Avalon Technologies IPO Witnesses Moderate Response on Day 1
Avalon Technologies, an integrated EMS provider with diversified end-user industries and clients, launched its IPO on April 3. However, the first day of bidding saw a tepid response from investors, with the issue being subscribed only 1% as of 12:30 pm, according to BSE data. The retail investor quota was subscribed 7%, while non-institutional investors saw only a few applications. There were no applications from Qualified Institutional Buyers as yet.
Out of the total 1,14,63,854 shares on offer, investors had bid for 1,47,662 units so far. The price band for the IPO has been set at Rs 415-436 per share of face value of Rs 2 each.
Avalon Technologies aims to raise Rs 865 crore through its IPO, with a fresh issuance of shares worth Rs 320 crore and an offer-for-sale of equity shares worth Rs 545 crore by promoters and other selling shareholders. The company’s scope of work requires complex designing, engineering, component procurement, and manufacturing, which creates long lead times and entry barriers.
Although the response to the IPO was moderate, analysts remain positive about the company. They believe that Avalon Technologies belongs to a high-growth industry, and some valuation comfort compared to its listed peers makes it a favourable investment.
Sumeet Shah of Reliance Securities noted that the IPO is valued at 55.5x P/E at the upper price band based on the FY23 annualised financials, which is lower than its peers. However, some investors may find this PE multiple unattractive despite being lower than its peers.
About Avalon Technologies:
Avalon Technologies, established in 1999, provides end-to-end box-build solutions in India, with a particular emphasis on high-value precision-engineered products. The company has 12 manufacturing units distributed throughout the United States and India, offering an array of services and solutions to its customers.
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