Avalon Tech files IPO papers with SEBI, plans to raise Rs 1,025 crore through public issue

Avalon Technologies has filed a draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) to raise around Rs 1,025 crore through an initial public offering. The IPO will consist of a fresh issue of Rs 400 crore and an offer-for-sale (OFS) of up to Rs 625 crore by its existing shareholders and promoters. The OFS will comprise up to Rs 130 crore by Kunhamed Bicha, Rs 210 crore by Bhaskar Srinivasan, Rs 34 crore by TP Imbichammad, Rs 12 crore by Mariyam Bicha, and up to Rs 79.51 crore each by Anand Kumar, Sareday Seshu Kumar and Luquman Veedu Ediyanam, according to the DRHP.

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The proceeds from the issue worth Rs 150 crore will be used for prepayment or repayment of all or a portion of certain outstanding borrowings availed by the company and one of its material subsidiaries, ATSPL. As of June 2022, Avalon Tech’s total outstanding borrowings amounted to Rs 312.27 crore. The company will also use Rs 150 crore for funding its working capital requirements. As of March this year, the aggregate amount sanctioned by the banks to its firm under the fund based working capital facilities amounted to Rs 126.50 crore on a standalone basis. JM Financial, DAM Capital Advisors, IIFL Securities and Nomura Financial Advisory and Securities India are the book running lead managers to the issue.

Avalon Tech is among fully integrated electronic manufacturing services companies delivering box build solutions in India in terms of revenue, with a focus on high value precision engineered products. Through its global delivery model, it provides a full stack product and solution suite, from printed circuit board design and assembly to end-to-end box build of electronic systems, to certain global original equipment manufacturers. Company’s other capabilities include cable assembly and wire harnesses, sheet metal fabrication, machining, magnetics and injection molded plastics.

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Financials

For FY22, Avalon Technologies’ net profit for the year stood at Rs 68.16 crore as against Rs 23.08 crore last year, while EBITDA margin for the year improved to 11.6 per cent from 9.58 per cent a year ago. Company’s total income increased to Rs 851.65 crore from Rs 695,90 crore a year ago. Its total order book increased to Rs 1,039.15 crore as of June 2022 from Rs 857.87 crore in FY22, while the total customer as of March 2022 was at 81 compared to 62 a year ago.