The Rs 607 crore IKIO Lighting IPO is now open for subscription. Should investors invest?
IKIO Lighting IPO: IKIO Lighting’s initial public offering (IPO) began today, Tuesday, June 6, and will end on Thursday, June 8. The bidding for anchor investors ended on Monday, with the company receiving Rs 182 crore. The price range for its public offering is Rs 270-285 per equity share with a face value of Rs 10 apiece. The company’s promoters and shareholders hope to raise Rs 607 crore from the IPO at the upper end of the price band. Prior to the public offering, the GMP of IKIO Lighting shares increased to Rs 95 per equity share, 33% higher than the offer price.
The IPO includes a fresh issue of up to Rs 350 crore in shares and an invitation for sale (OFS) component in which promoters and shareholders sell 90 lakh equity shares. According to rumors, the shares will be credited on June 15 and listed on stock exchanges on June 16.
IKIO Lighting is a manufacturer of light-emitting diode (LED) lighting products based in India. With LED lighting, Refrigeration lights, ABS (acrylonitrile butadiene styrene) pipework, and other goods in its portfolio, the company concentrated on offering sustainability and low-energy LED products.
Should you apply for the IKIO Lighting IPO?
Anand Rathi: Subscribe
IKIO has carved out a position for itself in the fields of functional ornamental lighting, commercial refrigerated illumination, and recreational vehicles. Its capacity to provide end-to-end solutions, as well as its backward-integrated production, has resulted in a robust business model with healthy RoEs, while operating on a smaller scale than its contemporaries, who primarily serve the mass-market needs of prominent brands. The company trades at 54x 9M FY23 EPS of Rs 5.3 at the higher IPO price range.
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Signify (Philips), the company’s main customer, has a strong 10-year relationship with the company, resulting in constant growth. They ensure consumer loyalty and a higher share of their customer’s business by generating new SKUs on an annual basis. The company is trading at a P/E ratio of 47.8x 9MFY23 annualized EPS in the upper band. When compared to its counterparts, the IPO appears to be fairly valued across various valuation metrics. Investors with a long-time perspective can SUBSCRIBE to the issue.
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IKIO does not have a peer company with similar business operations. The peer firms listed above are in the EMS industry and are solely being examined for valuation benchmarking. IKIO is asking a P/E multiple of 43.6x (to its restated FY22 EPS of Rs. 6.5) at a higher price band, compared to the peer average of 94.6x. The demanded P/E based on our FY23E earnings is 32.7x, which is lower than the peer’s TTM P/E multiple of 43.2x. As a result, we give the issue a “SUBSCRIBE” grade.
(The suggestions in this item are from the research analysts and brokerage firms mentioned. Axpertmedia.com accepts no liability for its investment advice. Rules and regulations govern capital market investments. Before investing, please contact your investment advisor.)