Electronic manufacturing services firm Avalon Technologies’ ₹865 crore IPO to open on April 3

• The offer is a combination of fresh issue worth ₹320 crore and an offer for sale (OFS) of ₹545 crore.
• The price band of the issue has been set at ₹415 - ₹436 per share.
• The company intends to utilise the fresh issue towards debt repayment, funding working capital requirements and general corporate purposes.

The electronic manufacturing services company Avalon Technologies is all set to open its initial public offering (IPO) of shares on April 3 and close on April 6. The price band for the issue has been set at ₹415 - ₹436 per share.

Shares of the company were already commanding a premium of ₹25 per share in the grey market. GMP is the premium at which IPO shares are traded in an unofficial market before they are listed on the stock exchanges.

The offer is a combination of fresh issue worth ₹320 crore and an offer for sale (OFS) of ₹545 crore. The company has reduced the size of its IPO from ₹1,025 crore it had planned to raise earlier. As per reports, the company cut its IPO size after it completed a pre-IPO placement – carried out between October 2022 and February 2023 – amounting to ₹160 crore.

The company intends to utilise funds raised via the IPO towards debt repayment, funding working capital requirements and general corporate purposes. The company’s total net debt rose to ₹283 crore in FY22 from ₹261 crore in the previous financial year.

Avalon is an end-to-end electronic manufacturing service solutions provider founded in 1999. Some of its key clients include Kyosan India, Zonar Systems Inc, Collins Aerospace, e-Infochips, The US Malabar Company, Meggitt (Securaplane Technologies Inc) and Systech Corporation. It has 12 manufacturing units located across the US and India. The company says it can also benefit from the tailwinds of Aatmanirbhar Bharat and the production-linked incentive Scheme (PLI).

About 75% of the issue has been reserved for qualified institutional investors, 15% for non-institutional investors and the remaining 10% for retail investors.

Shares of the company will be listed on BSE and NSE on April 18.
Source: RHP

The company said it goes through huge competitive pressures in its business, which would be detrimental to its future prospects.

“We face significant competition in our business. The markets for our products are characterised by factors such as rapid technological change, the development of new end products and their rapid obsolescence, evolving industry standards and significant price erosion over the life of a product,” said the company in its red herring prospectus.

Its key competitors include Indian EMS providers such as Dixon Technologies (India), Amber Enterprises India, Elin Electronics, Syrma SGS Technology, Kaynes Technology India, VVDN Technologies and Bharat FIH Limited.

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