Incorporated in 1982, Diffusion Engineers manufactures welding consumables like special-purpose electrodes, flux-cored wires, wear plates/parts, and heavy engineering machinery for various industries. The company also offers specialised welding services to its clients in the cement, power, and steel industries.
The company has four manufacturing units in Nagpur, Maharashtra, each producing a different set of products. Manufacturing units are strategically located in the central part of India, offering easy access to industries across the country and streamlined logistics for procurement and timely delivery to clients.
With over four decades of business operations, the company has established long-standing relationships with several clients. It served 503, 500 and 444 customers in FY 2024, 2023 and 2022, respectively. Meanwhile, its top 10 clients contributed 29.4%, 30.9% and 33.2% to overall revenue in the last three fiscal years. Cement, core engineering, and steel are three major industries in terms of revenue contribution.
Diffusion Engineers also exports its products to international markets to countries like Singapore, Uganda, Kenya, Nepal, Malaysia, Philippines, United Arab Emirates, and others. However, domestic markets contribute to the majority of the revenue. In FY24, around 90.53% of the total revenue came from domestic clients and the rest from the international market.
Between FY22 and FY24, Diffusion Engineers saw a 10.8% CAGR growth in its revenue from operations, while its net profit grew at a CAGR of 21.9%. Moreover, India’s welding consumables market is estimated to grow at a CAGR of nearly 9% between FY24 and FY27.
Rising demand for improved infrastructure in India could be one of the key growth drivers for the welding consumables sector. Welding is indispensable in the construction industry, providing strong and reliable joining solutions for structural components. This could indirectly benefit the Diffusion Engineers business and growth prospects.
Now, Diffusion Engineers is launching its initial public offer (IPO). The total IPO issue size is ₹158 crore, which consists of a fresh issue of over 94 lakh shares. The money raised from the public issue will be used to fund the expansion of its existing manufacturing facility, the setting up of a new manufacturing facility at Nagpur, working capital requirements, and general corporate purposes.
Here are key details about the Diffusion Engineers IPO:
| Company Name | Diffusion Engineers Limited |
|---|---|
| Company Type | Private |
| Company Established | 1982 |
| Diffusion Engineers IPO Open Date | 26th September 2024 |
| Diffusion Engineers IPO Close Date | 30th September 2024 |
| Diffusion Engineers IPO Allotment Status | 1st October 2024 |
| Credit of Shares to Demat | 3rd October 2024 |
| Diffusion Engineers IPO Listing Date | 4th October 2024 |
| Diffusion Engineers IPO Face Value | ₹10 per share |
| Diffusion Engineers IPO Lot size | 88 shares |
| Diffusion Engineers IPO Issue Size | Approx ₹158 crore |
| Diffusion Engineers IPO Listed on | BSE, NSE |
| Diffusion Engineers IPO Price | ₹159 to ₹168 per share |
Financial snapshot
| ₹ crore | FY22 | FY23 | FY24 |
|---|---|---|---|
| Income | 204 | 254 | 278 |
| Net profit | 17 | 22.1 | 30.8 |
Strengths
-
The company has over four decades of experience in the industry and has grown from a single-product to a multi-product manufacturing company.
-
It has demonstrated consistent growth in revenues and profitability. Revenue rose by over 10% CAGR between FY22 and FY24, while net profit grew at a 21.9% CAGR.
-
The company has a diversified client base, including customers from Original equipment manufacturers (OEMs) as well as direct customers.
-
The company has long-standing relationships with several Indian and global customers across industries. In the last three fiscal years, it served 503, 500, and 444 customers.
-
In a strategic move to diversify and enhance the product portfolio of welding consumables, the company intends to manufacture nickel, cobalt, and iron-based powders to cater to the growing demand from various industries.
Risks and threats
- The company earns the majority of its revenue from the domestic market. Hence, any downturn or policy changes could adversely impact the business.
- Has experienced negative cash flows from operating and investing activities in the last three financial years.
- All the manufacturing units are located in Nagpur. Hence, any local issues, such as social unrest or natural disasters, could impact the company’s day-to-day business.
- The business’s revenue is dependent on five major industries, including cement, power, and others. Hence, any industry-specific slowdown, demand change, or cyclicality could impact the company’s growth prospects.
- The inability to collect receivables and clients’ default in payment could reduce profits and affect cash flows.
You can now apply for the Diffusion Engineers Limited IPO. Click here to apply .