Continuing its winning streak after a stellar debut, shares of IKIO Lighting jumped almost 10 percent on Monday.
This comes after a strong debut on Friday, June 16, 2023. The stock got listed at ₹392.50, a premium of 37.7 percent or ₹107 versus its issue price of ₹285. It rose further throughout the day to end at a 41.6 percent premium to its IPO price at ₹403.75.
In today's deals, the stock rose as much as 9.6 percent to its record high of ₹443.80. This is almost 56 percent higher than its IPO price.
The initial public offering (IPO) of IKIO Lighting was open for subscription between June 6 and June 8, 2023 with a price band of ₹270-285.
The ₹607 crore-IPO witnessed strong interest from investors and was subscribed 66.30 times in the three-day bidding process. The portion for qualified institutional bidders was subscribed to the most, 163.68 times, followed by the quota reserved for retail investors which was subscribed to 13.86 times and the non-institutional investors' portion, which was subscribed to 63.35 percent.
While the stock has witnessed an extraordinary start to its journey on the exchanges, will this trend continue? Let's see what experts have to say.
Suman Bannerjee, CIO, Hedonova, noted that the IPO listing of IKIO Lighting has been successful and believes that there is a strong investor interest and positive market sentiment towards the company.
"I think in the next 12 months we could see IKIO lighting reaching at ₹650-700 levels. Considering the recent infrastructural developments in India this stock could achieve great heights," he forecasted. Below are the reasons given by Bannerjee for the same.
Strong financial performance: If IKIO Lighting maintains its revenue growth and profitability, it can attract more investors and drive the stock price higher.
Expansion into new markets: If the company successfully expands its presence in new markets or diversifies its product offerings, it can capture additional market share and generate higher revenues.
Positive industry trends: If the lighting industry experiences overall growth due to increasing demand for energy-efficient lighting solutions or government initiatives promoting sustainable lighting, it can benefit IKIO Lighting and contribute to its stock's rise.
Anubhuti Mishra, Equity Research Analyst at Swastika Investmart, also stated that IKIO made a strong debut, even better than expected. Considering its strong focus on R&D and backward integration, its well-established relationship with clients, and its consistent financial performance, Mishra has a positive view on the stock and thus suggests investors to hold IKIO for a longer period by keeping a stop loss 10 percent below its listing price.
Nirav Karkera, Head of Research at Fisdom, also has a bullish view on the recently listed stock.
"The stock price seems to have aggressively priced in the positive outlook on the company's business and financial prospects. The business is expected to grow on the back of R&D-led innovation along with expanding topline as it seeks to integrate through the value chain. The business model affords the company relatively healthy margins. Recent acquisitions can be expected to result in an immediate bump in earnings for the firm," he said.
However, he cautioned that considering the aggressive pricing in of growth prospects, further upside could be less exciting versus the listing gain. Downside risks are more pronounced considering a relatively concentrated business portfolio and any slippage could amplify in effect to dent investor sentiments rather quickly, noted the expert.
He expects a steady and flatter growth trajectory in the very near term.
Any surprises on the upside, especially emanating from recent expansion into the value chain would be a positive trigger, he stated, adding that diversification in client portfolio could alleviate concerns around the risk of revenues being largely concentrated with limited clients and easing of such concerns could boost investor confidence meaningfully.
The IPO comprised of a fresh equity issue of up to ₹350 crore and an offer for sale (OFS) of up to 90 lakh shares. Under the OFS, promoters Hardeep Singh offloaded 60 lakh shares and Surmeet Kaur sold about 30 lakh shares.
The company designs, develops, manufactures, and supplies LED products to other firms, who then distribute the products under their own brands. Its products are categorized as LED lighting, refrigeration lights, ABS (acrylonitrile butadiene styrene) piping and others.
Signify Innovations India is its largest customer with a 50 percent market share in India’s functional decorative lighting. The company has four manufacturing plants - three in Noida, and one in Haridwar.
