India's Aeroflex soars as much as 82% in stellar market debut

(This Aug. 31 story has been corrected to drop an erroneous reference to the company operating in the aviation sector, in paragraph 2)

By Hritam Mukherjee and Rama Venkat

BENGALURU (Reuters) - Shares of India's Aeroflex Industries surged as much as 82% in their trading debut on Thursday before settling 51% higher, valuing the company at $255 million and making it the latest stock to notch up strong gains in first-day trading.

Aeroflex makes metallic tubes, hoses and other products that are mainly exported for use in industries ranging from fire-fighting to refineries.

The initial public offering, which was subscribed 97.1 times, raised 3.51 billion rupees following strong demand from investors.

The Mumbai-based company joins Mankind Pharma and Concord Biotech in a list of companies with stellar market debuts as robust foreign inflows and domestic appetite for new listings boost the confidence of firms heading for the capital market.

Its products are more eco-friendly than rubber or polymer ones as the emissions during manufacturing are 3-5 times lower, Aeroflex Managing Director Asad Daud said.

Aeroflex has the first-mover advantage in its space, which explains the stellar demand in its IPO and trading debut, said Prashanth Tapse, senior vice president of research at Mehta Equities.

Aeroflex's shares opened at a 76% premium to its IPO price of 108 rupees and surged further before easing to end at 163.25 rupees, valuing the company at 21.11 billion rupees.

The stock likely ran into some profit booking, Tapse said.

The company's parent, SAT Industries - a textile-to-finance group - sold shares in the IPO, while well known investor Ashish Kacholia also bought shares ahead of the listing.

Daud said the company plans to repay all its debt with proceeds from the offering. Its outstanding debt was 394.4 million rupees as on July 31.

Aeroflex's profit rose 9.6% in the year ended March 31, 2023, while revenue from operations climbed nearly 12%. ($1 = 82.7635 Indian rupees)

(Reporting by Rama Venkat and Hritam Mukherjee in Bengaluru; Editing by Nivedita Bhattacharjee, Eileen Soreng and Saumyadeb Chakrabarty)