Dixon Technologies India Ltd Rs 600 crore IPO which opened on 6 September was oversubscribed 116 times as the bidding closes.
Dixon Technologies India Ltd Rs 600 crore IPO which opened on 6 September was oversubscribed 116 times as the bidding closes. The qualified institutional buyers seem to have more interest in the IPO as quota reserved for them — 6,79,264 shares — was subscribed 134.66 times on the last day of bidding. The shares reserved for non-institutional investors (5,09,188 shares) were subscribed 345.62 times while retail individual investors (11,88,105 shares) category was subscribed 9.34 times. The technology firm is planning to spend the proceeds on capacity expansion and debt repayment.
The company had expected to raise Rs 60 crore from the primary round of equity sale and Rs 540 crore from the offer for sale. “Post listing, 52% of Dixon will be held by promoters and friends, 8% by employees, 5% by Motilal Oswal and 35% will be with the public,” PTI reported citing Dixon Technologies MD Atul B Lall. The initial public offer of Dixon IPO had a price band of Rs 1,760-1,766 per share with a face value of Rs 10 each. The book running lead managers of the issue are IDFC Bank Limited, IIFL Holdings Limited, Motilal Oswal Investment Advisors Limited and YES Securities (India) Limited.
“In the primary raise, the money will be spent on setting up LED TV capacity in Tirupati, expansion of our backward integration of lighting business, debt repayment, IT infrastructure and the rest will be used for general corporate purposes,” MD Atul B Lall added. Dixon plans to repay a debt of Rs 22 crore, invest Rs 7.57 crore in setting up its seventh manufacturing unit for LED television in Tirupati. The company will use Rs 8.85 crore for producing parts of LED lights at its Dehradun plant.
Experts take — HDFC Securities
- Strengths: HDFC Securities has said that DTIL is leading market position in key verticals along with its strong relationships with a diverse top-tier customer base and experienced promoter and seasoned management team. It further added that DTIL is an end to end solutions provider with dedicated research and development capabilities, it also has flexible and cost-effective manufacturing capabilities. HDFC Securities stated that Dixon Technologies has strong financial performance and stable cash flows as over the last five fiscals ended March 31, 2017, it achieved a CAGR of 33.78% in revenue from operations (net) and 44.36% in EBITDA.
- Concerns: However the research and brokerage house HDFC Securities has also raised few concerns such as Highly dependency on certain key customers for a substantial portion of revenues and it didn’t obtained firm and long-term volume purchase commitments from customers. HDFC Securities added that the markets in which customers compete are characterized by consumers and their rapidly changing preferences. Moreover, business and results of operations are dependent on the contracts that it enter into. DTIL depends on certain suppliers for raw materials and other components and also the production capacity may not correspond precisely to its production demand which may affect the results of operations.