Shares of Avalon Technologies made a muted debut at Dalal Street on Tuesday as the company was listed at a price of Rs 431, a discount of a little more than 1% on BSE against its issue price of Rs 436.
Avalon Technologies shares were listed at Rs 436 on National Stock Exchange (NSE), at the same level as the given issue price. This was the first IPO and second listing in the current financial year.
"Despite its strong and stable financial performance, Avalon Technologies experienced a decline in its PAT margin during the first eight months of FY22 and currently has a high debt ratio. Investors with a high-risk tolerance may consider holding Avalon Technologies Ltd. shares long-term, with a recommended stop loss of around 405, which is the lower price band of the issue," said Pravesh Gour, Senior Technical Analyst, Swastika Investmart.
Just a day ahead of its listing, shares of Avalon Technologies were commanding a muted premium of Rs 8-10 per share in the grey market, suggesting a mild gain to the investors on their maiden trading session.
The Avalon Technologies IPO was open for subscription between April 3 and April 6 as the company was looking to raise Rs 865 crore from the primary markets. It fixed the issue price in the range of Rs 415-436 apiece with a lot size of 34 equity shares.
The issue was overall subscribed merely 2.34 times, thanks to qualified institutional buyers (QIBs), whose portion was booked 3.77 times. The quota for non-institutional investors (NIIs) and retail bidders section failed to get subscriptions as it was booked 43% and 88%, respectively.
The brokerage firms are majorly positive on the issue and suggest subscribing to it citing its reasonable valuations, health growth prospects, solid track record and sound balance sheet.
Most brokerages had given a 'subscribe with a long term' rating for the issue given the long-term benefits from the tailwinds of Aatmanirbhar Bharat and the production linked incentive (PLI) scheme across verticals, and currently at the IPO price, its valuations are a bit on the higher side compared to peers.
Avalon Technologies is a leading fully integrated electronic manufacturing services (EMS) company with end-to-end operations in delivering box-build solutions in India, catering to multiple industries like industrial, mobility, medical devices, solar, EVs, hydrogen, and digital communication and infrastructure
Incorporated in 1999, Avalon Technologies has 12 manufacturing units located across the US and India offering a variety of solutions and services to its clients. The 13th facility at Chennai is currently under construction.Operating margin of 20%-22%
Avalon has increased its key customer base over the time from 54 in FY20 to 89 in eight months to November 2022, including marquee names like Collins Aerospace, ATOS, and Cummins. As of November 2022, its order book was at Rs 1,190 crore, up 39 percent over FY22 closing order book.
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