Avalon Technologies IPO: All You Need To Know

The initial public offering of Avalon Technologies Ltd. is set to open on April 3 and close on April 6.

With this IPO, the Chennai-based electronic manufacturing services provider aims to raise Rs 865 crore. It consists of a fresh issue of shares worth Rs 320 crore and an offer for sale worth Rs 545 crore.

The company has priced its shares in the range of Rs 415–436 apiece. At the upper end of price band, the company will be valued at Rs 2,847 crore.

Bidding by anchor investors opened on March 31.

IPO Details

• Duration: April 3 to April 6.

• Fresh Issue: Rs 320 crore

• Offer for sale: Rs 545 crore

• Price band: Rs 415–436 per share.

• Issue size: Rs 865 crore.

• Face value: Rs 2 apiece.

• Lot size: 34 shares and multiples.

• Listing on: BSE and NSE.

• Lead managers: JM Financial, DAM Capital, IIFL Securities, Nomura

Use Of Proceeds

• Prepayment or repayment of all or a portion of certain outstanding borrowings availed by the company and material subsidiary, Avalon Technology and Services Pvt.: Rs 145 crore

• Working capital requirements: Rs 90 crore

• General corporate purposes: Undecided

Business

Avalon is in the business of manufacturing high-value precision engineered products. The company says 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 and certain global original equipment manufacturers. It also operates as a holding company for three subsidiaries.

Incorporated in 1999, its other capabilities include cable assembly and wire harnesses, sheet metal fabrication, machining, magnetics and injection-molded plastics.It operates 12 manufacturing facilities across India and the US, which comprise a total of 66 production lines, consisting of 11 SMT lines, 12 THT lines and 43 assembly lines. Some are dedicated lines that are tailored to a few specific customers, such as e-Infochips Pvt. and Kyosan India Pvt.Kunhamed Bicha and Bhaskar Srinivasan are the promoters of Avalon, holding 53.38% of the pre-offer paid-up capital of the company.

Financials

Peer Comparison

Risk Factors

• Dependent on certain customers for a portion of our revenues. Loss of relationship with any of these customers or a reduction in their demand for products may have a material adverse effect on profitability and results of operations.

• Not entered into any definitive arrangements to utilise certain portions of the net proceeds.

• Faces significant competitive pressures.

• Foreign exchange fluctuations may adversely affect earnings and profitability.

• May not be able to successfully develop new production processes and adopt new original design manufacturing capabilities if unable to identify emerging trends.

• Have had negative cash flows from operating activities in the past and may continue to have negative cash flows in the future.

• Dependence on subsidiaries exposes it to significant risks.

• Any downgrade in credit ratings may restrict access to capital and, thereby, adversely affect business and results of operations.

Conversation With Avalon's CMD And CFO