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Price, GMP, Financials; Risk, Should you Invest?

Price, GMP, Financials; Risk, Should you Invest?


Syrma SGS Tech IPO Opens Today: Syrma SGS Technology (SSTL) IPO opens for subscription today, August 12, 2022. The Rs 840 crore public offer will be available for subscriptions till August 18. Electronic manufacturing services firm Syrma said it has raised Rs 252 crore from anchor investors ahead of its initial share sale. Nomura, Kuber India Fund, BNP Paribas Arbitrage, Aditya Birla Sun Life Insurance Company, ICICI Prudential Mutual Fund (MF), Tata MF, Edelweiss MF and IDFC MF are among the anchor investors, it added.

Syrma SGS would be the first company to tap the primary market in two-and-a-half months. Prior to that, the IPO of Aether Industries was opened for public subscription during May 24-26.

Syrma SGS Tech IPO: Price Band

Syrma SGS Technology IPO, with a price band of Rs 209-220 a share, will be open for public subscription during August 12-18. At the upper end of the price band, the initial share-sale is expected to fetch Rs 840 crore. The public issue of Syrma SGS comprises a fresh issue of shares worth Rs 766 crore, and an Offer For Sale (OFS) of up to 33.69 lakh equity shares by Veena Kumari Tandon.

Syrma SGS Tech IPO: Valuation

The issue is priced at P/BV of 2.66 at NAV of Rs. 42.36 as of FY22. Company’s Debt to Equity ratio has improved from 0.82 in FY20 to 0.24 in FY22. As per the RHP, there are listed peers like Dixon Technologies trading at P/E 110x (Highest) and Amber Enterprises trading at P/E 75x (Lowest) and the industry average P/E is 93x. Hence the Syrma Share Price at P/E of ~45x is reasonably priced, Shushil Finance said in its IPO note.

Syrma SGS Technology IPO: Lot Size

Investors who wish to subscribe may bid for a lot size of 68 shares and thereafter in multiples of 68 equity shares. Those planning to invest in the issue will have to make a minimum investment at the upper end of the price band will be Rs 14,960 per lot and Rs 1,94,480 would be the maximum investment against 13 lots as they are allowed to invest up to Rs 2 lakh.

Syrma SGS Technology IPO: Financials

Syrma SGS Technology had good revenues even in the Covid-19 period. The sales are increasing at a steady pace. Syrma reported a 16.6 per cent year-on-year growth in proforma profit at Rs 76.46 crore for the year ended March 2022 on the strong top line and operating performance.

Syrma SGS Technology IPO: Objective

The company intends to use the funds raised for multiple purposes such as funding capital expenditure requirements for the development of an R&D facility and expansion / setting up of manufacturing facilities. It will also use the proceeds for funding long-term working capital requirements and general corporate purposes.

Syrma SGS Technology IPO: Risks

Highlighting the key concerns, Choice Broking said unfavorable government policies and regulations, delay in expanding the capacity, unfavorable sales mix, unfavorable forex movements, working capital intensive operations, and competition, remain key areas of concern.

Syrma SGS Technology IPO: GMP Today

According to market observers, shares of Syrma SGS Technology Ltd are trading at a premium of Rs 20 per equity share. Thursday evening, Syrma SGS Technology IPO GMP was Rs 10, which means the grey market premium of the upcoming share has doubled in the last 24 hours.

Syrma SGS Technology IPO: Should you Subscribe?

Giving ‘buy with caution’ tag, Choice Broking says, “The company reported a positive cash flow from operations in FY20 and FY21. Higher operating assets mainly led to a negative operating cash flow in FY22. However, average operating cash flow during the period stood at Rs. 60.1cr. Financial liabilities increased by 34.7% CAGR, however, on account of higher equity base debt-to-equity ratio improved from 0.3x in FY20 to 0.2x in FY22. Pre-issue average RoIC and RoE stood at 13.6% and 15%, respectively.”

Geojit said: “Considering its good peer financial performance, strong focus on R&D, capacity expansion plans, positive industry outlook with government support through PLI schemes and China plus one strategy of multinational companies, we assign a “Subscribe” rating for the issue on a medium to long term basis.”

The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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