Cyient DLM IPO: Witnesses Oversubscription by 10.32 Times on Last Day
Cyient DLM, a subsidiary of software services provider Cyient, experienced tremendous success with its initial public offering (IPO), as it was oversubscribed by 10.32 times on the closing day of bidding, June 30. Investors eagerly subscribed for 13.76 crore equity shares, surpassing the issue size of 1.33 crore shares.
Retail investors and high net worth individuals displayed significant interest, bidding 30.45 times and 16.81 times their respective allotted share quotas. The portion allocated for qualified institutional investors witnessed a subscription of 1.19 percent.
To accommodate the IPO, the Securities and Exchange Board of India agreed to extend the bidding period by one day, as June 29 was a market holiday.
Cyient DLM allocated 75 percent of the offer size to qualified institutional buyers, 15 percent to high net worth individuals, and 10 percent to retail investors. Additionally, a reserved portion worth Rs 15 crore shares was set aside for employees, who will receive these shares at a discounted price of Rs 15 per share, relative to the final issue price.
During the previous two sessions, the IPO had already achieved a subscription rate of 7.6 times.
The IPO aims to raise Rs 592 crore through a fresh issue of shares. The net proceeds from the offering will be utilized for incremental working capital requirements, capital expenditure, debt repayment, inorganic growth through acquisitions, and general corporate purposes.
The price band for the IPO is set at Rs 250 to Rs 265 per share.
Ahead of the IPO, Cyient DLM successfully raised Rs 259.64 crore from 20 anchor investors on June 26. Furthermore, eight domestic mutual funds invested in the company through their 11 schemes.
Most brokerage firms have recommended a ‘subscribe’ rating for the IPO, considering its reasonable valuations, strong order book, and positive industry trends.
The Indian electronics industry is poised for significant growth, supported by government initiatives such as Make in India, the production-linked incentive (PLI) scheme, and the China + 1 Strategy adopted by original equipment manufacturers (OEMs). With a robust order book, reduced debt post-IPO, and strong promoter support, Cyient DLM is well-positioned for a promising future, according to Geojit Financial Services, which has assigned a subscribe rating for the IPO on a short to medium-term basis.
Cyient DLM specializes in providing electronic manufacturing services (EMS) in the form of build-to-print (B2P) and build-to-specification (B2S) services. Its core solutions encompass critical components like printed circuit board assembly, cable harnesses, and box builds.
These components play a crucial role in ensuring the safety of critical systems such as cockpits, in-flight systems, landing systems, and medical diagnostic equipment. Cyient DLM’s customer base includes global OEMs in the aerospace and defense, medical technology, and industrial sectors. Prominent customers of the company include Honeywell International, Thales Global Services, ABB Inc, Bharat Electronics, and Molbio Diagnostics.
Nirmal Bang believes Cyient DLM is well-positioned to benefit from strong industry tailwinds, as the domestic EMS industry is projected to grow at a compound annual growth rate (CAGR) of 32 percent over FY22-27.
Although Cyient DLM’s revenue growth has lagged behind peers with a CAGR of 15 percent during FY21-23, its robust order book provides significant visibility for accelerated growth in the future. The brokerage firm also considers the company’s valuation on a price-to-earnings (P/E) basis to be reasonable compared to peers, with a valuation of 66.2x FY23 earnings, taking into account the potential for future growth opportunities.
About Cyient DLM:
Cyient DLM is an engineering and technology solutions company that operates on a global scale. Our services span the entire value chain of our customers, helping them with the design, construction, operation, and maintenance of their products and services. Our customers rely on our expertise in engineering, manufacturing, and digital technology to provide them with next-generation solutions that adhere to the highest standards of safety, reliability, and performance, establishing their brand as respected leaders in their industries and markets.
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