Exicom Tele-Systems IPO subscribed 15.60 times on Day 2 so far, retail portion booked 42.4x

The initial public offering (IPO) of Exicom Tele-Systems continued to witness a robust response from the investors during the second day of the bidding process. The issue, which opened off for bidding on Thursday, February 22, was overall subscribed 10.32 times on day one.

Exicom Tele-Systems is selling its shares in the price band of Rs 135-142 apiece. Investors can apply for a minimum of 100 shares and its multiples thereafter. It is looking to raise Rs 429 crore via IPO, which entirely includes  fresh shares worth Rs 329 crore and offer-for-sale (OFS) of up to 70,42,200 equity shares by its promoter NextWave Communications.

According to the data, the investors made bids for 28,42,01,400 equity shares, or 15.60 times, compared to the 1,82,23,540 equity shares offered for the subscription by 12.30 pm on Wednesday, February 28. The three-day bidding for the issue will conclude on Thursday February 29.

The allocation for retail investors was subscribed 42.40 times, while the portion reserved for non-institutional investors saw a subscription of 29.52 times. However, the quota set aside for qualified institutional bidders (QIBs) attracted bids for 1.15 times as of the same time.

Exicom Tele-Systems, which was incorporated in 1994, specializes in power systems, electric vehicle (EV) charging, and other related solutions. The company operates under two business verticals - power systems and EV charging solutions. The company is among the first to enter India's EV charger manufacturing segment.

The grey market premium of Exicom Tele-Systems has seen a sharp surge after first days bidding. The company is commanding a premium of Rs 180 in the unofficial market, citing a listing pop of around 125 per cent for the investors. However, the premium in the grey market stood around Rs 130 earlier, when the issue was announced.

Brokerage firms are mostly positive on the issue, suggesting to subscribe to it citing the rising market of EV chargers, diversified business in the segment and government's push on EVs. However, stretched valuations, dependence on a few major customers and any adverse policy may dent its financials.

Exicom Tele Systems is available at a P/E of 31 times, which appears to be fully priced. Considering the EV sector's robust outlook, company’s first mover advantage in both power management solutions  and EV charging infrastructure, improving financial and operational track record  and future expansion plans, we assign a 'subscribe' rating on a long term, said Geojit Financial.

However, it has  flagged a slowdown or decline in the adoption of EVs could negatively impact the company’s profitability and growth prospects and the company’s critical power solutions business depends heavily on its top five  customers, who contribute a significant portion of revenue as the key risks for the company.

Exicom Tele-Systems has raised Rs 178 crore from anchor investors as it allocated 1,25,38,800 equity shares at a price of Rs 142 apiece. The company has reserved 75 per cent of the offer to qualified institutional bidders (QIBs), with non-institutional investors receiving 15 per cent, and the remaining 10 per cent allocated to retail investors.

Exicom Tele-System established player in the Indian EV Charger market, with an early-mover-and-learner advantage in a fast growing industry characterized by high entry barriers and domain experience and know-how and diversified product portfolio with a track record of demonstrated outcomes in critical cases with vertically integrated operations, said Anand Rathi Research.

"At the upper price band, the company is valuing at P/E of 28 times, EV/EBITDA 33.98 times with a market cap of Rs 1,715.7 crore post issue of equity shares and return on net worth of 13.38 per cent. We believe that the IPO is fairly priced and recommend a 'subscribe for long term' rating to the IPO," it added.

Unistone Capital, Monarch Networth Capital and Systematix Corporate Services are the book running lead managers of the Exicom Tele-Systems IPO, while Link Intime India is the registrar for the issue. Shares of the company are likely to be listed on both BSE and NSE on Tuesday, March 5.

 

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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