The IPO of Noida-based Dixon Technologies opens today for subscription. The company aims to raise a total of Rs. 600 crore from fresh share issue and OFS at a price band of Rs1,760-1,766 per share. In this month as many as 4 companie are to come up with an IPO issue to raise a combined staggering amount of Rs. 2000 crore.
Let us know in detail whether the opened issue has something to offer for a retail investor.
Company's line of Business: Dixon, a contract manufacturer is a leading design-focused and solutions company that manufactures products in the areas of consumer durables, mobile and lighting. The company's clientele includes Panasonic, Haier Appliances, Philips, Surya Roshni, Gionee, Mitashi, Reliance Retail and Intex Technologies. The company has a backing of Motilal Oswal Private Equity (MOPE).
Issue details: The IPO issue with a price band of Rs 1,760-1,766 per share opens today. The issue comprise a fresh issue of Rs 60 crore and an OFS of up to 30,53,675 shares by some of the existing shareholders. Managing Director of the company said, "Post listing, 52 per cent of Dixon will be held by promoters and friends, 8 per cent by employees, 5 per cent by Motilal Oswal and 35 per cent will be with the public".
Through anchor book allocation, the company has raised a total of Rs179.79 crore by offloading shares to institutional investors, including Goldman Sachs, HDFC MF and ICICI Prudential AMC among others.
Objective of the IPO Issue: The proceeds shall be used to clear company's debt of Rs. 22 crore, capital expenditure that includes facility expansion, backward integration and IT upgradation.
Valuation: Largely brokerage houses have given a thumbs up to the issue and have guided on to invest in the issue from a medium to long term perspective. Huge listing gains are not expected from the issue. On the valuation front, analyst and brokerages see aggressive pricing for low single-digit Ebitda (3.7% in FY17) margin business.
One of the brokerage firm said that the company has registered strong financial performance over the past five years. "Its debt-equity ratio is much lower. With the increasing demand for electronic appliances due to changing modern lifestyle and high consumer spending, it is expected that company would see good growth in long run. As the issue looks expensive, a long term investor may opt the issue".
Another brokerage firm is of the view that "In our view there are many listed opportunities with better financials available at lower and comfortable valuation," it said.