The initial public offering (IPO) of IKIO Lighting opened for subscription on Tuesday, June 6, 2023, and will close on June 8. The company has fixed the IPO price band at Rs 270-285 apiece
The IPO comprises sale of fresh equity worth Rs 350 crore, while promoters of the company will offload 90,00,000 equity shares via offer for sale (OFS) route. Hardeep Singh will sell 60,00,000 equity shares, while Surmeet Kaur will cut her stake by 30,00,000 equity shares in the OFS
The company has reserved 50% of the offer for qualified institutional buyers (QIB), while 15% of the shares will be allocated to non-institutional investors. The remaining 35% of the issue is set aside for retail investors. The net proceeds from the IPO will be used towards repayment of certain borrowings, investments in its subsidiary IKIO Solutions for setting up a new facility in Noida, and other general corporate purposes
Incorporated in 2016, the Noida-based IKIO Lighting manufactures light-emitting diode (LED) lighting solutions. The company is primarily an original design manufacturer (ODM). The company's LED lighting offerings focus on the premium segment. It develops, manufactures and supplies products to customers, who then distribute the products under their own brands. They also work with the customers to develop, manufacture and supply products as designed by the customers
The Rs 607 crore IPO has gathered positive views from analysts as several brokerages suggest subscribing to the issue citing its attractive valuations, high-margin products, strong performance and growth potential. However, select analysts are cautious over its dependence on a single client, competitive industry, import concerns and limited product line as the key risks for the business
"At upper band, the business is trading at P/E multiple of 47.8 times of the annualised EPS. The IPO looks fairly valued across various valuation parameters when compared with its close peers. Investors can 'subscribe' to the issue for a long-term investment horizon," said SBICap Securities on IKIO Lighting IPO
IKIO has created its niche in functional decorative lights, commercial refrigeration lighting and recreational vehicles. Its ability to offer end-to-end solutions and its backward-integrated manufacturing have resulted in a strong business model with healthy RoEs despite operating on a smaller base than its peers, said Anand Rathi with a 'subscribe' rating on IKIO Lighting IPO
IKIO Lighting doesn't have any peer company having business operations similar to it. The peer companies are operating in the EMS sector and are considered only for valuation benchmarking. Based on our FY23E earnings, the demanded P/E is 32.7 times, which is at discount to peer’s prevailing P/E multiple of 43.2 times. Thus, we assign a 'subscribe' rating for the issue, said Choice Broking
IKIO Lighting is mainly in the business of original design manufacturing. The company has achieved remarkable success in this highly competitive market. It has a diverse product basket with a focus on high-margin areas, and we can witness its growth through consistent financial performance, said Swastika Investmart with a 'subscribe' rating for listing gains and long-term
"We assign 'Subscribe with caution' rating to this IPO as the company has a diverse product basket with focus on high-margin areas and is poised to capture growth in the LED market. However, client concentration risk particularly Signify Innovations India Limited contributing 70-90 per cent to their overall revenue from FY20 to nine months of FY23 keeps us cautious," Marwadi Shares and Finance said
IKIO Lighting's overall financials have grown at a CAGR of 25% and 32.3% over FY20-22 but the valuation seems expensive as it is trading at P/E of 66 times on FY22 EPS of 4.3/share, said Religare Broking which has a 'neutral' rating on the issue. Substantial portion of the revenue is derived from single customers and high competition amongst the sector are the key risks
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