Aeroflex Industries shares rebound sharply, settle with 5% gains; here's why

Shares of recently-listed Aeroflex Industries Ltd on Wednesday staged a sharp recovery from their intraday low levels and settled with decent gains. The stock initially dropped 2.22 per cent to hit a low of Rs 145.35 against its previous close of Rs 148.65. Later in the day, the scrip rebounded and jumped 6.69 per cent to touch a high price of Rs 158.60. It eventually settled 4.74 per cent higher at Rs 155.70. Around 4.07 lakh shares changed hands on BSE today. This was lower than the two-week average volume of 6.80 lakh shares. Turnover on the counter stood at Rs 6.21 crore, commanding a market capitalisation of Rs 2,013.52 crore.

The sharp upward move came after news agency Reuters reported, citing top company official, that Aeroflex is in talks to enter the aerospace sector, aiming to ride on on the country's rapidly growing space program. Following the recent success of its lunar mission (Chandrayaan-3), India has recently launched its first solar mission (Aditya-L1).

"It is our aim that our products be a part of India's next space mission," Aeroflex Managing Director Asad Daud told Reuters. The company is in early-stage discussions with Hindustan Aeronautics Ltd, Bharat Heavy Electricals Ltd (BHEL) and Indian Space Research Organisation (ISRO), Daud said.

While HAL and BHEL are existing clients, the ongoing talks are a first for specific space-related projects, he mentioned.

Aeroflex has currently three Chinese suppliers that meet 70-75 per cent of the company's needs for coils. The Aeroflex MD said the figure will drop to 50-60 per cent by next March.

"We have spoken to a large Indian steel manufacturer who has matched quality and Chinese prices. Going forward, 70-80 per cent of our new orders would be catered by Indian vendors. Domestic suppliers deliver within 4-5 days, while Chinese shipments take more than a month to arrive," he further said.

On the earnings front, Daud said Aeroflex expects its total revenue to increase by 35 per cent in the next three to four years, with at least 5 per cent coming from aerospace.

For the financial year ending March 2023 (FY23), the company has recorded a revenue from operations of Rs 269.4 crore and a profit of Rs 30.1 crore.

A couple of weeks back, shares of Aeroflex debuted at a strong premium of 82.8 per cent at Rs 197.4 on BSE. On NSE, the stock listed at Rs 190, up 76 per cent over the issue price of Rs 108.

The counter's 14-day relative strength index (RSI) came at 73.36. A level below 30 is defined as oversold while a value above 70 is considered overbought.

The company exports 'Make-in-India' metallic flexible flow solutions to more than 85 countries, as exports account for more than 80 per cent of the total revenues.

On technical setup, the counter's 14-day relative strength index (RSI) came at 73.36. A level below 30 is defined as oversold while a value above 70 is considered overbought.

(With inputs from Reuters)

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