Avalon Tech sets price band for Rs 865-crore IPO at Rs 415-436 per share

Avalon Technologies plans to use Rs 90 crore for its working capital requirement for fiscal 2024.

Avalon Technologies Ltd has set the price band for its initial public offering at Rs 415-436 per share, which values the company at Rs 2,500 crore at the top end of the band.

The IPO will open for subscription on April 3 and close on April 6. The anchor investors bidding will open on March 31. The basis of allotment will be on April 12 and credit of share will be on April 17. The stock will list on exchanges on April 18.

The Rs 865-crore public issue will consist of a fresh issue of Rs 320 crore and an offer-for-sale of up to Rs 545 crore.  The OFS will comprise up to Rs 131 crore by Kunhamed Bicha, up to Rs 172 crore by Bhaskar Srinivasan, up to Rs 10 crore by TP Imbichammad, up to Rs 10 crore by Mariyam Bicha and up to Rs 75.50 crore each by Anand Kumar and Luquman Veedu Ediyanam each, and Rs 65 crore by Sareday Seshu Kumar.

The size of the IPO was reduced from Rs 1,000 crore after Avalon completed a total pre-IPO placement of Rs 160 crore, consisting of 80 crore of primary or fresh issuance and 80 crore secondary share sales. In the pre-IPO placement, the company garnered Rs 60 crore each from UNIFI Financial Private Limited and Ashoka India Equity Investment Trust Plc and Rs 40 crore from India Acorn Fund Limited. Consequently, the size of public issue now stands at Rs 865 crore.

The proceeds from the fresh issue worth Rs 145 crore will be used to pay debt of the company and its material arm Avalon Technology and Services Pvt Ltd. As of January 2023, total outstanding borrowings on consolidated basis of Avalon Technologies stood at Rs 324.12 crore.

The firm plans to use Rs 90 crore for its working capital requirement for fiscal 2024. As of January 2023, the aggregate amount sanctioned by the banks to the company under the fund-based working capital facilities amounted to Rs 152.69 crore on a standalone basis.

JM Financial, DAM Capital Advisors, IIFL Securities and Nomura Financial Advisory and Securities India are the lead managers to the issue.

Avalon Technologies is one of the leading fully integrated electronic manufacturing services (EMS) companies with end-to-end capabilities in delivering box-build solutions in India with a focus on high-value precision engineered products.

The company provides a full-stack product and solutions suite, right from printed circuit board (PCB) design and assembly to the manufacture of complete electronic systems (box build), to certain global original equipment manufacturers (OEMs), including OEMs in the US, China, Netherlands and Japan.

It has 12 manufacturing facilities across India and the US. The company specialises in manufacturing and providing design support for critical integrated assemblies, sub-assemblies, components and enclosures for multiple industry verticals.

For FY22, its total income increased to Rs 851.65 crore from Rs 695,90 crore a year ago. Net profit for the year stood at Rs 68.16 crore as against Rs 23.08 crore last year, while EBITDA margin for the year improved to 11.6 percent from 9.58 percent a year ago.

Total order book increased to Rs 1190.25 crore as of Nov 2022 from Rs 857.87 crore in FY22. Its total customer as of Nov 2022 was at 89 from 72 a year ago.