Aeroflex Industries Ltd has filed a draft red herring prospectus with the Securities and Exchange Board of India (Sebi) to raise around Rs 350 crore in an initial public offering.

The IPO includes a fresh issue of Rs 160 crore and a sale offer of up to Rs 190 crore from its existing shareholders and promoters. The OFS includes up to 12.3 million shares in Sat Industries Ltd and up to 5.2 million shares in Italica Global FZC. Sat Industries holds a 92.18% stake, while Italica Global FZC holds a 6.52% stake.

Proceeds from the issue worth Rs 350 crore will be used to repay debt, and Rs 84 crore will be used for working capital requirements. Pantomath Capital Advisors Pvt Ltd is the sole lead manager for this issue.

Aeroflex manufactures and supplies environmentally friendly metal flexible flow solution products serving domestic and international markets. Its products are exported to over 80 countries, including the United States and Europe.

In industrial and commercial ecosystems, flexible flow solutions facilitate the transfer of substances such as air, liquids and solids. These solutions are critical to connecting various processes’ start and endpoints. Aeroflex offers a wide range of over 1,700 stock-keeping units (SKUs) for its products.

The company recently developed bronze products and has over 55 products in the pipeline. Aeroflex’s business model poses an exit barrier for new players and existing customers due to the complexity of research and product development, diverse product applications, required technical expertise, the precision involved, and the lengthy and rigorous customer qualification process a huge obstacle.

Aeroflex is a Sat Industries subsidiary, also listed on the BSE and NSE. Both Aeroflex and Sat Industries Limited have a track record of paying dividends. Sat Industries Limited has a track record of expanding several diversified businesses backed by an acquisition-led strategy.

In FY22, the company reported revenue of Rs 240.80 crore against Rs 144.77 crore a year ago. Its net profit for the period was Rs 27.51 crore compared to Rs 6.01 crore last year, improving its net profit margin to 11.41% from 4.15%. Its net debt as of January 2023 stands at Rs 41.75 crore.