Aditya Infotech IPO: Dixon was allotted shares at ₹340 apiece. Should you pay double?
Following the listing, the promoters' stake will decline to 77% from 93%. Dixon Technologies, an existing investor, will continue to hold a 7% stake, while public shareholders will own the remaining 24%.
Aditya Infotech is well known for its in-house CP Plus brand, a well-established Indian brand in the security and surveillance industry. It also serves as the exclusive distributor for Dahua Technology, a global leader in video surveillance systems.
The IPO opens on 29 July, with a price band of ₹640– ₹675 per share, valuing the company at ₹7,912 crores at the upper end of the price band. At the heart of the issue lies a move to reduce leverage. Of the fresh issue, ₹375 crore is earmarked for debt repayment, with the rest to be used for general corporate purposes.
While the debt reduction improves the optics on financial discipline, the real story may lie elsewhere. In India's still-underrated electronic security and surveillance market, what sets Aditya Infotech apart, and what should investors know as the company makes its public debut?
How dominant is CP Plus in Aditya Infotech's portfolio?
Aditya Infotech operates in a highly organized surveillance market, where 90% of the industry share is held by formal players. The company leads the pack, with a 21% revenue market share in FY25. It manufactures and sells its CP Plus brand, and exclusively distributes products from China's Dahua Technology.
It generates revenue primarily from one-time sales of each product unit. Together, CP Plus and Dahua accounted for 94% of the company's ₹3,112 crore revenue in FY25, with CP Plus contributing 69%, and Dahua (25%). The higher share of CP Plus helps reduce reliance on third-party brands.
Aditya Infotech has also begun offering services and solutions to build recurring revenue streams. For instance, CP Plus AI solution, powered by SparkCognition, offers video analytics capabilities on a subscription basis.
How diversified is Aditya Infotech's product portfolio?
Its product range spans commercial (thermal solutions, interactive displays), consumer (dash cams, Wi-Fi doorbells) and surveillance products, including digital video recorders (DVRs) and Power over Ethernet (PoE). However, its designs and products are not patented, making it vulnerable to imitation and potential loss of competitive edge.
Its products are used across banking, healthcare, education, law enforcement, hospitality, smart traffic, industrial and retail sectors. Surveillance products such as CCTV cameras made up 79% of revenue, while the rest 21% came from accessories like routers, cables, and monitors.
Is Aditya Infotech's rising inventory a concern?
With an annual manufacturing capacity of 17.2 million units, Aditya is the world's third-largest manufacturer of surveillance products. Capacity utilization stood strong at 77%, reflecting steady demand. However, the utilization has increased slightly from 73% in FY23.
At the same time, inventory levels in FY25 rose 71% to ₹871 crores compared to FY24, indicating either weaker-than-expected demand or a buildup in anticipation of stronger demand ahead. If demand is weak, high inventory may strain working capital and hurt margins. If strategic, it could aid faster deliveries, but it risks overestimating demand.
How exposed is Aditya Infotech to supplier concentration risks?
Further, supplier concentration risk remains high, with AIL Dixon (a joint venture between Dixon Technologies and Aditya Infotech) supplying 52% of materials consumed, 85% of which are sourced from outside India. Also, the top five suppliers supply 92% of the raw materials. This exposes it to both supplier concentration and geographic risk.
By contrast, the company's localization strategy offers some comfort. About 85% of the CP Plus product line is manufactured in India, with 96% of materials sourced from India. In addition, only 4% of its components are imported, significantly lower than AIL Dixon.
How balanced is Aditya Infotech's regional exposure?
The company's distribution network is one of its biggest strengths. It sells through over 1,000 distributors and runs 69 exclusive CP Plus Galaxy stores across 550 cities and towns. A dominant 80% of sales come via distributors, while online marketplaces contribute only 2.5%.
The business is primarily concentrated in India, with 99.68% of its revenue derived from domestic sales. Its domestic revenue is fairly diversified—North India leads with 39%, followed by the West (26%), South (20%), and East (15%). This reduces reliance on any single region.
Is low client concentration a strength or a risk?
