Elin Electronics IPO GMP, price band, lot size, analyst views & more

The Rs 475 crore initial public offer (IPO) by Elin Electronics will open for public subscription today. The issue would comprise a fresh issue of Rs 175 crore and an offer for sale of Rs 300 crore to be sold in the 234-Rs 247 price band. Last heard, the IPO was commanding a grey market premium (GMP) of Rs 45 per share.

Elin Electronics is in a promising and growing industry, which has huge scope of growth, said analysts who said the company’s increasing focus on higher margin ODM (original design manufacturing) segment is positive. Taking valuations into consideration, they are neutral-to-positive on the issue.

Elin Electronics manufactures end-to-end product solutions for major brands of lighting, fans, and small kitchen appliances in India. It is among the largest fractional horsepower motors manufacturers in India. Out of its top 20 customers as of September 30, it was serving 11 customers for over 10 years and 16 for over five years. Elin’s top 10 customers accounted for nearly 77 per cent of total revenues in FY22. Its top five customers included Philips, Havells India, Eveready, Signify and Molbio and contributed 63 per cent of Elin’s top line.

A total of 35 per cent of Elin Electronics IPO is reserved for retail investors. Retail investors would be required to subscribe to a minimum of 1 lot of 60 shares. At the upper end of the price band, one lot would be valued at Rs 14,820. The maximum shares that retail investors can buy are 780 or 13 lots worth Rs 1,92,660.

Based on FY22 earnings, the company is demanding a PE of 31.3 times, EV/Ebitda of 16.8 times and EV/Sales of 1.2 times.

“In view of the company’s dual OEM and ODM based business model, diverse products and services portfolio, healthy financials, focus on R&D and strong growth potential given the large addressable market, we recommend ‘SUBSCRIBE’ to the issue,” said Reliance Securities.

The brokerage said the total addressable EMS market in India was valued at Rs 2,65,400 crore in FY21 and is expected to grow to Rs 9,96,300 crore in FY26 with a CAGR of 30.3 per cent. That said, the contribution of Indian EMS companies is around 40 per cent.

“The expansion of India’s EMS industry driven by an increase in consumer electronics and appliances consumption and growth of the lighting segment will bode well for the company. Venturing into new product segments is propelling OEMs to pursue EMS engagement, while the ODM model is also slowly gaining traction in India,” Reliance Securities said.

Ashika Stock Broking said Elin Electronics is a comparatively smaller player compared to Dixon technologies and Amber Enterprises, which are in the same business. It noted that the company will utilise Rs 175 crore towards debt repayment and capex.

At the higher price band, Elin Electronics demands a PE multiple of 29.7 times based on H1FY23 post issue fully diluted EPS basis, which seems at higher level, Ashika said adding that: “Given the valuation that are at higher level, small scale of operation compared to the peers and muted financial growth, we have Neutral view on this IPO.”

Hem Securities has a ‘Subscribe’ rating on the issue.

The offer will close on December 22; the basis of allotment will be finalised by December 27, initiation of refund by December 28, credit of shares to demat by December 29 and listing, if the IPO sails through, is all likely by December 30.