Contract electronics manufacturer Dixon Technologies (India) Ltd made a stellar debut on the stock exchanges on Monday with its shares soaring 64% from the initial public offering (IPO) price.
Shares of Dixon began trading on the BSE at Rs 2,725 apiece, up 54% from the issue price of Rs 1,766.
The shares rose as high as Rs 3,020.25 intraday, before closing with 64% gain at Rs 2,892.80 apiece.
The 30-stock benchmark BSE Sensex closed about 0.5% higher on Monday.
Dixon’s robust start follows its IPO, which was subscribed nearly 118 times with strong participation across investor categories.
The company’s market capitalision stands at Rs 3,276.62 crore. It was seeking a valuation of as much as Rs 1,946 crore (around $305 million) through the IPO. The company raised almost Rs 600 crore through the IPO. The offering comprised a fresh issue of shares and a secondary sale of 3.05 million shares by promoters and Motilal Oswal Private Equity Investment Advisors.
The company plans to use the fresh capital to pay debts worth Rs 22 crore and spend Rs 7.57 crore for setting up an LED TV manufacturing unit at its Tirupati facility. It also aims to spend Rs 8.85 crore towards enhancing backward integration capabilities in the lighting products vertical and Rs 10.6 crore for upgrading the IT infrastructure facility.
The Noida-based company, which was formerly known as Dixon Utilities and Exports Pvt. Ltd, joins listed peers Centum Electronics Ltd, MIC Electronics Ltd and PG Electroplast Ltd.
Dixon’s listing makes it the first electronics component contract manufacturer to opt for the capital markets-route since PG Electroplast went public with a Rs 121 crore IPO in September 2011.
Other unlisted companies that Dixon competes with include Jabil Circuit India Pvt. Ltd, SFO Technologies Pvt. Ltd, Elin Electronics Ltd, Rangsons Electronics Pvt. Ltd and Amara Raja Electronics Ltd, a unit of $2.3 billion Amara Raja Batteries Ltd.
Dixon had hired IDFC Bank, IIFL Holdings, Motilal Oswal Investment Advisors and Yes Securities as book-running lead managers for the IPO.
BRNL’s tepid show
Meanwhile, SREI Infrastructure Finance Ltd-promoted Bharat Road Network Ltd (BRNL) had a tepid show on its stock market debut with its shares opening flat and then inching marginally higher.
BRNL shares began trading on the BSE at Rs 204.90 apiece compared with the issue price of Rs 205. The shares then rose nearly 7% to a high of Rs 218.65 apiece, BSE data showed.
The stock closed at Rs 208.15 apiece at the end of Monday's trading.
BRNL’s poor show follows a public issue that received tough competition in subscription from Dixon Tech. The road developer’s IPO was subscribed 1.81 times.
With the listing of Dixon and BRNL, 18 companies have made debuts this year. Ten out of previous 16 companies have gained on debut, stock exchange data showed.
BRNL's market value stands at Rs 1,747.42 crore. The company was seeking a valuation of Rs 1,721 crore through the issue at the upper end of the Rs 195-205 price band.
At the upper end of the price band, the IPO size worked out to Rs 600.65 crore. The IPO comprised a fresh issue of 29.3 million shares and resulted in a 34.9% stake dilution on a post-issue basis.
Following the IPO, the company aims to sponsor the Solapur Tollways Pvt. Ltd project with a Rs 51.47-crore infusion. Solapur Tollways will use the money for a road project.
In addition, BRNL aims to acquire subordinated debt—in the form of unsecured loans, warrants and optionally convertible debentures (OCDs), among other instruments—worth Rs 372.25 crore held by SREI Infrastructure. It will use the balance for general corporate purposes.
Inga Capital Pvt. Ltd, Investec Capital Services (India) Pvt. Ltd and SREI Capital Markets Ltd are the financial advisers for the IPO.
BRNL joins a host of infrastructure and construction firms, such as Shankara Building Projects Ltd, PSP Projects Ltd, Dilip Buildcon, GR Infraprojects Ltd and GVR Infra Projects Ltd, tapping into the public market. Other infrastructure firms that have gone public in the past couple of years include Sadbhav Infrastructure Project Ltd, PNC Infratech Ltd and MEP Infrastructure Developers Ltd.