Client concentration remains low. The top client contributed just 4% of FY25 revenue. The top five contributed 12%, and the top 10 made up 19%—down from 21% in FY23. Most customer relationships are long term, with the top 10 customers having a relationship of over 6 years, including Bright Computers, IR Focus CCTV, Kiran Electro Systems and Wasp Infotech.
However, it does not enter into long-term contracts with customers nor does it have any specific agreements. This means that Aditya's order volumes are subject to changes in customer demand, pricing terms or competition.
As a result, the company must continuously invest in customer acquisition and channel relationships to maintain its sales momentum. To this end, it is focusing on a service-based model and enterprise customers, to secure and grow customer relationships with large corporates.
Could rising warranty claims dent Aditya Infotech's margins?
While the company hasn't specified the exact duration of its warranty, it remains liable for claims arising from faulty or defective CP Plus products. In contrast, warranties and post-sales services for Dahua products are handled directly by Dahua.
Warranty claims have also increased in line with the rising sales volumes. Product service and warranty expenses grew from ₹9.5 crore (0.42% of revenue) in FY23 to ₹14.8 crore (0.48%) in FY25.
While the numbers are not large, a rise in claims could still impact margins and profitability. Also, Aditya Infotech does not have an insurance policy to cover warranty expenses, so any payout exceeding its reserves could affect its financial position.
What's holding back Aditya Infotech's net profitability?
Aditya Infotech has posted strong revenue growth, with topline rising 36% from ₹2,296 crores in FY23 to ₹3,112 crore in FY25, led by higher volumes across product categories.
Profitability also improved at the operating level. Ebitda rose 43% to ₹258 crores, up from ₹181 crores in FY23, as margins expanded by 38 basis points to 8.27%. Even though Aditya Infotech has no listed peer, its margins are modest compared to the 20.7% margin of unlisted competitor Prama Hikvision.
At the same time, smaller player Samriddhi Automations operates at a lower 5.4% margin. This places Aditya Infotech somewhere in the middle of the segment.
However, the picture looks weaker at the profit after tax (PAT) level. Despite topline growth and better operating performance, adjusted PAT (before exceptional items) fell 10% to ₹103 crores in FY25, from ₹114 crores in FY23, as PAT margins contracted by 168 basis points to 3.3%.
This decline was driven by a sharp increase in expenses. Employee benefit expenses doubled to ₹203 crores, while other expenses surged 80%, and depreciation expenses rose nearly four-fold. We have used PAT before exceptional items throughout to exclude the impact of gain of ₹249 crore arising from fair valuation in FY25.
The return ratios remained moderate too. Return on equity stands at 10%, while return on capital employed is at 16%. The company also carries some debt on its books. As of May 31, 2025, outstanding debt stood at ₹423 crores, with ₹42 crores paid in finance costs during FY25. However, ₹375 crores from the IPO proceeds will go towards debt repayment, providing a near-term boost to the bottom line in FY26.
Is the surveillance boom already baked into Aditya's valuation?
Aditya Infotech's numbers are reasonable but not high enough to justify the premium the company is seeking. The IPO implies a price-to-earnings multiple of 77 times, which looks rich given its average return ratios, muted profitability. Notably, the IPO pricing is almost double that of ₹340 per share, the price at which they were allotted to Dixon in September.
Even so, Aditya Infotech is well-placed to benefit from the rapid growth in India's video surveillance sector. The sector is expected to grow at 16.5% annually, from ₹106 billion in FY25 to ₹227 billion in FY30. The number of units sold is also expected to double from 40 million to 75 million by that time.
But the valuation leaves little margin of safety, even if the growth story holds.
For more such analysis, read Profit Pulse.
About the author: Madhvendra has over seven years of experience in equity markets and has cleared the NISM-Series-XV: Research Analyst Certification Examination. He specialises in writing detailed research articles on listed Indian companies, sectoral trends, and macroeconomic developments.
Disclosure: The writer does not hold the stocks discussed in this article.
The purpose of this article is only to share interesting charts, data points, and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educational purposes only.
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