Avalon Technologies IPO opened for subscription on 3 April, Monday and will conclude on Thursday, 6 April. The price band for the IPO has been fixed at Rs 415-436 a share, making the issue size Rs 865 crore at the upper end. Ahead of the IPO, the company raised Rs 389.25 crore from anchor investors. The IPO comprises a fresh issue of 7,339,450 shares totalling Rs 320 crore as well as an offer-for-sale (OFS) component of 12,500,000 equity shares amounting to Rs 545 crore. Avalon Technologies shares were trading with a negative grey market premium (GMP) of Rs 9 today. The shares of the company are expected to list on the stock exchanges BSE and NSE on 18 April 2023.
Avalon Technologies is a fully integrated Electronic Manufacturing Services (EMS) company with end-to-end capabilities in delivering box build solutions in India, with a focus on high value precision engineered products. They also provide a full stack product and solution suite, right from printed circuit board (PCB) design and assembly to the manufacture of complete electronic systems (Box Build) to global original equipment manufacturers (OEMs) located in the United States, China, Netherlands, and Japan.
Canara Bank Securities: Subscribe
“The company largely generates its revenues from the United States (~63% of revenues), catering to the sunrise industries such as clean tech, power automation, mobility. The company has an order book of Rs 1190 crore as on November 2022 with a customer base of 80. Overall, EMS( Electronic Manufacturing Services) is expected to grow at a CAGR of 32% to reach Rs 4500 billion from the current Rs 1469 billion. Its debt to equity ratio seems to be above average of its industry peers. However, its unique offering and B2B model help Avalon with long term relationships with its diverse customers, ensuring incremental order book and steady margin. We recommend SUBSCRIBE for the long term.”
Reliance Securities: Subscribe
“The company is an integrated EMS provider with good diversification among end-user industries and clients with strategic manufacturing locations. Its scope of work requires complex designing, engineering, component procurement and manufacturing which creates long lead times and consequently entry barriers. It is also likely to benefit from the ‘Make in India’ and the PLI schemes of the Govt which promotes local manufacturing of components and electronics systems. The company intends to deleverage further which should further boost profitability and improve return ratios. Considering the healthy business prospects for the Indian EMS industry, company’s high return ratios and similar margins relative to peers and valuation comfort at 55.5x P/E on annualised FY23 financials, we recommend SUBSCRIBE to the issue.”