Elin Electronics Ltd is an ISO-certified company and is coming out with its Initial Public Offer (IPO) this week. The IPO is opening on 20 Dec and closing on 22 Dec. The total IPO is for Rs.475 crore, of which Rs.300 crore is an offer for sale and Rs.175 crore is a fresh issue.
Elin Electronics Ltd is a part of the Elin Group. It was established by the Sethia family in 1969 in Delhi. It is a leading manufacturer of OEM (original equipment manufacturer) products for several large electronic brands like Havells, Philips, Preethi, Bajaj, LG, Crompton etc. It has a wide range of products like LED lighting products, induction motors for fans, modular switches and sockets, fractional horsepower motors etc. It is also an original manufacturer (ODM- original design manufacturer) of several home appliances like irons, mixer grinders, hand blenders, hair dryers and many more.
Elin Electronics has three manufacturing facilities located in Ghaziabad, Baddi and Goa. The Ghaziabad factory also houses its R&D (research and development) facility where all the R&D for the OEM and ODM models is conducted. The R&D incudes all processes from concept sketching, design refinement, generating optional features to the last stage, testing.
Elin Electronics has shown a steady growth in the past 3 financial years. It generated a total revenue of Rs.786.37 crore in 2020 , Rs.864.9 in 2021 and Rs.1094.67 crore in 2022. It recorded a profit of Rs.27.49 crore in 2020, Rs.34.86 crore in 2021 and Rs.39.15 crore in 2022. It also paid a dividend of 20% in Sept 2022.
The IPO lead managers are Axis Capital and JM Financial and the registrar is KFin Technologies. It will be listed on NSE and BSE once the shares are allotted. The IPO was scaled back from Rs.760 crore to Rs.475 crores due to the current market conditions. The majority stake holders are Suman Sethia with 9.3% of the equity and Kishor Sethia with 8.56% equity. The Rs.300 crore offer on sale will by the existing investors including members of the Sethia family. The fresh issue of Rs.175 crore will be used to pay off some debt and for the expansion of the plants in Ghaziabad and Goa.
The company has fixed a price band of Rs.234 to Rs.247 per share. Its face value is Rs.5 per share and the minimum lot size is 60 shares. The portion for the qualified institutional buyers (QIBs) is set at 50%, the retail category is 35% and the non institution investors(NIIs) is 15%. The EV to EBITDA ratio is 14.39x which is on the higher side, EV to net sales is 1.05 which is good and the price-to-earnings ratio is 25.76 which is average. Keeping these in mind the IPO seems to be fully priced and is a good medium term to long term investment. The only concern is that the promoters share will become very less after the IPO.
The positives for this IPO are:
- Elin Electronics is one of the leading electronics manufacturing services providers to major brands.
- It is India’s largest Fractional Horse Power (FHP) motors manufacturer and supplier in India with a capacity of 10 million motors annually
- Steady financial growth in the past three fiscal years
- It services well known large brand with huge potential
|IPO Opening Date||20 Dec 2022|
|IPO Closing Date||22 Dec 2022|
|Face Value per Share||Rs.5 per Share|
|Lot Size||60 Shares|
|Price Band||Rs. 347 to Rs. 366|
|Issue Size||Rs. 475 crores|
|Issue Type||Offer For Sale + Fresh Issue|
|Offer for sale||Rs.300 crore|
|Fresh issue||Rs.175 crore|
|Allotment Date (tentative)||27 Dec 2022|
|Listing Date (tentative)||30 Dec 2022|
|Retail investor quota||35%|
|Grey Market Premium||Rs.30|
Disclaimer: The investments discussed or recommended in the market analysis, research reports, etc. may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and only after consulting such independent advisors as may be necessary.