Before its IPO, Elin Electronics raises Rs 142 crore through an anchor book.
On December 21, the second day since bidding, Elin Electronics‘ IPO received 95% of the total subscriptions. In response to a 1.42 billion share offer, bids for 1.34 billion shares had been received. By purchasing 1.33 times the permitted allotment, individual investors stole the march. Non-institutional investors with high net worth selected 1.29 times as many shares as were reserved.
Despite the fact that the provider of electronics manufacturing services reserved half of the offer for qualified institutional purchasers, just 1% of the shares designated for them had been purchased.
Retail investors will receive 35% of the offer, while non-institutional investors will receive the remaining 15%. On December 19, Elin expects to raise Rs 475 crore through the offering, of that which Rs 142 billion have already been mobilized through the anchoring book at Rs 247 per share, the top end of the price range. The offer consists of a new share issue for Rs 175 crore and a promoters’ offering for sale (OFS) of Rs 300 crore in shares.
The corporation would utilize the money to pay off debt and upgrade facilities in Verna, Goa, and Ghaziabad, Uttar Pradesh. The remaining funds will be used for general company needs. The selling stockholders will receive the money from OFS.
The price range for the December 22 closing date of the offer has been fixed at Rs. 234–247 per share. Elin Electronics is a maker of small kitchen appliances, lights, fans, and motors with a fraction of a horsepower for popular Indian companies.
The fair values, consistent operating margin, healthy double-digit profits growth, anticipated positive industry outlook, and varied product portfolio are among the reasons why analysts gave the offer a “subscribe” grade.
They claimed Elin offers a wide range of products to meet the needs of its clients, which has assisted the business in growing market share and current clients’ loyalty. In FY20-22, its revenue increased at a CAGR of 18%. According to ICICI Direct, Elin has kept its EBITDA margin in the region of 7-8% for FY20-22 with the help of cost-control measures, the expansion of new product categories, and a greater emphasis on original design manufacturing business, which commands high margins.
A stronger EBITDA has helped PAT rise at a CAGR of percent in FY20-22. According to the brokerage, which gave the offer a “subscribe” rating, the company is valued at 31x at FY22 EPS of Rs 8 per piece (based on shares outstanding post-issue of equity) at the full price range of Rs 247.
Cholamandalam Securities suggested that investors subscribe to the IPO for the long term, given the potential for development in the EMS industry. Prabhudas Lilladher, a brokerage firm, has given a buy recommendation with the phrase “Apply for Long Term.”
“Elin is a top provider of electronics manufacturing services (EMS). Thus one may subscribe to IPO for the long term. According to the brokerage, they have a robust customer base that includes Phillips, Bosch, Usha, Panasonic, and other companies.
Additionally, “they are one of the main players in the kitchen gadgets vertical with EMS share of the market of 10.7% in FY2021 and is also one of the important players in LED lighting and illumination with EMS market share of roughly 7% in FY2021.” Pinebridge & Kotak Offshore were foreign investors who took part in the anchor book.
Market participants said that the grey market premium (GMP) for Elin Electronics’ IPO was approximately Rs 7. According to this, the grey market anticipated the business to list for roughly Rs 254 (Rs 247 + Rs 7), 2.83 percent more than the upper band price of Rs 247 per ownership stake in the IPO.
Elin, situated in Delhi, is a top manufacturer of fractional horsepower motors in the nation and a developer of edge product solutions for popular brands of lights, fans, and tiny kitchen appliances.
“Both the top and bottom lines look to be growing steadily. According to FY22 (2021-22) accounting transactions, the asking P/E is 30 times, which appears acceptable compared to peers.
However, the company’s top five customers generate more than 60% of its sales. Following the offer, chairman holdings would significantly fall, according to Manan Doshi of UnlistedArena.com, a website that deals in unlisted & pre-IPO shares, spoke with Business Today.
Edited by Prakriti Arora
