Review of Ikio Lighting IPO

Synopsis
The business of Original Design Manufacturing enjoys fancy among the investors at present. The company has strong profitability and growth potential. The IPO size is not large, and the pricing as compared to the peers is reasonable. Fundamentally, you may apply. To learn about grey market fancy for this IPO, pl. check grey market updates.

Detailed analysis:
In earlier days, the brands used to own and operate their own production units. Nowadays to avail the economies of scale, the brands entrust the manufacturing activities to one or two trusted companies, whose main focus is achieving economies of scale and provide desired quality at reasonable production costs. So the business of Electronics Manufacturing Services and Original Design Manufacturing are growing as fast pace.
Ikio Lighting has focused on sustainability and providing low energy LED products. Its products are categorised as (i) LED lighting; (ii) refrigeration lights; (iii) ABS (acrylonitrile butadiene styrene) piping; and (iv) other products. Its LED lighting offerings focus on the premium segment and include lighting, fittings, fixtures, accessories and components.
Its largest customer is Signify Innovations India Limited, erstwhile Philips Electronics India Limited ,
which according to Frost & Sullivan in Fiscal 2022 had a 50% market share in India’s functional decorative lighting category (including LED spotlights, LED downlights and cove lights) and a 10% market share in India’s true-blue decorative lighting segment.
It has a history of high customer retention. In Fiscal 2022, it derived approximately 93.56% of its consolidated restated revenues from operations from repeat customers.
The business has shown strong growth in the topline and bottomline during the years 2019-20 to 20221-22.

IPO Size: The size of the IPO is not very large. 21280702 Shares are offered at the price band of Rs. 270-285 and at the upper priceband the company will raise Rs 606.50 Cr. (Rs. 350 by fresh issue of shares and the balance by offer for Sale)

Pricing: The shares are offered at very attractive valuations. The upper price band to the EPS of 2021-22 comes to 36.68(whereas the current prices of the peer companies show much higher PE Multiples, eg.
Dixon Technologies @ PE of 90.93
Amber Enterprise @ PE of 57.07
Syrma SGS @ PE of 63.28
Elin Electronics @ PE of 13.91.
So, the offer price leaves room for reasonable gains subsequent to the listing.
Grey Market Fancy: The IPO shows good fancy in the grey market since the price band and dates are announced. For latest updates on grey market, please click: GMP updates

Conclusion: Apply for listing gains and as well as as long term investment

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