Ardee Engineering Limited is making headlines as it recently submitted its Draft Red Herring Prospectus (DRHP) to the Securities and Exchange Board of India (SEBI). The company is gearing up for an initial public offering (IPO) aimed at generating ₹580 crore in funds. Established in 2008, Ardee Engineering specializes in design, engineering, and manufacturing, focusing on three key sectors: pre-engineered buildings (PEB), material handling systems (MHS), and engineering services.
Company Overview and Clientele
Ardee Engineering has carved a niche in various industries, including e-commerce, logistics, electronics manufacturing, defense, aerospace, steel production, construction, power generation, and mining. With its headquarters in Hyderabad, the company has successfully built a diverse client base that includes major players like ArcelorMittal Nippon Steel India Limited (AM/NS), JK Cement Limited, Navayuga Engineering Company Limited, and Udaipur Cement Works Limited.
- Founded: 2008
- Total production capacity: 44,144 metric tonnes per annum (MTPA) as of March 31, 2024
- Fiscal year 2024 operational revenue: ₹620 crore
- Profit after tax (PAT): ₹29 crore
IPO Breakdown
The IPO, as detailed in the DRHP, comprises a fresh equity issue of up to ₹500 crore and an Offer for Sale (OFS) of ₹80 crore from Selling Shareholder Chandra Sekhar Moturu.
Fund Allocation
Ardee Engineering plans to utilize the net proceeds from the fresh issue effectively, with allocations as follows:
- ₹279.6 crore for the establishment of two new manufacturing plants in Seetharampur, Telangana
- ₹44.8 crore for capital expenditures on a new integrated manufacturing facility in Parawada, Andhra Pradesh
- ₹65 crore dedicated to the repayment or prepayment of existing loans
- Remaining funds will be allocated for general corporate purposes
Pre-IPO Placement Plans
Before filing the Red Herring Prospectus (RHP) with the Registrar of Companies (RoC), Ardee may execute a Pre-IPO placement of securities worth up to ₹100 crore. This move could potentially reduce the total size of the fresh issue based on the funds raised during the placement.
Management and Oversight
The IPO is being managed by IIFL Capital Services Limited and JM Financial Limited, who are leading the book for this significant offering.
Market Context
As the IPO landscape faces challenges, with March 2024 witnessing the lowest IPO count in two years, Ardee Engineering’s move could signal renewed investor interest. This follows other notable filings, like the Studds IPO, highlighting the competitive nature of the current market.
With its robust business model and a diverse clientele, Ardee Engineering Limited is poised to make a significant impact in the IPO arena, appealing to both institutional and retail investors alike.
