Delhi based Elin Electronics has filed Draft Red Herring Prospectus (DRHP) with the market regulator SEBI for launching its Initial Public Offering (IPO). Elin Electronics is an electronics manufacturing services company and plans to raise as much as INR760 crore. According to DRHP, Elin Electronics IPO will be a mix of fresh issue (INR175 crore) and an offer for sale (INR585 crore).
Proceeds from Elin Electronics IPO’s fresh issue are proposed to be used towards:
- Repay/prepay debt – INR80 crore
- Funding capital expenditure for upgrading and expansion of existing plants in Ghaziabad, Uttar Pradesh and Verna, Goa – INR48.97 crore
- General corporate purposes
The Offer for Sale includes shares offered by promoters Kamal Sethia, Kishore Sethia, Gaurav Sethia, Sanjeev Sethia, Sumit Sethia, Suman Sethia, Vasudha Sethia and Vinay Kumar Sethia. The combined stake of promoters in the company stands at 38.69%.
Elin Electronics IPO: EMS to OEM, ODM segments
Elin Electronics offers Electronic Manufacturing Services (EMS), Universal Motors and Induction Motors, Design & Manufacturing of Tools/Moulds/Dies, Domestic Kitchen Appliances, Personal Care Products, Lighting Products & Automotive Components.
However, the company stands different from the traditional EMS companies given its backward integrated product and solutions suite. Its focus is on component fabrication, sourcing and system assembly. Its key products in its EMS business vertical include LED lighting, fans and switches; small appliances; fractional horsepower and other EMS products.
Catering to both original equipment manufacturer (OEM) and original design manufacturer (ODM) business models, Elin is one of the key players for LED lighting & Flashlights and Small Appliances with a market share of approximately 7% and 10.7% in FY21, respectively. The company partners with leading consumer electronics and appliances brands for LED lighting, fans and switches such as Signify Innovations and Eveready; for Small appliances such as Philips, Bosch, Faber, Panasonic and Usha; for fractional horsepower motors such as Havells, Bosch, Faber, Panasonic, Preethi (owned by Philips), Groupe SEB (Maharaja brand) and Usha; as well as for Medical diagnostic cartridges and for Moulded and sheet metal parts and components makers.
The company competes with the likes of Dixon Technologies and Amber Enterprises which have got themselves listed in recent years. While both IPOs rewarded investors, Dixon Technologies has had a particularly strong run on the bourses.
Elin Electronics Financial Performance (in INR crore)
Its revenues from operations increased by 9.8% from INR786.4 crore in FY2020 to INR864.9 crore in FY2021 primarily. This revenue growth was aided by increase in consumer purchase of home and personal appliances mid relaxation of COVID-19 led restrictions. Similarly, its net profits jumped 26.8% to INR34.9 crore for FY2021 from INR27.5 crore for FY2020.
The company also put a particularly strong performance in the six months ended 30 September 2021 as revenues stood at INR518.9 crore while profits were at INR19.3 crore. When annualized, both figures represent gains from previous year’s corresponding figures.
Given the successful IPOs of peers, Elin Electronics IPO will be closely watched by investors.