Shares of Avalon Technologies made a flat market debut on Tuesday. The stock listed at ₹431 on BSE, a discount of 1.1 percent over its issue price of ₹436. Meanwhile, on NSE, it opened at its IPO price, at no premium or discount.
The stock fell as much as 11 percent from its issue price to its day's low of ₹387.75 in intra-day deals. Meanwhile, it ended 9.11 percent lower from IPO price at ₹396.45 on BSE.
The Initial Public Offering (IPO) of the firm was opened for subscription on April 3 and closed on April 6. The company fixed the price band at ₹415 to 436 per equity share for the proposed IPO.
Avalon, an end-to-end supplier of electronic manufacturing services and solutions, was founded in 1999. Among its most important customers are Kyosan India, Zonar Systems Inc, Collins Aerospace, e-Infochips, The US Malabar Company, Meggitt (Securaplane Technologies Inc), and Systech Corporation. There are 12 production facilities spread out over the US and India.
On the final day, the IPO was subscribed 2.21 times, driven by strong responses from qualified institutional buyers (QIBs). The company has received bids for 2,53,32,856 shares against 1,14,63,854 shares on offer, according to data from the BSE.
QIBs subscribed to the issue 3.57 times. Retail investors subscribed to 84 percent of the portion reserved and non-institutional bidders subscribed to 41 percent of the portion set aside.
The company's ₹865 crore IPO is made up of ₹320 crore from a fresh share issuance and ₹545 crore from shares offer for sale (OFS) by promoters and existing shareholders. The company had previously planned to raise ₹1,025 crore through the IPO.
Avalon concluded a pre-IPO placement totaling ₹160 crore, made up of ₹80 crore in primary or fresh issuance and ₹80 crore in secondary share sales, reducing the size of the IPO.
Kunhamed Bicha, Bhaskar Srinivasan, T P Imbichammad, Mariyam Bicha, Anand Kumar, Sareday Seshu Kumar, and Luquman Veedu Ediyanam are the shareholders offloading their stake.
Most brokerages had a subscribe rating for the IPO on the back of a healthy order book, strong and steady financial performance, unique offering, and B2B business strategy.
"At the higher price band, the company is demanding an enterprise value/ trailing twelve months (EV/TTM) sales multiple of 3.1 times, which is at discount to the peer average of 6.3 times. Based on our FY24E forecasts, the demanded EV/Sales is around 2.3 times, which seems to be attractive for a company like Avalon, which is operating in the high-growth EMS space. Thus, we assign a 'subscribe' rating for the issue," said Choice Broking.