Proposed Facility." Furthermore, a portion of the net proceeds will be utilized towards meeting the company's working capital requirements. Lastly, the remaining funds will be utilized for General Corporate Purposes.

Financials of the Company (Amt in Crores)

In the period ended on March 31, 2023, the company's assets amounted to Rs 230.34 Crore, marking a significant increase of approximately 21.58% from the previous year's Rs 189.55 Crore. Revenue also saw growth, reaching Rs 258.67 Crore, reflecting a rise of about 23.90% compared to the previous year's Rs 208.75 Crore. The profit after tax for the same period witnessed a decent increase to Rs 22.15 Crore, which represents a rise of approximately 29.91% from the previous year's Rs 17.05 Crore.

Key Performance Indicators of Diffusion Engineers Limited

The company's key performance indicators for the fiscal year ended March 2023 include a Return on Capital Employed of 18.46%, a Return on Net Worth of 16.86%, a Profit after-tax margin of 8.56%, and a Return on Equity of 16.86%. Additionally, the EBITDA margin for the same period is reported at 13.65%. These metrics provide insights into the company's financial performance, indicating strong returns on investment and equity alongside operational efficiency. Analysis of these KPIs can help stakeholders evaluate the company's overall health and make informed strategic decisions to drive sustainable growth and profitability.

Lead Manager, Registrar of IPO & Promoters of the Company

The IPO is managed by Unistone Capital Private Limited, which is the book-running lead manager of this public issue. Bigshare Services Private Limited has been appointed as the registrar for the issue, while Prashant Garg, Dr Nitin Garg, and Chitra Garg serve as the company's designated promoters. They collectively manage the company's vision and growth strategy and ensure success in the public market.