The Rs 865-crore initial share sale received a tepid response for the first two days, but sailed through on the last day, thanks to strong interest from qualified institutional buyers (QIBs).
The overall subscription of the issue was 2.21 times at close. The QIB portion was subscribed 3.57 times and retail investors' portion 84%. Non-institutional bidders showed the least interest in the issue with just 41% subscription.
Ahead of listing, Avalon Tech commanded a mild premium of Rs 6 in the unlisted market, which indicated a flattish debut.
The lower-than-expected subscription demand from all categories of investors was mainly on the back of fully priced-in valuations and a larger portion of funds going to promoters via OFS.
"The company's issue price was Rs 415-436, so shares are listed at par with no profit and no loss. Investors with a high-risk tolerance may consider holding Avalon Technologies Ltd. shares long-term, with a recommended stop loss of around Rs 405, which is the lower price band of the issue," Pravesh Gour, Senior Technical Analyst at Swastika Investmart, said.
Most analysts had a 'subscribe' recommendation on the issue for the long term, but after the muted response to the IPO, experts advised conservative investors to avoid holding the shares."In general, investors don’t like or prefer to be invested in a higher OFS IPO where there is no room for any upside in the near term. Hence, we advise conservative investors to avoid holding and watch out for better companies and opportunities, while risk takers can hold based on their risk appetite," said Prashanth Tapse, Senior VP (Research), Mehta Equities.
The issue comprised a fresh issue of shares up to Rs 324 crore and an offer for sale (OFS) of up to Rs 545 crore by promoters and selling shareholders.
Avalon Technologies is one of the leading fully-integrated electronic manufacturing services (EMS) companies with end-to-end operations in delivering box-build solutions in India. The company provides a full-stack product and solution suite, from printed circuit board design and assembly to the manufacturing of complete electronic systems.
The company plans to use proceeds from the fresh issue for the repayment of the borrowings and funding the working capital requirements. Further, residual funds will be used for general corporate purposes.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
Avalon Technologies shares list at 1% discount to issue price - Economic Times
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