Can Omnitech IPO deliver long-term growth for investors?

Omnitech Engineering, a manufacturer of high precision engineered components, aims to raise ₹418 crore through a fresh issue and an additional ₹165 crore via an offer for sale in its upcoming IPO. Following the IPO, the promoter group's stake will decrease to 74.2% from 94.1%. The company enjoys a strong customer loyalty, with 97% of its revenue derived from repeat business, and about 79% of its earnings come from exports, predominantly to the US. However, this reliance on international markets exposes Omnitech to geographical and tariff risks. The company, which operates three manufacturing facilities in Gujarat, has faced operational challenges, including disruptions from flooding, and exhibits a longer working capital cycle with negative cash flow from operations reported in FY25. Financially, Omnitech has shown a 39.1% annual revenue growth between FY23 and FY25, reaching ₹342.9 crore, alongside a 16.5% increase in net profit to ₹43.9 crore. Despite a decline in return on equity (ROE) to 21.6% in FY25, it remains significantly higher than industry peers. As investors weigh the long-term potential against these risks and operational challenges, they may opt for a cautious approach until clearer financial trends emerge.