On October 29, United Heat Transfer Limited made its debut on the NSE SME platform, listing at ₹60.95 per share. This price represents a modest premium of 3.3% over the issue price of ₹59 per share, resulting in what many analysts term a "muted debut." Despite a strong IPO subscription, the performance on the first trading day has raised questions among investors, especially those looking to invest in stocks in emerging SME markets.
United Heat transfer IPO overview
The United Heat Transfer IPO offered 50.84 lakh shares, entirely through a fresh issue, raising approximately ₹30 crore. Priced between ₹56 and ₹59, the IPO saw substantial demand from investors during the subscription period, which ran from October 22 to October 24. The IPO was oversubscribed by an impressive 83.7 times, indicating keen interest across investor categories. The retail investor segment alone witnessed a subscription of 98.93 times, while the non-institutional investor (NII) category was subscribed 124.72 times.
The funds raised are earmarked for critical uses, including repaying debt, meeting working capital requirements, and covering corporate expenses. These strategic financial moves are designed to bolster United Heat Transfer's position in the competitive industrial and automotive heat exchanger sector, where the company has operated since 1995.
Business insights and prospects
Founded in 1995, United Heat Transfer Limited specialises in manufacturing heat exchangers, pressure vessels, and process flow skids for heavy industries. The company's two manufacturing facilities in Nashik are equipped with advanced technology, helping it serve a broad range of clients in sectors like automotive, maritime, and heavy machinery. Despite a revenue dip of 9% in FY24, the company's profit after tax surged by 195%, indicating a potentially profitable trajectory for those considering investing in stocks within this sector.
However, some analysts have flagged concerns about United Heat Transfer's financial consistency and its positioning in a highly fragmented market. As per industry analysts, while FY25 projections show optimistic earnings, investors are advised to approach with caution and consider long-term prospects before deciding to invest in stocks in this volatile sector.
Key takeaways
For android only