Electronic manufacturing services and solutions provider Cyient DLM has filed the draft red herring prospectus (DRHP) with the capital market watchdog Sebi to raise funds through an initial public offering (IPO).
The wholly-owned subsidiary of IT services company Cyient is looking to raise Rs 740 crore through a fresh issue of equity shares, the company said on January 10. The documents were filed a day earlier.
It may also consider raising up to Rs 148 crore by way of private placement, rights issue, preferential offer or any other method before the filing of the red herring prospectus with the Registrar of Companies.
If it raises funds through the pre-IPO placement, the fresh issue size will be reduced accordingly.
The qualified supplier to global original equipment manufacturers (OEMs) in aerospace and defence, medical technology and industrial sectors will utilise funds to meet working capital requirements and expenditure.
The repayment of debts and inorganic growth through acquisitions would also be taken care of by IPO proceeds, the company said.
Cyient DLM claims to be one of the leading integrated electronic manufacturing services (EMS) and solutions providers with strong capabilities across the value chain and the entire life cycle of a product, said the DRHP citing a Frost & Sullivan report.
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It has more than two decades of experience in developing high mix, and low-to-medium volume highly complex systems, the company said.
It is one of the few EMS companies in India catering to highly regulated industries and the largest supplier of EMS services to the aerospace and defence industry.
The EMS player has reported improved financial performance since FY20. Profit for FY22 grew by 237 percent to Rs 40 crore, backed by healthy operating performance and revenue increased by 14.7 percent to Rs 720.5 crore from the previous year.
On the operating front, earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 83 percent to Rs 84 crore and margin expanded more than 4 percentage points to 11.66 percent from 7.31 percent in the same period.
For the six-month period ended September FY23, the company clocked a profit of Rs 13.42 crore on revenue of Rs 340.3 crore.
Axis Capital and JM Financial are the book managers to the issue.
Rivals Syrma SGS Technology, Kaynes Technology India, and DCX Systems successfully closed their public issues and made their market debut in 2022. These companies are trading above their issue prices, up 25 percent, 32 percent, and 3 percent, respectively.
Indian EMS industry contributed 2.2 percent ($20 billion) to the global market in 2022 and it is the fastest growing in the world at a CAGR of 32.3 percent, the Frost & Sullivan report said. It is expected to account for 7 percent ($80 billion) of the global EMS market in 2026.
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