Avalon Technologies IPO Analysis @ Chanakyanipothi.com,
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Avalon IPO Listing Estimate:
In spite of very strong business and profitability, the IPO received not so impressive subscription. Today at the time of listing, the mood of the market may not very strong. The scrip may list at par (plus/minus Rs. 10). However, for the long term investors, we strongly suggest accumulating the shares on listing and sit tight for 9 months.
Avalon Technologies IPO Guidance:
Electronic Manufacturing Services (“EMS”) business has strong growth potential & is expected to grow at a CAGR of 32.3%. The company is one of pioneer in EMS with a focus on high value precision engineered products particularly Printed Circuit Boards. High profitability. Very small offering for NIIs & RIIs, so chances of huge oversubscription. The scrip is offered at very reasonable price. Must Apply IPO.
Avalon Technologies IPO Grey Market updates # Since the business enjoys fancy among the investors & NII portion is very small, the IPO enjoys grey market fancy.
Prior to listing:
GMP: 9, low volume
Rs. 10 L Fix Application, No trades
Avalon Technologies IPO Subscription Status
On 6 April 2023 @ 5.00 (Closed)
QIB 6253012 Shares, 3.57T
NII: 3126505 Shares, 0.41T
RII: 2084337 Shares 0.84T
Total: 11463854 Shares 2.21T
Avalon Technologies IPO Promoters
KUNHAMED BICHA AND BHASKAR SRINIVASAN
Very Elaborate Business Information of Avalon Technologies
Avlon Technologies is one of the leading fully integrated Electronic Manufacturing Services (“EMS”) companies with end-to end capabilities in delivering box build solutions in India in terms of revenue in Fiscal 2022, with a focus on high value precision engineered products. Through a unique global delivery model, it provides 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 certain global original equipment manufacturers (“OEMs”), including OEMs located in the United States, China, Netherlands and Japan. Through its end-to-end capabilities, it believes its customers may achieve tangible benefits such as reduced manufacturing costs, improved supply chain management and reduced inventory obsolescence.
Its capabilities include PCB design and assembly, cable assembly and wire harnesses, sheet metal fabrication and machining, magnetics, injection molded plastics and end-to-end box build of electronic systems. It specialize in manufacturing and providing design support for critical integrated assemblies, sub-assemblies, components and enclosures for multiple industry verticals. The end-use industries it caters to include a mix of established and long product lifecycle industries, such as industrial, mobility and medical devices and high growth “sunrise” industries, such as solar, electric vehicles and hydrogen in the clean energy sector and digital infrastructure in the communications sector.
Certain of its key customers include Kyosan India Private Limited, Zonar Systems Inc., Collins Aerospace, e-Infochips Private Limited, The US Malabar Company, Meggitt (Securaplane Technologies
Inc) and Systech Corporation, with whom it has had relationships for more than seven years. In addition to maintaining its relationships with existing customers, it has increased its key customer base over time from 54 customers in Fiscal 2020 to 62 customers in Fiscal 2021, to 81 customers in Fiscal 2022, increasing its order book (open order) from Rs 5,046.72 million as of March 31, 2020, to Rs 10,391.49 million as of June 30, 2022.
The company has a diversified client base across multiple end-use industries, it has minimal concentration risk.It has a unique global delivery model, comprising design and manufacturing capabilities across both India and the United States. It is the only Indian EMS company with full-fledged manufacturing
facilities in the United States, which gives it a unique competitive advantage in the North American markets. It has 12 manufacturing units located across the United States and India: one unit in
Atlanta, Georgia, one unit in Fremont, California, seven units in Chennai, Tamil Nadu, one unit in Kanchipuram, Tamil Nadu and two units in Bengaluru, Karnataka. This enables it to offer clients local manufacturing services across these locations depending on their needs, and also leverage favorable policy initiatives such as the ‘Make in India’ program of the Government of India, leading to high customer retention and cost-efficient manufacturing.
