GNG Electronics IPO Opens — Should You Subscribe Or Not? Read DRChoksey's Report

GNG Electronics Ltd., seller of refurbished product under the brand Electronics Bazaar has launched its initial public offering on July 23 and the offer closes for subscription on July 25.

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Deven Choksey Report

GNG Electronics Ltd., seller of refurbished product under the brand Electronics Bazaar has launched its initial public offering on July 23 and the offer closes for subscription on July 25. The company has fixed the price band in the range of Rs 225-237 per share.

The Rs 460-crore IPO comprises of a fresh issue of shares worth Rs 400 crore and an offer for sale of Rs 60-crore up to 25.5 lakh shares. The market value of GNG Electronics at the upper end of the price band is Rs 2,702 crore.

Motilal Oswal Investment Advisors, IIFL Capital Services Ltd., JM Financial Ltd. are the book-running lead managers for the public issue.

The allotment for the GNG Electronics IPO is expected to be finalized on July 28.

The shares will be listed on both the National Stock Exchange and the BSE on July 30.

Objects of the Offer

• Prepayment/ repayment of certain outstanding borrowings availed by the Company and Electronics Bazaar.

• General Corporate Purposes.

Outlook:

GNG Electronics, is the India’s largest refurbisher of Laptops and desktops, which sells refurbished product under the “Electronics Bazaar” brand to both retail and B2B customers. It operates through an integrated model, coupled with a robust global procurement network of 557 suppliers and extensive reach across 4,154 touchpoints in 38 countries. It can offer 5,800+ SKUs, for serving diverse client needs.

The company remains the India’s largest Microsoft-authorized refurbisher, led by its scale, operational excellence, global credibility and strong ESG initiatives. Led by its expertise in refurbishment of laptops, and brand accreditations from Lenovo and HP.

It has able to scale its revenue and Ebitda at 46.3% and 58.0% CAGR over FY23-25. Despite operating on thin margins, it has been able to post superior returns due to its strict capital allocation policy. Its Navi Mumbai facility has the capacity to refurbish ~360k laptops annually, of which it refurbished ~300k laptops during FY25.

The company can scale its capacity, rapidly due to the modular nature of the fit outs and machine used in the refurbishing process. It had a fixed asset turnover of ~40x in FY25, reflecting its asset-light model.

GNG Electronics through its initial issue, plans to raise ~Rs 460 crore, for repaying borrowings to the tune of Rs 320 crore and rest to fund the general corporate purposes.

Repayment of debt will lead to significant improvement to its profitability. In absence of like-to-like comparable listed peer, we have compared the company with e-waste metal recyclers, due to similar kind of margin profile and similar vendors supplying used electronic products.

We believe the company’s initial issue is fully priced in, as its is available at 26.3x trailing twelve months EV/Ebitda, higher than the peer’s TTM EV/Ebitda of 22.8x.

We expect sustained growth in financials led by consistent demand for quality refurbished electronic products and thus assign a “Neutral” rating to its initial issue.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.