Electronics manufacturing services provider Syrma SGS Technology is expected to see healthy debut in the range of Rs 250-300 on August 26, given the stable equity market sentiment, strong IPO subscription figures, better financial performance with diversified product portfolio and marquee customers base.
The public issue of Syrma, which opened on August 12, was subscribed 32.61 times with support from every type of investors. The issue price was fixed at Rs 220 per share.
Qualified institutional investors looked aggressive bidders for the issue as their reserved portion was subscribed 87.56 times, while the quota set aside for non-institutional investors was booked 17.5 times. Retail investors put in bids 5.53 times their reserved portion.
"We are expecting Syrma to list at 15-20 percent premium to issue price as the company being one of the leading design and electronic manufacturing services companies has consistent track record of financial performance," Astha Jain, Senior Research Analyst at Hem Securities told Moneycontrol.
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Also, the company has established relationships with marquee customers across various countries & state-of-the-art manufacturing capabilities supported by a global supplier network, with a focus on vertical integration, she said.
Syrma SGS technology is technology-focussed engineering and design company engaged in turnkey electronics manufacturing services (EMS), specialising in manufacturing for diverse industries, including industrial appliances, automotive, healthcare, consumer products and IT industries, and currently operating through 11 strategically located manufacturing facilities in north India and south India.
Syrma raised Rs 840 crore through its public issue, of which more than 90 percent (Rs 766 crore garnered through fresh issue) of the money is going into the company for expansion, working capital requirements, and general corporate purposes. This also may be supporting the listing price expectations.
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"Considering the better than expected investors demand, one can expect a 25-30 percent listing gain amid rebound in secondary markets and Syrma's high-margin product portfolio poised for bright prospects going forward," Prashanth Tapse, Senior VP Research at Mehta Equities said.
On valuations parse, at upper price band (Rs 220), the issue is asking for a market cap of Rs 3,877 crore and based on FY21 earnings, the issue seems to be reasonably priced compared to industry peers, Prashanth believes.
Rajnath Yadav, Research Analyst at Choice Broking also believes Syrma SGS Technology IPO would give a respectable return on listing.
The grey market premium of Syrma ahead of listing remained stable despite volatility in the equity markets, currently at around Rs 50-55, rising from Rs 15-25 in around 10 days, which is also giving confidence about listing price, experts said.
"After closure of the public issue, Syrma SGS Technologies IPO GMP has remained steady around Rs 55 despite two-day sell-off in the market. We expect the listing to be around Rs 260-270 range," Manoj Dalmia, Founder and Director at Proficient Equities said.
"The segment in which Syrma SGS is operating is also poised for bright prospects ahead and investors may consider it with medium to long-term perspectives," he added.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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