Airfloa Rail Technology IPO Analysis

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Airfloa Rail Technology Limited started in 1998 in Chennai as Air Flow Equipments (India) Private Limited. Over the years, it grew from making parts for railway coaches to becoming a full-fledged rail technology company. In 2024, it became a public limited company and changed its name to Airfloa Rail Technology Limited.

Now, the company is coming out with its first IPO (Initial Public Offering). Through this IPO, Airfloa plans to issue 65,07,000 new shares (no shares are being sold by existing owners – it’s a fresh issue). The money raised will be used to expand its business and strengthen its financial position.

Business Verticals

Airfloa mainly works in two big areas:

  1. Railway Rolling Stock (about 59% of revenue)
    • Think of trains and their parts.
    • The company makes railway coaches, wagons, locomotives, and all their components (like windows, doors, seating, and interiors).
    • They also design and assemble complete coaches for Indian Railways, metro trains, and even international clients (for example, they built passenger coaches for Sri Lanka).
    • They were part of the Vande Bharat Express project, supplying important interior and seating components.
  2. Aerospace and Defence (about 41% of revenue)
    • Beyond trains, the company also builds parts for airplanes, defence vehicles, and precision-engineered components.
    • This includes making engine parts, structural components, electronic systems, and even contributing to projects like battle tanks and aerospace technology.
    • They have a subsidiary called Sree Dakssnaa Aerospace and Defence India Pvt. Ltd. for this work.
    • In simple words: Just like they supply key parts for trains, they also make high-tech parts for planes and defence equipment.

So, to summarize:
Airfloa Rail Technology is a Chennai-based company that began with railway interiors and grew into a train + aerospace + defence manufacturing company. The IPO is their way of raising funds to grow further, and their two main money-making areas are:

  • Railways (trains, coaches, interiors, wagons)
  • Aerospace & Defence (airplane and defence vehicle parts)

Major Risks

  1. Too Dependent on Indian Railways
    • More than half of Airfloa’s money comes from Indian Railways ordersAirfloa.
    • If Railways reduce spending, delay projects, or change rules, Airfloa’s income could drop.
    • They are not the only supplier, so competition is also a risk in Airfloa.
  2. Government contracts and their notoriety for delayed payments/no payments
    • Railways is notorious for delayed payments to their vendors. The company is negative on cash flow.

Final Verdict

Apply. If it gets listed at 30+ PE post-listing, expect correction. If it gets listed at 20-25 PE, you can consider buying from the open market.

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