The public issue of Cyient DLM has been has been oversubscribed by 7.6 times on June 28, the second day of bidding. Investors have purchased 10.13 crore equity shares, surpassing the offer size of 1.33 crore shares.
Retail investors and high-net worth individuals (non-institutional investors) remained at the forefront to support the IPO, putting in bids 24.02 times and 11.24 times the portions set aside for them.
Employees have bid 1.09 times the allotted quota and that of qualified institutional buyers 91 percent.
The issue, which was subscribed 3.53 times on its first day, June 27, will remain open till June 30.
The company has reserved 75 percent shares of the offer for qualified institutional buyers (QIB), 15 percent for high net worth individuals (HNI) and the remaining 10 percent for retail investors.
Employees are entitled to Rs 15 crore worth of shares in the IPO, which they will receive at a discount of Rs 15 per share to the final offer price.
The electronic manufacturing services (EMS) and solutions provider aims to mop up Rs 592 crore via the IPO which comprises only a fresh issue. The company already received strong demand in the anchor book, raising Rs 259.64 crore on June 26, a day before the issue opening.
Also read | Cyient DLM: Management speaks about growth outlook, financial performance
The price band for the offer is Rs 250-265 per share.
The net proceeds from the fresh issue will be utilised for working capital requirements, capital expenditure, repaying debts, and inorganic growth through acquisitions, besides general corporate purposes.
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Cyient DLM, the subsidiary of software services firm Cyient, provides as build to print (B2P) and build to specification (B2S) services to their clients, and is a qualified supplier to global OEMs in the aerospace and defence, medical technology, and industrial sectors.
Their 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. It has three manufacturing facilities spread across Mysuru, Hyderabad and Bengaluru.
Also read: Cyient DLM IPO: 10 key things to know
"The company enjoys several competitive advantages and capabilities, giving them a strong edge and also providing them with certain key factors which are difficult to replicate. Some of these factors include their sectoral expertise, the high complexity of products they manufacture and the solutions they provide, their ability to provide end-to-end solutions, and the trust of their customers they enjoy," Stoxbox said.
The brokerage advised cash surplus investors to park funds for long-term rewards. On the upper end of the price band, the issue will be valued at 34.2x FY23 EPS which it believes is fairly priced.
The EMS market globally is witnessing a strong growth trajectory. India’s EMS market contributes 2.2 percent ($20 billion) of the global EMS market in 2022 and it is the fastest growing among all countries 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.
Also read: With Sebi nod, Tata Tech gears up to float first public issue from the group in 20 years
Considering the strong business prospects, healthy financials, diversified product mix, tailwinds on the back of a solutions-oriented approach, client-focused service and track record of reliability, Reliance Securities also recommended subscribing to the issue.
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