Shares of IKIO Lighting made a stellar debut on the bourses today. On NSE, the stock listed at ₹392.5, a premium of 37.7 percent or ₹107 versus its issue price of ₹285. On BSE, the stock listed at ₹391, a premium of 37.1 percent or ₹106 vs IPO price.
The ₹607 crore-initial public offer (IPO) witnessed strong interest from the investors and was subscribed 66.30 times in the three-day bidding process. The portion for qualified institutional bidders was subscribed the most, 163.68 times, followed by the non-institutional investors' portion, which was subscribed 63.35 percent. Finally, the quota reserved for retail investors was subscribed 13.86 times.
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 IPO had a price band of ₹270-285 and was opened for subscription on between June 6-8, 2023.
Hem Securities believes that the company is well poised to capture the growth of the LED market with a diverse product basket & focus on high-margin areas. It enjoys long-term relationships with leading industry customers and has a strong focus on R&D. We like the company as it has an established infrastructure with backward integration along with strong and consistent financial performance.
The net proceeds of the offer, thereby, will be used to repay borrowings, invest in subsidiary IKIO Solutions for setting up a new facility in Noida, and other general corporate purposes.
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.
Most brokerages recommend subscribing to the IPO as the company has a diverse product basket with a focus on high-margin areas, a strong growth outlook and consistent financial performance.
"The company's ability to offer end-to-end solutions and its backward-integrated manufacturing has resulted in a strong business model with healthy RoEs despite operating on a smaller base than its peers, which cater mainly to the mass-market needs of leading brands," said Anand Rathi.