Sector Potential: The EMS sector is a sizeable industry globally and in India, and is expected to
grow at a significant pace. While the EMS market in India was valued at Rs 1,469 billion (US$20 billion) in Fiscal 2022 and is expected to grow at a CAGR of 32.3% to reach a value of Rs 4,502 billion (US$60 billion) in Fiscal 2026, the EMS market in the United States was valued at approximately US$140 billion in 2021 and is expected to grow at a CAGR of 6.1% to reach US$188 billion by 2026.
Capabilities and Value Propositions
Avlon is a fully integrated EMS provider and continue to expand its offerings. It started in 1999 as a pure play PCB assembler and have invested in its capabilities and become vertically integrated to include multiple offerings as listed below. it has a significant level of vertical integration in the EMS industry (source: F&S Report), that includes PCB assembly, cable assembly and wire harnesses, sheet metal fabrications and machining, injection molded plastics, magnetics and end-to-end box build.
• End – to – end integrated solutions, providing a “One Stop Shop” for electronics and electro – mechanical design and manufacturing services.
• High entry barriers to business through our collective cross-industry experience, customer engagement
capabilities and leading position in the high mix flexible volume product manufacturing segment.
• Well-diversified business leading to strong growth avenues
• Established relationships with marquee customer base
• Global delivery footprint with high quality standards and advanced manufacturing and assembly capabilities
• Strong financial performance, stable cash flows and visible growth profile
For more information, click www.avalontec.com
Objects of the IPO
The Company proposes to utilize the Net Proceeds towards funding the following objects.
1. Prepayment or repayment of all or a portion of certain outstanding borrowings availed by the Company
and one of its Material Subsidiaries, i.e., Avalon Technology and Services Private Limited
2. Funding the working capital requirements of the Company
|Avalon Technologies IPO Details (Tentative)|
|IPO opens on||3 April ,2023|
|IPO closes on||6 April ,2023|
|Issue Type||Book Built Issue IPO|
|Issue Size||19839450 Sh /Rs 865 Cr|
|* Fresh Issue||7339450 Sh /Rs 320 Cr|
|* Offer for Sale||12500000 Sh /Rs 545 Cr|
|Face Value per share:||Rs. 2|
|Price Band||Rs. 415-436|
|Retail Discount||Rs 0 per share|
|Employee discount||Rs. 0 per share|
|Retail Lot Size||34 Shares|
|Listing will at||BSE, NSE|
|Shares offered to||Shares||Rs. in Cr|
|QIB (75 %)||5952137||259.51|
|NII (15 %)||2975917||129.75|
|RII (10 %)||1983945||86.50|
|Retail portion will be oversubscribed by||5434698 Forms.|
|How much Shares to Apply?||Payable|
|Min Retail Application||34 Sh||Rs. 14824|
|Max Retail Application||442 Sh||Rs. 192712|
|Small HNI (Min) application||476 Sh||Rs. 207536|
|Small HNI (Max) application||2278 Sh||Rs. 993208|
|Big HNI Application||2312 Sh||Rs. 1008032|
|Avalon Technologies IPO Tentative timetable|
|IPO opens on||3 April 2023|
|IPO Closes on||6 April 2023|
|IPO Allotment on||12 April 2023|
|Unblocking of ASBA||13 April 2023|
|Credit of Shares||17 April 2023|
|Listing on||18 April 2023|
|Registered Office of Avalon Technologies IPO|
|B – 7, First Main Road, MEPZ, Tambaram, Chennai – 600 045, Tamil Nadu, India|
JM financial, DAM Capital Advisors, IIFL Securities, Nomura Financial,
|Registrar to IPO|
|Link Intime India Pvt Ltd|
|Avalon Technologies IPO Financial & Analytical Ratios|
|Year||Total Income||Net Profit||EPS||RoE|
|Rs. in Cr||Rs.in Cr||Rs.||%|
|Book Value of the Share on||31.03.2022||Rs. 15.60|
|Book Value of the Share||after the FPO||Rs.?|
|Offer Price at Cap||Rs. 436|
|Upper Price /last EPS||38.58|
|Upper Price/Book Value Ratio||27.94|
|Upper Price/BV after IPO||?|
Avalon Technologies IPO Peer Comparison
|As on date of DRHP||Total Income Rs.||Face||PE|
|Rs. In Cr||Rs|
|The IPO Company||840.72||2||38.58|
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