The initial public offering (IPO) of Elin Electronics had been subscribed 69 percent by the afternoon of December 21, the second day of bidding. Bids had come in for 97.65 lakh shares against an offer size of 1.42 crore shares.
Retail investors stole the march, buying 1.02 times the allotted quota. High-networth individuals (non-institutional investors) had picked 82 percent of their quota.
Qualified institutional buyers had subscribed only 1 percent of the shares set aside for them though the electronics manufacturing services provider has reserved half of the offer for them.
Thirty-five percent of the offer has been reserved for retail investors and the remaining 15 percent for non-institutional investors.
The issue is expected to fetch Elin Rs 475 crore, of which Rs 142 crore has already been mobilised through the anchor book at Rs 247 a share, the upper end of the price band, on December 19.
The offer comprises a fresh issuance of shares worth Rs 175 crore and an offer for sale (OFS) of Rs 300-crore shares by promoters.
The company will use the proceeds to repay debt and expand facilities at Ghaziabad in Uttar Pradesh and Verna in Goa. The balance will be utilised for general corporate purposes. The OFS money will go to selling shareholders.
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The price band for the offer, which closes on December 22, has been set at Rs 234-247 a share.
Elin Electronics is a manufacturer of fractional horsepower motors, lighting, fans and small kitchen appliances for leading brands in India.
Analysts have given a “subscribe” rating to the offer, citing reasonable valuations, steady operating profit margin, healthy double-digit growth in earnings, expected strong industry outlook and a diversified product portfolio.
They said Elin caters to its customers through a wide product portfolio, which not only helped the company to gain market share but has also aided in gaining a wallet share of existing customers.
Its revenue grew at 18 percent CAGR in FY20-22. Elin has maintained its EBITDA margin in the range of 7-8 percent over FY20-22 supported by cost control measures, the addition of new product categories and increasing focus on high-margin original design manufacturer business, ICICI Direct said.
PAT has grown at a CAGR of 19 percent in FY20-22, supported by higher EBITDA. At the upper price band of Rs 247, the stock is priced at ~31x at FY22 EPS of Rs 8 per share (based on fully diluted post issue of equity), said the brokerage which assigned a “subscribe” rating to the offer.
Given the room for growth in the EMS sector, Cholamandalam Securities recommended that investors subscribe the IPO for the long term.
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