Cyient subsidiary files draft papers with SEBI for IPO worth ₹740 crore
- Cyient DLM looks to raise ₹740 crore through a fresh issue of equity shares.
- The company is a wholly owned subsidiary of IT services company Cyient, which is listed on Indian stock exchanges.
- The company is a qualified supplier to global original equipment manufacturers (OEMs) in the aerospace and defence, medical technology and industrial sectors.
- China plus one strategy is aiding the company by providing opportunities to grow its business and market share, it says in its DRHP.
AdvertisementElectronic manufacturing services and solutions provider Cyient DLM filed its draft red herring prospectus (DRHP) papers with market regulator SEBI to raise funds through an initial public offering (IPO).
The company is a wholly owned subsidiary of IT services company Cyient, which is listed on Indian stock exchanges. Cyient has informed investors in a BSE statement that its subsidiary may also consider raising up to ₹148 crore prior to the filing of the red herring prospectus with the registrar of companies.
If it raises funds through the pre-IPO placement, the fresh issue size will be reduced accordingly.
Cyient DLM is looking to raise ₹740 crore through a fresh issue of equity shares. The proceeds from the IPO will be utilised towards funding incremental working capital, capital expenditure, repayment of loans, achieving inorganic growth through acquisitions and general corporate purposes.
The company is a qualified supplier to global original equipment manufacturers (OEMs) in the aerospace and defence, medical technology and industrial sectors.
It claims to be amongst few electronic manufacturing services (EMS) companies in India catering to highly regulated industries; and the largest supplier of EMS services to the aerospace and defence industry.
Its offerings include printed circuit boards, cable harnesses, and box builds which are used in safety critical systems such as cockpits, inflight systems, landing systems, and medical diagnostic equipment.
Some of its marquee customers are Honeywell International, Thales Global Services SAS, ABB Inc, Bharat Electronics and Molbio Diagnostics. It has manufacturing facilities in Mysuru, Hyderabad and Bengaluru.
China plus 1 strategy
The company in its DRHP said that India is well positioned to benefit from global original equipment manufacturer’s (OEM) strategy towards China plus 1 strategy for supply chain diversification.
China leads the global electronic manufacturing services business, and had 46.7% share in 2021. It is a global leader due to operational cost benefits, availability of a large number of highly skilled personnel, infrastructure, logistical advantages, and proximity to the largest end user base across all end-user verticals, the company says.
Advertisement“However, many global electronics manufacturers are now contemplating on China + 1 strategy and looking for alternate manufacturing locations for exports, creating tremendous investment potential for countries like Vietnam, India, and the Philippines etc,” said the draft red herring prospectus.
Its order book has increased to ₹1,202 crore as on March 2022 from ₹906 crore in the previous year.
The company is heavily dependent on ten customers as 93.24% of its revenues came from them in FY22. Its dependence on these customers has gone up slowly but steadily to 90.8% in FY21 and 89.3% in FY20.
The profitability of the company has more than tripled in FY22 from the previous financial year at ₹39.7 crore.
|Particulars||Revenue from operations||Profit for the period|
|FY22||₹720 crore||₹39.7 crore|
|FY21||₹628 crore||₹11.8 crore|
|FY20||₹457 crore||-₹6.7 crore|
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