Omnitech Engineering
IPO Size: Rs. 583 cr
- Fresh Issue of Rs. 418 cr (i) greenfield capex Rs. 233 cr (ii) Rs. 50 cr repayment of Rs. 377 cr net debt (iii) brownfield and solar capex Rs. 19 cr
- Offer for Sale (OFS) of Rs. 165 cr by the promoter (94% to shrink to 74%)
Price band: Rs. 216-227 per share
- Last year (on 4.1.25), company raised Rs. 33 cr via preferential allotment at Rs. 210 per share
M cap: Rs. 2,807 cr, implying 21% dilution
IPO Date: Wed 25th Feb to Fri 27th Feb 2026, Listing Thu 5th Mar 2026
Grey Market Premium (GMP): We are strongly against ‘grey market premium’ as it is an unofficial figure, against SEBI guidelines.
High Precision Engineering Component Maker
Omnitech Engineering is a Rajkot, Gujarat based manufacturer of safety-critical engineered components and assemblies, serving energy (50% of revenue), motion control & automation (30%) and industrial equipment (20%) industries. It has 3 plants in Rajkot, with 75% of Rs. 450 cr revenue from exports, mainly to US and UAE.
Rising Order Book
Order book jumped to Rs. 1,765 cr as of 30.9.25, from Rs. 284 cr as of 31.3.25, mainly due to order wins on the energy side, comprising Rs. 1,040 cr order from a single customer. Current order book represents a healthy book-to-bill of ~4x.
With 70% utilization of existing capacity, company plans a sizeable capex of Rs. 233 cr for 2 new plants, to be funded by IPO proceeds and expected commissioning by Jun 27. Net fixed assets were at Rs. 234 cr, as of 30.9.25
Declining Margins
On FY25 revenue of Rs. 343 cr, EBITDA stood at Rs. 117 cr, translating into an EBITDA margin of 34%. However, margins are on a downward trajectory.
On H1FY26 revenue of Rs. 228 cr, EBITDA was at Rs. 70 cr, with EBITDA margin slipping to 30%. Omnitech’s PAT margin has also declined from 18% in FY23 to 13% in FY25 and to 12% in H1FY26. On PAT of Rs. 28 cr, H1FY26 EPS stood at Rs. 2.64.
Leveraged Funding
Company’s growth has come at the cost of increase in net working capital days. From 139 days about 2.5years ago, it is up to 256 days, as of 30.9.25. Company has 8.5 months of revenue blocked in working capital, nearly double from 4.6 months in FY23. While exports do have longer cycles, but 8 months is quite concerning, and will eventually strain return ratios, which have been holding up firmly, at 16-18% for ROCE and 24% for RoE. Post equity expansion due to IPO, ROE is expected to contract to low-to-mid teens.
Additionally, a significant portion of working capital is funded via loans, with Rs. 383 cr gross debt, having a credit rating of only BBB+. Due to this, even post IPO repayment, net debt to EBITDA ratio will remain elevated at 2.3x. Besides, new capacity will require working capital funding, which is no provided for in the fresh issue. So, leverage is expected to remain elevated.
Unattractive Pricing
M cap of Rs. 2,800 cr and Enterprise Value (EV) of Rs. 3,130 cr leads to a PE multiple of 43x, based on H1FY26 annualised earnings This is quite aggressive.
Company is unaffected by US tariffs, as customer billing is ex-factory. But, outlook on company’s bread-winner, oil and gas sector, remains cautious. While it intends to diversify into new end-use industries such as defence, semi-conductors, aerospace, railways, securing customer approvals is a long drawn process while company’s balance sheet position is also not supportive.
25th Feb 2026 at 01:02 pm