Aditya Infotech IPO GMP hints at 38% listing pop. Some brokerages say subscribe, others warn of risks

A sharp grey market premium for Aditya Infotech is stoking investor excitement on the debut day. The company’s Rs 1,300 crore initial public offering opened for subscription Monday, with its shares commanding a premium of Rs 260 in the unofficial market, implying a potential 38.5% gain over the upper issue price of Rs 675.

But while retail enthusiasm and early subscription numbers are robust, analyst opinion remains sharply divided.

Sharp valuation debate for Aditya Infotech

SBI Securities, taking the most conservative stance, flagged high valuations as a red flag. “At the upper issue price of Rs 675, the stock trades at FY25 P/E of 77.0x, which we believe is exorbitant, in the backdrop of mid-teen return ratios and weak operating cash flows,” the brokerage said. “Investors are recommended to AVOID the issue and track the performance of the company post-listing.”

In contrast, Geojit Financial Services recommended subscribing, citing strong financial growth, a dominant market position, and favourable regulatory tailwinds. “Considering its market leadership, strong brand recall, extensive distribution network, rapid growth in financials, healthy RoE, favourable policy environment and first mover advantage, we assign a ‘Subscribe’ rating with a long-term investment perspective,” the brokerage said.

Reliance Securities echoed that sentiment, calling the company “well-placed to benefit from rising surveillance demand, backed by strong distribution, local manufacturing and tech partnerships,” and labelled it a “compelling long-term investment.”

Anand Rathi also backed the issue, albeit cautiously. While calling the IPO “fully priced,” it issued a “Subscribe – Long Term” rating based on Aditya’s leadership in India’s electronic surveillance space and its expansive product portfolio.

Still, Bajaj Broking urged caution. While highlighting strong brand partnerships and steady growth, it noted: “Subscribe with Caution,” citing “high valuation and moderate return ratios (RoE 22%, RoCE 20%)” as key risks.

Solid start to subscription

On Day 1 of bidding, Aditya Infotech’s IPO saw an overall subscription of 1.16 times. The retail portion led the momentum, subscribed 4.02 times, while Non-Institutional Investors (NIIs) bid 1.56 times. However, institutional investors appeared more reserved, with Qualified Institutional Buyers (QIBs) subscribing to just 1% of their quota as of early afternoon.

The offer, which is open through July 31, is entirely a fresh issue comprising 1.93 crore shares. Listing is tentatively scheduled for August 5 on the BSE and NSE.

Post-issue, promoter holding will drop to 77% from 95%. Proceeds from the offering will primarily go toward working capital and debt repayment, about Rs 375 crore, aimed at reducing the company’s debt-to-equity ratio from 0.4x to 0.2x.

Business profile and financials

Founded in 1995, Aditya Infotech is a leading distributor and manufacturer of electronic surveillance products under its flagship “CP Plus” brand. The company also distributes Dahua products and partners with major global tech firms, catering to both enterprise and government clients.

It acquired full ownership of its manufacturing joint venture with Dixon Technologies in 2024, enhancing its domestic production footprint. As of FY25, it has a capacity of 17.2 million units, operating at 77% utilization.

Between FY22 and FY24, revenue grew at a 24% CAGR, from Rs 2,090 crore to Rs 3,212 crore. Net profit doubled to Rs 210 crore over the same period. EBITDA margins rose modestly from 9.6% to 10.7%, but analysts note the business remains capital-intensive and susceptible to global supply disruptions.

Return ratios remain strong, with average RoE and RoCE at 32% and 28% respectively over three years, according to Geojit.

Tailwinds from policy and market

Aditya Infotech is expected to benefit from India’s Standardisation Testing and Quality Certification (STQC) norms, implemented in April 2025, which restrict the sale of certain Chinese imports in IP-driven surveillance systems. Domestic players like Aditya, with local manufacturing and embedded R&D, are seen as well-positioned to capitalise on this shift.

The Indian video surveillance market, currently valued at Rs 106 billion, is projected to more than double by FY30, growing at a CAGR of 16.5%, according to Frost & Sullivan.

Retail demand and grey market buzz suggest a hot listing for Aditya Infotech. But beyond the IPO pop, investors face a classic dilemma: a fast-growing company in a favourable market, but at a steep price. With brokerages split down the middle, the bet may come down to one’s appetite for long-term risk versus short-term reward.

Also read | Aditya Infotech IPO gets fully subscribed on Day 1; should you apply? Check GMP, review, and more

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)