Cyient DLM, a subsidiary of software services company Cyient, is the second IPO to launch this week after IdeaForge Technologies which floated on Monday.
The initial public offering of Cyient DLM opened today, June 27 and will close on June 30. The price band for the offer has been fixed for Rs 250 to Rs 265 per piece. The company is planning to raise up to Rs 592 crore via a public issue of 2.23 crore equity shares, at the upper price band.
How will Cyient DLM use the funds?
The Cyient DLM IPO offers only fresh issues, therefore, all the funds, barring issue expenses, will be received by the company. The company has also reserved 15 crore worth shares for its employees. Eligible employees of the company will be able to enjoy a discount of Rs 15 per share to the final issue price.
The electronic manufacturing services company had also mopped up Rs 108 crore via private placement (pre-IPO placement) of 40.75 lakh equity shares, prior to filing the RHP with the registrar of companies. In total, the company will raise around Rs 700 crore funds.
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It will utilize the funds on incremental working capital requirements (Rs 291 crore), capital expenditure (Rs 43.57 crore), repaying of certain debts (Rs 160.09 crore) and inorganic growth through acquisitions (Rs 70 crore) are other key objectives of IPO.
According to reports, investors can apply for a minimum of 56 equity shares and in multiples of 56 shares thereafter. Retail investors can invest a minimum of Rs 14,840 for one lot and a maximum of Rs 1,92,920 for 13 lots, as they are allowed to invest up to Rs 2 lakh in an issue.
Also, around 75 percent of the offer is reserved for qualified institutional buyers (QIB), 15 percent for high net-worth individuals (non-institutional investors), and the rest for retail investors.
About the company
The company is a supplier to global OEMs (original equipment manufacturers) in the aerospace, defence, medical technology, and industrial sectors.
As per media reports, it has long-term relationships with several marquee customers such as Honeywell International Inc, Thales Global Services SAS, ABB Inc, Bharat Electronics, and Molbio Diagnostics, which together contributed 56.67 percent to company's revenue in FY22-23.
Its net profit for the year FY22-23 declined 20.3 percent to Rs 31.7 crore, however, revenue surged 15.5 percent to Rs 832 crore, compared to previous fiscal. Gross profit for the year also saw an uptick by 14.5 percent over the year prior, but the gross margin fell 14 bps to 15.55 percent during the same period.
What do analysts say?
Analysts in the market seemed to be pretty optimistic over the valuation and strong growth potential.
"Based on the EMS industry demand and growth in the recent performance, the issue draws a lot of attention due to promoter’s parentage backup, hence considering industrial and company's growth rationale, we recommend investors to subscribe to the IPO for the long term," Prashant Tapse of Mehta Equities, was quoted as saying by The Economic Times.
Several analysts including Choice, Stoxbox, Swastika and Reliance Securities have given subscribe ratings to the IPO. "Considering strong business prospects, healthy financials, diversified product mix, tailwinds on the back of solutions-oriented approach, client-focused service and track record of reliability, we recommend subscribing to the issue," Reliance Securities was quoted as saying by ET.