Breaking Down the Latest IPO Buzz: A Week in Review

The last financial week of 2022-23 saw a surge of IPO buzz in the market, with several companies submitting their DHRP (Draft Red-Herring Papers) and others receiving approval to go public. Companies like Avalon Technologies, Netweb Technologies, and JG Chemicals made headlines with their IPO plans. The companies intend to use the money raised through IPOs for debt repayment, funding operations, civil building, investment, research and development, and working capital requirements. The market eagerly awaits the opening of the IPOs for investment and the subsequent listing of the shares on the stock exchange. Overall, the IPO buzz indicates a promising start to the financial year 2023-24.

Avalon Technologies

Avalon Technologies, a company that makes electronics, is going public by selling shares to investors. The price range for the shares is set at Rs 415-436, which values the company at Rs 2,500 crore. The IPO will be open for investment from April 3 to April 6, and the shares will be listed on the stock exchange on April 18. The company is selling some new shares for Rs 320 crore and some old shares for up to Rs 545 crore. 

The money raised will be used for paying off debt and funding operations. Avalon makes electronic products for other companies and has 12 factories in India and the US.

Netweb Technologies India Ltd

In order to generate money through an IPO, Netweb Technologies India Ltd, an Indian provider of high-end computer solutions, has submitted draft papers to the Securities Exchange Board of India (SEBI). As part of the IPO, the company’s current shareholders and promoters would offer up to 8.50 million shares for sale, totaling a fresh issue of shares worth Rs 275 crore. 

The money obtained through the offering will be used for several things, including debt reduction and civil building. The issue’s primary managers are Equirus Capital and IIFL Securities. Revenue and net profit for the company increased significantly in FY22. The company’s entire backlog of orders as of February 2023 was Rs 98.12 crore.

JG Chemicals

JG Chemicals, a zinc oxide manufacturer based in Kolkata, has received permission from the Securities and Exchange Board of India (SEBI) to raise funds through an initial public offering (IPO). They intend to issue new shares worth Rs 202.50 crore and sell up to 5.70 million shares held by existing shareholders and promoters. 

The funds raised will be used to invest in BDJ Oxides (a subsidiary company of JG Chemicals), repay a Rs 45 crore debt, establish a research and development center, and cover working capital requirements. As of December 20, 2022, BDJ Oxides had outstanding borrowings of Rs 54.65 crore.

Udayshivakumar Infra

Udayshivakumar Infra is a company that constructs roads, bridges, canals, and industrial areas in Karnataka. Its initial public offering (IPO) was subscribed to 5.15 times and is expected to list on the stock exchanges BSE and NSE on April 3, 2023. The IPO offered fresh equity shares of up to ₹66 crores and was priced in a range of ₹33-35 a share. The company’s shares currently command a premium of ₹9 in the grey market. 

The proceeds from the IPO will be used for working capital requirements and general corporate purposes. The company’s financial performance has been inconsistent over the last three years, with EBITDA (Earning Before Interest, Tax, Depreciation, and Amortisation) margins of 13.41% and PAT (Profit After Tax) margins of 6.54% in FY22. The asking price-to-earnings ratio based on FY22 earnings is around 10x, which is moderate compared to its peers.

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