Can Omnitech IPO deliver long-term growth for investors?

Synopsis Omnitech Engineering plans to raise ₹418 crore via a fresh issue and ₹165 crore through an offer for sale to fund new facilities and repay debt. Despite a loyal customer base and strong export revenue, the company faces geographical and tariff risks, a longer working capital cycle, and negative operating cash flow in FY25, prompting investor caution. ET Intelligence Group: Omnitech Engineering, a high precision engineered components manufacturer, plans to raise '418 crore through a fresh issue to fund new facilities and to repay debt. It will also raise '165 crore through an offer for sale. The promoter group's stake will fall to 74.2% after the IPO from 94.1%. The company has a loyal customer base with 97% of revenue coming from repeat business. With about 79% of its revenue coming from exports, including 58% from the US, the company faces geographical and tariff related risks. Additionally, It exhibited a longer working capital cycle and had negative cash flow from operations in FY25. Given these factors, investors may wait to see clarity in financials. Business Incorporated in 2006, Omnitech caters to customers across sectors such as energy, motion control and automation, industrial equipment systems, metal forming and others. It has three manufacturing units, all in Gujarat thereby creating geographic concentration risks. For instance, flooding from excessive rainfall in FY25 disrupted operations. It has a leased warehouse in Houston, USA. The company imports about 37% of its materials and uses hedging techniques to reduce currency risks. World Matters Biz is growing at high-precision components maker, but co is exposed to tariff shifts and has longer working capital cycle Financials Between FY23 and FY25, revenue grew by 39.1% annually to '342.9 crore and net profit rose 16.5% to '43.9 crore. Around 30% revenue comes from top three customers. The company has a longer working capital cycle - net working capital days at 256 in the six months to September. This may increase working capital needs thereby raising interest outgo. Cash flow from operating activities was '11.8 crore in the first half of FY26, but the company faced operating cash flow deficit of '69 crore in FY25, dropping from positive cash flow of '39.4 crore in FY23. Though return on equity (ROE) dropped sharply to 21.6% in FY25 from 53.9% in FY23, it remains well above peer range of 6-13%. For the six months ended September 2025, the company's revenue and net profit was '228.2 crore and '27.8 crore, respectively. Live Events Valuation Considering the post-IPO equity and annualised profit for FY26, the price-earnings (P/E) multiple is 50 compared with above 66 for peers including Azad Engineering, Unimech Aerospace and Manufacturing, and PTC Industries. (You can now subscribe to our ETMarkets WhatsApp channel) (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price ...moreless India seeks self-reliance in containers; but has The Great Wall to climb Jyoti Structures bankruptcy shows how revival can drag for nearly a decade How IndiGo-Air India duopoly is causing turbulence at MakeMyTrip, peers India’s post-pandemic K-shaped recovery is flattening. Here’s why Stock Radar: Aster DM Healthcare stock recovers from lows; reclaims crucial moving averages – time to buy? Buy, Sell or Hold: Motilal Oswal remains neutral on IDFC First Bank; Morgan Stanley maintains underweight on Urban Company 1 2 3