Avalon Technologies IPO | 10 key things to know before you subscribe to the issue

Avalon Technologies, the primary preliminary public offering (IPO) of the economic yr 2023-24, is about to open for subscription subsequent week.

Here are 10 key matters to realize approximately the general public provide:

1) IPO Dates

The first day of bidding for this maiden public trouble might be April three, and the provide will near on April 6.

2) Price band

The fee band has been constant at Rs 415-436, in keeping with share, with a face price of Rs 2 every.

3) Public Issue length

Avalon intends to elevate Rs 865 crore thru its IPO that contains a clean issuance of stocks really well worth Rs 320 crore, and a suggestion on the market (OFS) of fairness stocks really well worth Rs 545 crore via way of means of promoters and different shareholders.

The OFS consists of fairness stocks really well worth Rs 131 crore being offered via way of means of Kunhamed Bicha, stocks really well worth Rs 172 crore being offered via way of means of Bhaskar Srinivasan, Rs sixteen crore via way of means of T P Imbichammad, Rs 10 crore via way of means of Mariyam Bicha, Rs sixty five crore via way of means of Sareday Seshu Kumar. Also, Anand Kumar and Luquman Veedu Ediyanam will every promote stocks really well worth Rs seventy five.five crore withinside the OFS.

The public trouble has been decreased from Rs 1,half crore to Rs 865 crore after the employer mopped up Rs a hundred and sixty crore thru pre-IPO placement.

The employer has already raised Rs 389.25 crore from anchor traders on March 31, as a result Rs 475.seventy five crore really well worth of stocks can be up on the market at some point of April three-6.

4) Objectives of the trouble

The digital production services (EMS) employer goes to utilise the clean trouble proceeds for repaying debts (Rs a hundred forty five crore), and operating capital requirements (Rs ninety crore), except fashionable company purposes.

The price range raised thru the OFS will visit the promoting shareholders, now no longer the employer.

5) Lot length and traders` reserved portion

Investors can bid for at the very least 34 fairness stocks and in multiples of 34 stocks thereafter. With this, the minimal utility length for retail traders might be Rs 14,824 in keeping with lot (34 stocks), and the most might be Rs 1,92,712 for thirteen lots (442 stocks).

The employer has reserved seventy five percentage of the provide for certified institutional buyers (QIB), 15 percentage for excessive networth individuals (HNI), and the final 10 percentage for retail traders.

6) Company profile

Incororated in 1999 at Chennai, Avalon Technologies is a fully-incorporated EMS employer with cease-to-cease operations in handing over container construct solutions, with a focal point on excessive-price precision-engineered products.

It gives a full-stack product and answer suite, proper from revealed circuit board (PCB) layout and assembly, to the manufacture of entire digital systems (container construct). Its clients consist of international authentic gadget manufacturers (OEMs), together with OEMs positioned withinside the United States, China, Netherlands, and Japan.

The employer caters to a combination of set up and long-product-lifecycle industries, consisting of industrial, mobility, and scientific devices, and excessive-increase dawn industries, consisting of sun power, electric powered vehicles, and hydrogen gas withinside the smooth power region, and virtual infrastructure withinside the communications region.

With 12 production gadgets throughout the USA and India, Avalon has accelerated its client base from fifty four in FY19-20 to 89 as of November 2022, and grown its order ee-e book from Rs 504.sixty seven crore in FY19-20 to Rs 1,190.25 crore in that time.

Per a Frost & Sullivan report, the EMS region is predicted to develop at a widespread pace. While the EMS marketplace in India became worth Rs 1.forty six lakh crore ($20 billion) in FY21-22 and is predicted to develop at a CAGR of 32.three percentage to hit Rs 4.five lakh crore ($60 billion) in FY25-26, americaA EMS marketplace became worth approximately $a hundred and forty billion in 2021, and is predicted to develop at a CAGR of 6.1 percentage to $188 billion via way of means of 2026

The employer compares itself with Dixon Technologies, Amber Enterprises, Syrma SGS Technology, and Kaynes Technology.

7) Financials

At Rs 34.2 crore, Avalon has recorded a 19.2 percentage yr-on-yr (YoY) decline in earnings after tax (PAT) for the eight-month length ended November FY22-23 on a excessive base because of first rate profits withinside the yr-in the past length. The earnings margin dropped to five.eighty four percentage from 7.eighty one percentage withinside the equal length.

Cosolidated sales from operations accelerated eight percentage YoY to Rs 585 crore for the eight-month length of FY22-23, with the smooth power section contributing 23 percentage, mobility and transportation 22 percentage, industrials 28 percentage, verbal exchange nine percentage, and 17 percentage via way of means of scientific and different segments.

On the working front, EBITDA (income earlier than interest, tax, depreciation, and amortisation) grew sixteen.eight percentage YoY to Rs sixty eight crore, even as the margin extended via way of means of 87 foundation points (bps) to 11.sixty three percentage withinside the equal length.

For the economic yr 2021-22, the employer has clocked a 195 percentage increase in PAT at Rs sixty eight.2 crore and a 22 percentage upward thrust in sales at Rs 841 crore, in comparison to the preceding yr. Net earnings margin jumped 476 bps to eight.1 percentage withinside the equal length. EBITDA accelerated 47.five percentage to Rs 97.five crore, with the margin increasing 202 bps to 11.6 percentage .

The employer's general borrowings can be decreased to round Rs one hundred fifty crore publish the IPO from approximately Rs three hundred crore now, R M Subramanian, CFO, Avalon Enterprises, said.

8) Promoters

Kunhamed Bicha, Chairman and Managing Director, and Bhaskar Srinivasan, Non-Executive Director, are the founders and promoters of Avalon, who together keep 53.38 percentage of the employer`s stocks. The general promoter and promoter organization maintaining is 70.seventy five percentage, and the final 29.25 percentage is held via way of means of public shareholders, together with UNIFI Financial, Ashoka India Equity Investment Trust Plc, and India Acorn Fund.

R M Subramanian is the Chief Financial Officer of the employer, even as Dr. Rajesh V is the Company Secretary, Compliance Officer, and Legal Head of the firm.

9) Risks and concerns

Here are the important thing dangers and worries highlighted through brokerages (Swastika Investmart, Canara Bank Securities, Reliance Securities).

a) The organization has had poor coins waft withinside the past.

b) Dependence on a restricted quantity of clients for a prime part of its revenues.

c) Disruption withinside the operation of its production facilities.

d) The organization can be issue to economic and reputational threat because of product high-satisfactory and legal responsibility issues.

e) Any growth withinside the price of uncooked substances or components, or any delay, scarcity or interruption withinside the deliver of uncooked substances and predominant manufacturing inputs may also adversely have an effect on the operations, coins waft, and financials of the business.

f) Failure to preserve greatest stock ranges should cause growth in stock maintaining costs.

g) Foreign alternate fluctuations.

10) Allotment and Listing Dates

Avalon will finalise the IPO percentage allotment through April 12 and the refunds can be credited to the financial institution money owed of unsuccessful traders through April 13. Eligible traders gets stocks of their demat money owed through April 17.

Finally, its inventory can be indexed at the BSE and NSE on April 18.

JM Financial, DAM Capital Advisors, IIFL Securities, and Nomura Financial Advisory and Securities (India) are the service provider bankers to the issue, even as the registrar to the provide is Link Intime India.