Electronic manufacturing services and solutions provider Cyient DLM clocked a 51 percent premium on debut on July 10, as was expected following the robust demand for its initial public offering and favourable market conditions.
The stock started off the first trade at Rs 401 on the BSE against the issue price of Rs 265 a share.
Healthy fundamentals with a strong order book of Rs 2,432.5 crore, as of March FY23, and policy tailwinds for the EMS sector, especially in digital manufacturing, also boosted stock performance.
The Rs 592-crore IPO of Cyient DLM was subscribed over 67 times during the bidding period from June 27 to June 30. Qualified institutional buyers bought shares more than 90 times the portion set aside for them. Retail investors and high-networth individuals bid 49.22 times and 45.05 times their allotted quotas.
The price band for the offer was Rs 250-265 a share.
Incorporated in 1993, Cyient DLM, the subsidiary of listed software solutions firm Cyient, is one of the leading integrated electronic manufacturing services and solutions providers with a domestic market share of half a percent in FY22.
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Having strong capabilities across the value chain and the entire life cycle of a product, the company offers several value-added and after-market services to customers, which include global original equipment manufacturers in the aerospace and defence, medical technology and industrial sectors.
Cyient DLM provides its manufacturing services through build-to-print (B2P) and build-to-specification (B2S) modes. Its solutions primarily comprise printed circuit board assembly, cable harnesses, and box-builds, which are used in safety critical systems such as cockpits, inflight systems, landing systems, and medical diagnostic equipment.
Most of brokerage houses recommended subscribing to IPO, citing strong business prospects, healthy financials, a diversified product mix and reasonable valuations compared to industry peers.
Globally, the EMS market is seeing strong growth. India’s EMS market contributed 2.2 percent ($20 billion) to the global market in 2022 and is the fastest growing at a CAGR of 32.3 percent. It is expected to contribute 7 percent ($80 billion) of the global EMS market in 2026 which will aid the company to grow further.
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"Considering the strong business prospects, healthy financials, diversified product mix, tailwinds on the back of solutions-oriented approach, client-focused service and track record of reliability, we recommend subscribe to the issue," Reliance Securities had said.
Choice Broking also assigned subscribe rating. "Over the period, CDLM has developed expertise, which acts as an entry barrier for a new competitor," the brokerage said, adding order book is healthy and is largely from key clients, which demonstrates the client stickiness.
Cyient DLM reported revenue growth at a CAGR of 15 percent during FY21-FY23. EBITDA (earnings before interest, tax, depreciation and amortisation) and profit after tax grew at a CAGR of 18 percent and 4 percent during the same period.
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