IKIO Lighting, an LED lighting solutions provider, is the first initial public offering set to hit the markets this month with an improving sentiment.
Here are 10 key things to know before subscribing the offer:
1) IPO Dates
The offer will open for subscription on June 6 and close on June 8. The anchor book will open for a day on June 5.
2) Price Band
The price band for the offer has been fixed at Rs 270-285 per share.
3) IPO Details
The decorative lighting solutions provider plans to raise Rs 606.5 crore through maiden public issue which comprises fresh issuance of shares worth Rs 350 crore, and an offer-for-sale of Rs 256.5 crore by promoters, at the upper price band.
Two promoters - Hardeep Singh and Surmeet Kaur - are going to offload 90 lakh shares via offer for sale.
4) Objectives of Issue
IKIO intends to utilise fresh issue proceeds for repaying debts (Rs 50 crore) and investment in wholly owned subsidiary IKIO Solutions (Rs 212.31 crore), besides general corporate purposes.
Subsidiary IKIO Solutions will set up a new facility at Noida, Uttar Pradesh. The plant will carry out electronic manufacturing services for lights, rotary switch and electric switch, socket, ABS pipe and solar for recreational vehicles.
5) Lot Size
Investors can bid for a minimum of 52 equity shares (one lot) and in multiples of 52 shares thereafter. The minimum investment by retail investors in the offer would be Rs 14,820 per lot, and the maximum would be Rs 1,92,660 for 13 lots.
Half of the offer size is reserved for qualified institutional buyers, 15 percent for high net-worth individuals (non-institutional investors) and the remaining 35 percent for retail investors.
6) Company Profile
Incorporated in 2016, IKIO Lighting is an Indian manufacturer of light emitting diode (LED) lighting solutions, having four manufacturing facilities with one in the SIDCUL Haridwar industrial park in Uttarakhand and three in Noida.
It is primarily an original design manufacturer (ODM). It develops, manufactures and supplies products to customers. Then, the customers further distribute these products under their own brands.
Its products are categorised as LED lighting; refrigeration lights; ABS (acrylonitrile butadiene styrene) piping; and other products. Its LED lighting offerings focus on the premium segment and include lighting, fittings, fixtures, accessories and components.
In addition, it manufactures and assembles other products including fan regulators that are designed by clients; light strips, moulding, and other components and spares.
IKIO's largest customer is Signify Innovations India (erstwhile Philips Electronics India). According to Frost & Sullivan, in FY22, Signify had a 50 percent market share in India’s functional decorative lighting category, and a 10 percent market share in India’s true-blue decorative lighting segment.
Further it has a diversified customer base across all its product segments which include Western Refrigeration, Panasonic Life Solutions India, and Novateur Electrical & Digital Systems.
7) Financials
In the nine months ended December 2022, IKIO derived 93.56 percent of consolidated restated revenues from operations from repeat customers.
The company recorded restated consolidated profit at Rs 28 crore for FY22 against Rs 20.58 crore in FY21, and in the same period, revenue from operations stood at Rs 219.9 crore against Rs 159.66 crore. On the operating front, its EBITDA (earnings before interest, tax, depreciation and amortisation) came in at Rs 40.15 crore versus Rs 30.28 crore with margin at 18.26 percent against 18.97 percent.
In nine-month period ended December 2022, IKIO reported restated consolidated profit of Rs 34.58 crore on revenue of Rs 240.7 crore, with EBITDA at Rs 48.8 crore and margin at 20.71 percent.
The company did not own 100 percent of the equity shareholding of subsidiaries until September 12, 2022, the restated consolidated financial information does not include financial information for subsidiaries prior to their acquisitions. Accordingly, restated consolidated financial information is not comparable to any future financial results.
Its listed peers are Dixon Technologies, Amber Enterprises, Syrma SGS Technology, and Elin Electronics.
8) Promoters
Promoters - Hardeep Singh and Surmeet Kaur - hold 100 percent shareholding in the company.
Hardeep Singh is the Managing Director and Chairman of the company, while Surmeet Kaur and Sanjeet Singh are the Whole-time Directors on the board.
Subhash Chand Agrawal is the Chief Financial Officer of the company, while Sandeep Kumar Agarwal is the Company Secretary and Compliance Officer.
9) Risk Factors
a) IKIO derives a substantial portion of revenue from Signify Innovations India which accounted for 70.04 percent of restated revenue from operations in nine-month period ended December 2022. Further, over 85 percent of revenue is derived from top twenty customers on a restated basis in the same period. Cancellation by top customers or delay or reduction in their orders could have a material adverse effect on its business, results of operations and financial condition.
b) It also derives a substantial portion of revenue from LED lighting products which accounted for 91.27 percent of revenue. Any reduction in orders for LED lighting product line could have a material adverse effect on its business.
c) The company also relies on third party suppliers for key components, materials and stock-in-trade as well as customer support services including product repairs and returns. Any shortfall in the supply of components and raw materials or an increase in component or raw material costs, or other input costs, may adversely affect the pricing and supply of products.
d) IKIO is dependent on imported components from vendors in China, Singapore, Hong Kong and Taiwan and raw materials. Any shortfall in the said supply may adversely busines.
e) Continuous customer on-boarding is critical to any contact manufacturer. Significant delay could curb growth prospects, says Anand Rathi.
f) Anand Rathi further says demand prospects in US markets could be bruised by recessionary headwinds. Prolonged subdued demand could weigh on growth
prospects.
10) Listing and Allotment Dates
IKIO Lighting will finalise the basis of allotment by June 13. The refunds will be credited to bank accounts of unsuccessful investors by June 14, and equity shares will be transferred to eligible investors by June 15.
The listing of equity shares will take place on June 16.
Motilal Oswal Investment Advisors is the sole book running lead manager, while KFin Technologies is the registrar to the offer.
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