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Cyient DLM made a strong debut on the bourses on Monday, with its shares listed at Rs 403 (NSE), a 52 per cent premium over the issue price of Rs 265 per share. The stock opened at Rs 401 on the BSE. Post listing, the stock hit a high of Rs 425 on the NSE and and Rs 424.40 on the BSE.
At 10:09 AM; Cyient DLM was trading at Rs 404.25, nearly 53 per premium over its issue price. A combined around 10.5 million equity shares had changed hands on the NSE and BSE. In comparison, the Nifty 50 and the S&P BSE Sensex were up 0.40 per cent and 0.30 per cent, respectively.
As expected, Cyient DLM made an outstanding entry in the secondary market at a listing price of Rs 403. Cyient DLM is a fundamentally strong company, has a strong track record of growth, and is well-positioned to benefit from the growing demand for digital manufacturing solutions. We will not recommend a fresh Buy at this level. However, existing investors can hold the shares for the long term with a stop loss at 362.7, as the company has good growth prospects, said Anubhuti Mishra, Equity Research Analyst at Swastika Investmart in a note post listing.
The Initial Public Offer (IPO) of electronic manufacturing services (EMS) firm had received an overwhelming response from investors, with the issue subscribed up to 71.35 times. The quota for Qualified Institutional Buyers (QIBs) received 95.87 times subscription while the category for Retail Individual Investors (RIIs) and Non-Institutional Investors (NIIs) was subscribed 52.17 times and 47.75 times, respectively.
Cyient DLM is a subsidiary of Cyient. It provides EMS and solutions. The company provides EMS as build-to-print (B2P) and build-to-specification (B2S) services. The core solutions provided by Cyient DLM encompass various key components, including printed circuit board assembly, cable harnesses, and box builds. These components play a crucial role in safety of critical systems such as cockpits, inflight systems, landing systems, and medical diagnostic equipment.
The company has a customer base which includes global OEMs in the aerospace and defence, medical technology and industrial sectors and its key customers include Honeywell International, Thales Global Services, ABB Inc, Bharat Electronics, and Molbio Diagnostics.
Cyient DLM has strong industry tailwinds working in its favour as domestic EMS industry is expected to grow at 32 per cent CAGR over FY22-27. Over FY21-23 period, Cyient DLM’s revenue growth is lagging peers at 15 per cent CAGR; however its strong order book provides decent visibility of accelerated growth going forward. It’s valuation on P/E basis is reasonable compared to peers, at 66.2x FY23 earnings, considering the future growth opportunities, analysts at Nirmal Bang Securities said in IPO note.
The EMS market globally is witnessing a strong growth trajectory. India’s EMS market contributes 2.2 per cent ($20bn) of the global EMS market in 2022 and it is the fastest growing among all countries at a CAGR of 32.3 per cent. It is expected to contribute 7 per cent ($80bn) of the global EMS market in 2026 which will aid the company to grow further, analyst at Reliance Securities had said.
