The initial public offering (IPO) of Cyient DLM (design-led manufacturing), a subsidiary of IT giant Cyient, will open for subscription on June 27. The IPO is a fresh issue of Rs 592 crore with a face value of Rs 10. The company has set a price band of `250-265 per share with a lot size of 56.
Around 75% of the net offer is reserved for the qualified institutional bidders (QIBs), whereas non-institutional bidders would get 15% and retail investors would get 10%.
The size of the fresh issue has been adjusted to Rs 592 crore from previous Rs 740 crore as the company completed a pre-IPO placement of 40,75,000 equity shares, aggregating to Rs 108 crore.
The proceeds from the issue will be used for funding incremental working capital requirements, capital expenditures, repayment of debt and achieving inorganic growth through acquisitions.
Cyient DLM is an integrated electronic manufacturing services (EMS) and solutions provider that focuses on a product’s whole life cycle, including design, manufacture and maintenance. Some of its listed peers are Syrma SGS Technology, Kaynes Technology India and DCX Systems.
Commenting on the design capability of the company, Ganesh Venkat Krishna Bodanapu, chairman and non-executive and non-independent director, said, “One of the key elements of our business is that we are not just focused on India business but global reach. We have thousands of design engineers. The value capturing happens in the design phase and not just in the manufacturing phase. Of course, we work diligently, squeeze the supply but the main competition with our peers is in design. We continue to strengthen global operations and leverage design more.”
In FY23, the company’s revenue from operations rose 15% to Rs 832 crore and the profit was up 4% at Rs 31.7 crore. They have a diverse customer base in India as well as the USA, France and Israel.
“The revenue growth was 15% last quarter which is quite less compared to our peers. This is because of our constant shift to high quality products.” said Shrinivas Appaji Kulkarni, chief financial officer.
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He pointed out that the order book is around Rs 2,400 crore, filled with quality tier-1 clients like Honeywell, ABB, etc, with whom they enjoy sustained and long-standing relationship. “Going forward, you will see our margins sustaining and growing,” he added.
Promoter company Cyient holds an over 92.84% stake in it, which is expected to come down to 66.68% after the issue.
Currently, the company has three branches – in Mysuru, Hyderabad and Bengaluru. “We are not planning to expand our branches in India for now but we are looking for global expansion.” said Rajendra Velagapudi, managing director.
Axis Capital and JM Financial are the book-running lead managers to the issue, whereas KFin Technologies is the registrar. The IPO will close on June 30 and will list on exchanges on July 10.