Avalon Technologies IPO Day 1: Electronic manufacturing services firm Avalon Technologies Ltd’s initial public offering is set to open for subscription today, and will remain open till Thursday, April 6, 2023.
The company on Friday said it has raised a little over Rs 389 crore from anchor investors ahead of its initial share sale. The company has decided to allocate a total of 89.27 lakh equity shares to 24 funds at Rs 436 apiece.
Avalon Technologies IPO: Price band
The price band has been fixed at Rs 415-436, per share, with a face value of Rs 2 each.
Avalon Technologies IPO: Public Issue size
Avalon intends to raise Rs 865 crore through its IPO that comprises a fresh issuance of shares worth Rs 320 crore, and an offer for sale (OFS) of equity shares worth Rs 545 crore by promoters and other shareholders.
The OFS includes equity shares worth Rs 131 crore being sold by Kunhamed Bicha, shares worth Rs 172 crore being sold by Bhaskar Srinivasan, Rs 16 crore by T P Imbichammad, Rs 10 crore by Mariyam Bicha, Rs 65 crore by Sareday Seshu Kumar. Also, Anand Kumar and Luquman Veedu Ediyanam will each sell shares worth Rs 75.5 crore in the OFS.
Objectives of the issue
The electronic manufacturing services (EMS) company is going to utilise the fresh issue proceeds for repaying debts (Rs 145 crore), and working capital requirements (Rs 90 crore), besides general corporate purposes. The funds raised via the OFS will go to the selling shareholders, not the company.
Avalon Technologies IPO: GMP
As per market observers, Avalon Technologies shares are commanding a premium (GMP) of Rs 12 in the grey market today. The shares of the company are expected to list on the leading stock exchanges BSE and NSE on Tuesday, April 18, 2023.
“Compared to its competitors in the industry, the company has an impressive PAT margin. The IPO valuation for Avalon Technologies, based on the FY22 figures, is 45x PE post a fresh issue, which is similar to the market average. It will be intriguing to observe the response that the company receives given the current unsettled market conditions,” said Abhay Doshi of UnlistedArena.
Avalon Technologies IPO: About The Company
Incorporated in 1999 at Chennai, Avalon Technologies is a fully-integrated EMS company with end-to-end operations in delivering box build solutions, with a focus on high-value precision-engineered products.
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). Its customers include global original equipment manufacturers (OEMs), including OEMs located in the United States, China, Netherlands, and Japan.
Avalon Technologies IPO: Should You Subscribe?
The company sources its raw material from suppliers, primarily on a purchase order basis, who may not perform their contractual obligations in a timely manner or at all. Any hike in raw material costs may adversely affect the business and financial performance. The company is also dependent on a few customers for a major portion of its revenues.
“Although the overall outlook for Avalon Technologies IPO is positive, investors should be cautious given the current market conditions. The electronics manufacturing industry is known for its volatility, and raw material costs may adversely affect the business. Investors should carefully evaluate the company’s performance, financial health, and growth prospects before investing in the IPO,” said Krishna Raghavan- Founder at Unlistedkart.
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