Cyient DLM IPO: All You Need To Know

The initial public offering of Cyient DLM Ltd. opens on Tuesday to raise as much as Rs 592 crore over three days, even as India doubles down on its electronics manufacturing push.

• Dates: June 27–30, 2023.

• Issue size: Rs 592 crore.

• Face value: Rs 10 per share

• Price: Rs 250–265 per share.

• Fresh issue: 2,23,39,623 shares.

• Lot size: 56 shares.

• Listing: BSE and NSE

The company has already raised Rs 108 crore by allotting 4.08 million shares to Amansa Investments at Rs 265 apiece in a pre-IPO placement, according to a notification. Axis Capital Ltd. and JM Financial Ltd. are book-running lead managers of the issue.

Cyient DLM, incorporated on June 30, 1993, is an integrated electronics manufacturing services and solutions provider with a focus on the entire lifecycle of a product, including design, build, and maintenance.

The company manufactures printed circuit boards, cable harnesses, and box builds used in safety-critical systems such as cockpits, in-flight systems, landing systems, and medical diagnostic equipment.

The company’s long-term clients include Honeywell International Inc., Thales Global Services SAS, ABB Inc., and Bharat Electronics Ltd.

The global EMS market is addressed by more than 1,000 companies, with the top 10 firms contributing 53% to the industry. Hon Hai Technology, or Foxconn, is the market leader and is followed by Pegatron, Quanta, and Wistron, all of which have recently set up shop in India.

Cyient DLM doesn’t have a direct Indian rival.

The Indian EMS industry contributed 2.2% of the global EMS market in 2022 but is among the fastest-growing at a compounded annual growth rate of 32.3%. By 2026, the country is expected to contribute 7% to the global market share.

The funds raised from the IPO will be used for:

• Working capital: Rs 291.09 crore.

• Capital expenditure: Rs 43.57 crore.

• Debt repayments: Rs 160.91 crore.

• Acquisitions: Rs 70 crore.

• General corporate purposes.

• Cyient DLM’s top 10 customers constituted 91.08% of its total revenue from operation in the fiscal ended March 31. The loss of any key customer can have material adverse effect on the company’s business, results of operations, financial condition, and cash flows.

• The company’s order book, worth Rs 2,432.54 crore, is not indicative of future growth or new orders. The company may not realise all of the revenue expected from the order book.

• Cyient DLM is dependent on promoter Cyient Ltd. and its management, and loss of any key management personnel can adversely affect the company’s business.

• Any failure to compete effectively in the highly competitive EMS industry can have a material adverse effect on the company’s business, results of operations, financial condition, and cash flows.

• Cyient DLM’s profit narrowed down by 20.27% year-on-year to Rs 31.72 crore in FY23.

• Any decrease in the sales of Cyient DLM’s printed circuit boards or in the volume of build-to-print, or B2P orders, will adversely affect business, results of operations, financial condition, and cash flows.

• Any disruption in any of Cyient DLM’s manufacturing facilities—particularly the one in Mysuru, which accounts for 90.75% of its total revenue from operations—may adversely affect business. 

• The capacity utilisation of Cyient’s facilities for the last three financial years is lower in comparison with other manufacturing companies.

• Failure to manage inventory costs may have adverse effect on business, results of operations, financial condition and cash flows.