The initial public offer (IPO) of Cyient DLM was subscribed 14.72 times on the last day of bidding on June 30 as investors subscribed for 19.61 crore equity shares against the issue size of 1.33 crore shares.
Retail investors and high networth individuals bid 37.73 times and 24.16 times their allotted quota of share, while the portion set aside for qualified institutional investors was subscribed 3.49 percent.
Employees portion received bids of 1.99 times the allotted quota of share.
The Securities and Exchange Board of India on June 28 accepted the company’s request to extend the IPO by a day as June 29 was a market holiday.
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The subsidiary of software services provider Cyient has reserved 75 percent of the offer size for qualified institutional buyers, 15 percent for high networth individuals, and 10 percent for retail investors, while the total issue consists of a reserved portion worth Rs 15 crore shares for employees who will get those shares at a discount of Rs 15 per share to the final issue price.
In previous two session, the offer was subscribed 7.6 times.
The electronic manufacturing services and solutions provider will be raising Rs 592 crore via IPO that comprises only a fresh issue.
The net proceeds from the issue would be utilised towards incremental working capital requirements, capital expenditure, repaying debts, and inorganic growth (through acquisitions), besides general corporate purposes.
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The price band for the offer is Rs 250 to Rs 265 per share.
Cyient DLM already raised Rs 259.64 crore from 20 anchor investors, ahead of its IPO, on June 26. Eight domestic mutual funds also made investment in the company via anchor book, through their 11 schemes.
Most brokerages have given ‘subscribe’ rating to the issue considering the reasonable valuations, strong orderbook and strong industry tailwinds.
The electronics industry in India is poised for growth, supported by government initiatives like Make in India, the production linked incentive (PLI) scheme, and the China + 1 Strategy adopted by OEMs. Cyient DLM has a bright future ahead considering its robust order book, reduced debt post IPO and strong promoter backing augurs well for the company, said Geojit Financial Services which has assigned a subscribe rating for the issue on a short to medium term basis.
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Cyient DLM provides EMS as build-to-print (B2P) and build-to-specification (B2S) services. The core solutions provided by Cyient DLM encompass various key components, including printed circuit board assembly, cable harnesses, and box builds.
These components play a crucial role in safety of critical systems such as cockpits, inflight systems, landing systems, and medical diagnostic equipment. It has a customer base which includes global OEMs in the aerospace and defence, medical technology and industrial sectors.
Its key customers include Honeywell International, Thales Global Services, ABB Inc, Bharat Electronics, and Molbio Diagnostics.
Also read: Cyient DLM management speaks about growth outlook, financial performance
Nirmal Bang believes Cyient DLM has strong industry tailwinds working in its favour as domestic EMS (electronics manufacturing services) industry is expected to grow at 32 percent CAGR over FY22-27.
Over FY21-23 period, Cyient DLM’s revenue growth is lagging peers at 15 percent CAGR, however its strong order book provides decent visibility of accelerated growth going forward, the brokerage said, adding it’s valuation on P/E basis is reasonable compared to peers, at 66.2x FY23 earnings, considering the future growth opportunities.
Hence, Nirmal Bang recommended subscribing to the issue from long term perspective.
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