This recently listed stock has zoomed 98% against issue price in 2 weeks

Shares of Diffusion Engineers surged 12% to Rs 333.20 on the BSE in Friday's intra-day trade, and have zoomed 98% against its issue price of Rs 168 per share.

Shares of Diffusion Engineers surged 12 per cent to Rs 333.20 on the BSE in Friday’s intra-day trade amid heavy volumes. The stock was trading at its highest level since listing on October 4, 2024. Currently, it quotes 98 per cent over its issue price of Rs 168 per share. In comparison, the BSE Sensex was up 0.12 per cent at 81,101 at 12:03 pm.

Diffusion Engineers IPO had received a strong response from the investors with the issue subscribed 114.50 times. The public issue was subscribed 85.61 times in the retail category, 95.74 times in the qualified institutional buyers (QIB) category, and 207.60 times in the high non-institutional investor (NII) category.

Diffusion Engineers is engaged in the business of manufacturing welding consumables, wear plates and wear parts and heavy engineering machinery for core industries. Besides manufacturing welding consumables like electrodes, flux cored wires, etc.; the company also offers solutions for reconditioning/ repair of critical equipment used in manufacturing plants of cement, power, and steel, among others.

Welding consumables market in India is estimated at around Rs 4,600 crore in fiscal 2023, with fiscal 2026 projections around Rs 5,800 - 6,000 crore. Due to the rise in demand for improved infrastructure, a lot of investment is happening in infrastructure development, such as construction of roads, bridges, ports and airports.  

This investment in infrastructure is one of the key growth drivers for the welding consumables sector, because welding is indispensable in the construction industry, as it provides strong and reliable joining solutions for structural components, Diffusion Engineers said in its draft red herring prospectus (DRHP).

Government initiatives such as National Infrastructure Pipeline, in which about Rs 111 trillion is to be invested in infrastructure during fiscals 2020 to 2025 in sectors such as heavy engineering, roads, urban infra, and railways, along with industrial reforms, such as ‘Make in India’ and ‘Atmanirbhar Bharat’, will support growth in the welding consumables sector, the company said.

Meanwhile, wear plates market in India is estimated around Rs 2,000 crore in FY23 and is expected to grow at a compounded annual growth rate (CAGR) of 8.5 - 9.5 per cent to reach around Rs 2,600 crore in FY26. Wear plates are essential part of the industries such as power plants, steel mills, quarrying, cement etc., as these plates protect key components of these industries.

As India continues to undergo rapid industrialization, each of these industries would grow and require wear plates to protect their equipment and machinery. The Indian heavy engineering capital goods industry is estimated to be Rs 2,650 - 2,750 billion as of FY23 and is projected to clock a CAGR of 7-8 per cent over FY23- 26. The industry expected to reach Rs 3,300 - 3,400 billion in size by FY26, the company said.