Sedemac Mechatronics IPO: Analysts cautious on valuations as issue opens today

The initial public offering (IPO) of Sedemac Mechatronics Ltd., backed by A91 Partners, Catamaran Ventures and Xponentia Capital, will open for subscription on March 4 and close on March 6.

Ahead of the issue opening, the company raised ₹325.88 crore from 23 anchor investors on March 2. Participants in the anchor book included Goldman Sachs, Abu Dhabi Investment Authority, 3P Investment Managers, WhiteOak Capital and Pinebridge Global Funds.

The ₹1,087.45-crore IPO

is entirely an offer for sale of up to 80.43 lakh equity shares, meaning the company will not receive any proceeds.

At the upper price band of ₹1,352 per share, Sedemac Mechatronics is expected to command a post-listing market capitalisation of ₹5,970.63 crore.

The price band has been fixed at ₹1,187 to ₹1,352 per share. Investors can bid in lots of 11 shares and in multiples thereafter.

Shares worth ₹1 crore have been reserved for employees, who will receive a discount of ₹128 per share to the final offer price.

The allocation structure earmarks 50% of the net offer for qualified institutional buyers, 15% for non-institutional investors and 35% for retail investors.

On valuations, SBI Securities has recommended a 'Subscribe' rating for the long term, while cautioning that listing or short-term gains appear unlikely.

At the upper band, the brokerage values the stock at 62.6x FY26E P/E on an annualised basis. It highlighted the company's focus on technology-intensive components such as ISG ECU, EFI ECU and integrated ISG+EFI ECU systems, along with in-house design and manufacturing capabilities.

According to the brokerage, strong OEM relationships and product criticality create high entry barriers.

Arihant Capital Markets has assigned a 'Neutral' rating. It cited favourable industry tailwinds, with the ISG market projected to grow at a low-to-mid teens CAGR, steady expansion in the domestic EFI ECU segment and over 40% CAGR growth expected in EV motor controllers.

However, it flagged customer concentration and import dependence as key risks. The brokerage said that the issue is valued at 126.91x P/E based on FY25 EPS of ₹10.65.

Swastika Investmart has advised investors to 'Avoid' the IPO, citing stretched valuations at 127x trailing P/E.

The brokerage said growth expectations appear fully priced in at the upper band and warned that the sharp eight-fold rise in FY25 profit was on a low base. It added that earnings consistency over the next few quarters would be crucial.

Financially, the company reported an eight-fold jump in profit to ₹47 crore for FY25, compared with ₹5.8 crore in FY24. Revenue rose 24% to ₹658.4 crore from ₹530.6 crore. For the nine months ended December 2025, profit stood at ₹71.4 crore on revenue of ₹770.6 crore.

Sedemac Mechatronics manufactures genset controllers and electronic control units used in automotive and industrial applications. Its products are supplied to leading OEMs in India and overseas markets including the United States and Europe.

ICICI Securities, Avendus Capital and Axis Capital are the book-running lead managers to the issue.

The basis of allotment is expected to be finalised by March 9, with listing slated for March 11.

Note To Readers

Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.