Hexaware Technologies vs Ajax Engineering IPO: Here's What You Should Know

Hexaware Technologies, Ajax Engineering GMP: Despite the secondary market witnessing subdued momentum due to domestic and global macro, the primary market is all heated up. The bidding period of nearly 6 IPOs will be starting this week. Among all the companies set to debut on D-street, two major IPOs are gaining significant attention— Hexaware Technologies and Ajax Engineering.

But before you put your money to play in the market, here's what you should know about the public offerings.

Hexaware Technologies & Ajax Engineering Issue Size

Both companies are going for mainboard listing. Hexaware Technologies is a Mumbai-based IT company providing specialised AI-enabled digital services. The company is planning to raise Rs 8,750 crore, which makes it among the biggest IT IPOs in the country.

The issue comprises solely an Offer for Sale (OFS) of 12.36 crore shares, with the price band set between Rs 674 and Rs 708 per share.

Ajax Engineering, on the other hand, specialises in manufacturing concrete equipment, including mixers, pumps and pavers. The issue size of its IPO stands at Rs 1,269.35 crores, consisting entirely of an OFS of 12.36 crore shares. The price band of the IPO is set at Rs 599 to Rs 629 per share.

Hexaware Technologies & Ajax Engineering GMP

Both companies are currently trading flat in the grey market. GMP or grey market premium refers to the initial price at which the shares of the company start trading before they hit the bourses (NSE and BSE).

At 8:34 am, the shares of Hexaware technologies were trading at a GMP of Rs 3.5, marking a flat premium of 0.49%. At the same time, the shares of Ajax Engineering were trading at a GMP of Rs 15, indicating a premium of just 2.54% over its issue price.

What do analysts say?

While both the companies have recorded a steady trajectory of profit and revenue growth, it is worth mentioning that both the public offers consist solely of and offer for sale, thus no fresh issue. This means the proceeds from the initial offering will go to the existing investors, not the company itself.

Hexaware technologies might witness tough competition as the IT space has several strong giants. Plus, economic fluctuations, which often impact the currency exchange rate, can also pose a significant risk. However, the company's strong and diversified presence gives it an edge.

"At the upper price band, the company is valuing at PE of 43.1x with a market cap of Rs 430,247 million post issue of equity shares and return on net worth of 22.8%. On the valuation front, we believe that the company is fairly priced. Thus, we recommend a SUBSCRIBE rating to the IPO," Anand Rathi brokerage firm stated in its report.

For Ajax Engineering, the outlook looks fine due to its faster pace of growth in gaining addressable market. However, the concrete industry is cyclical in nature.

In terms of valuation, based on FY24, the company is aiming for a PE ratio of 32 times. After the issue, the company's market capitalisation will be Rs 71,961 million, which suggests that the issue is reasonably priced, as per analysts.

"Therefore, given the factors like, market leading in SLCM’s products, present across all the concrete application value chain and stable top and bottom lines, we recommend the issue can be considered as SUBSCRIBE for LONG TERM," the brokerage firm added.