Avalon Technologies IPO sails through on last day; GMP rises

The initial public offering (IPO) of Avalon Technologies sailed through on the final day of the bidding process as qualified institutional buyers (QIBs) showed strong interest in bidding for the offer.

The Rs 865 crore initial share sale was subscribed 1.59 times as of 3.25 pm, with the QIB portion subscribed 2.48 times. The retail investors' portion was subscribed 74%, while non-institutional investors bid for just 36% of the reserved portion.

This surge in demand from QIBs helped boost the overall subscription rate and provided a much-needed boost to the IPO, which had seen a lackluster response in the preceding days. At the end of Day 2, the issue was subscribed just 9%.

The issue, which opened on April 3, will close today. The price band for the issue is set at Rs 415-436, and investors can bid for 34 shares in 1 lot and multiples thereof.

As many as nine brokerages have recommended a "subscribe" to the issue from a long-term perspective.

According to market sources, the grey market premium (GMP) of Avalon Technologies is currently at Rs 11-12. If we consider the upper end of the price band, the company's shares are expected to get listed at a marginal premium of 3% on the exchanges.

However, it is important to note that grey market premiums are just an indicator as to how the company's shares are stacked up in the unlisted market and are subject to change rapidly.

Avalon Technologies is one of the leading fully integrated electronic manufacturing services (EMS) companies with end-to-end operations in delivering box build solutions in India. The company provides a full stack product and solution suite, from printed circuit board design and assembly to the manufacturing of complete electronic systems.

The company plans to use proceeds from the fresh issue for the repayment of the borrowings and funding the working capital requirements. Further, residual funds will be used for general corporate purposes.

JM Financial, DAM Capital, IIFL Securities and Nomura Financial are book running lead managers to the issue and Link Intime India is acting as a registrar.