IPO Alert: What to expect when Maini Precision Products goes public

In India, the aerospace industry is growing significantly with the rising activities from both the defence and civil aviation sectors. The Indian aerospace & defence (A&D) market is projected to reach approximately $70 billion by 2030, driven by the rapid demand for advanced infrastructure and government thrust.

In the defence segment, India’s expenditure was ₹4.8 trillion in 2021 with a growth of 7% year on year. The analysts expect a healthy rise of 11-13% on defence expenses between 2021-2026.

Meanwhile, the Indian automotive industry is expected to reach ₹16-18 trillion by 2026 and expects strong growth especially from two-wheelers and electric vehicles.

Maini Precision Products recently filed preliminary papers with capital market regulator SEBI to raise funds through an initial share sale. The size of the IPO is likely to be ₹900 crores.

The initial public offering consists of a fresh issue of equity shares aggregating to ₹150 crores, and an offer for sale of up to 2,54,81,705 equity shares, according to the draft red herring prospectus.

Maini Precision Products plans to use ₹112.5 crores from the net proceeds towards repayment and prepayment of certain loans availed by the company. The remaining funds will be used for general corporate purposes.

Diversified Business

Maini Precision Products is an end-to-end solutions provider engaged in process design, engineering, manufacturing, testing, and supply of a variety of precision products and assemblies. The company has a diverse portfolio of 126 product families.

The company’s products are classified into two businesses – aerospace, which comprises precision products manufactured for aerospace and defence, and automotive and industrial, which comprises precision products manufactured for clean internal combustion engines, fuel injections and transmissions hydraulics and industrial, agriculture and legacy automotive.

The Bengaluru-based company mainly exports to the US, France, Sweden, Italy, Slovakia, England, Japan, Spain, Poland and Germany.

Key Numbers

Maini Products’ revenue from operations stood at ₹427.36 crores for FY21, where 66.23% of its revenues were being attributed to exports. The company posted a loss of ₹47 crores in the financial year 2020-21, widening from ₹22.6 crores a year ago.

Meanwhile, the development of Maini’s products involves a lengthy and expensive process with uncertain timelines and uncertain outcomes.

The failure to develop new or improved products or process improvements or production techniques could subject the company to write-offs or otherwise adversely affect its business, financial condition and results of operations and have a negative impact on its competitive position.