DIXON TECHNOLOGIES (INDIA) LIMITED IPO Price Band : `1760 `1766 our recommendation neutral
THE OFFER Issue Open : 6 Sep 2017 to 8 Sep 2017»» Issue Type: Book Built Issue IPO»» Issue Size: Offer for Sale of 3,053,675 Equity Shares Fresh Issue aggregating up to ` 60.00 Cr»» Face Value: `10 Per Equity Share»» Issue Price: `1760 `1766 Per Equity Share»» Market Lot: 8 Shares»» Minimum Order Quantity: 8 Shares»» Listing At: NSE, BSE
CAPITAL STRUCTURE The share capital of Company, is set forth below:- (Amount in ` except share data) Authorised Share Capital :- 26,000,000 Equity Shares @10 Aggregate value 260,000,000 Issued, subscribed and paid up capital before the Issue :- 10,985,341 Equity Shares @10 Aggregate value 109,853,410 Present Issue:- Offer for Sale 3,053,675 Equity Shares Fresh Issue aggregating up to Rs 60.00 Cr
OBJECT OF THE OFFER The Proceeds from the Offer for Sale The proceeds from the Offer for Sale (net of Offer related expenses of the Selling Shareholders) shall be received by the Selling Shareholders and Company shall not receive any proceeds from the Offer for Sale. Objects of the Fresh Issue Company proposes to utilise the Net Proceeds towards funding the following objects:- Repayment/pre-payment, in full or in part, of certain borrowings availed by Company. Setting up a unit for manufacturing of LED TVs at the Tirupati Facility. Enhancement of backward integration capabilities in the lighting products vertical at Dehradun Facility. Upgradation of the information technology infrastructure of Company. General corporate purposes
COMPANY OVERVIEW Dixon Technologies (India) Limited (DTIL) is the largest Indian design-focused and solutions company and leading Original Design Manufacturer ( ODM ) of lighting products, LED TVs and semi-automatic washing machines in India. DTIL s diversified product portfolio includes: Consumer electronics like LED TVs, Home appliances like washing machines, Lighting products like LED bulbs and tube lights, down lighters and CFL bulbs Mobile phones. The company also provides solutions in reverse logistics i.e. repair and refurbishment services of set top boxes, mobile phones and LED TV panels. Its key customers include Panasonic India Private Ltd., Philips Lighting India Ltd., Haier Appliance Pvt. Ltd., Gionee, Surya Roshni Ltd., Reliance Retail Limited, Intex Technologies Ltd., Mitashi Edutainment Pvt. Ltd., Dish Infra Services Private Ltd.
STRENGTHS Leading market position in key verticals Strong relationships with a diverse top-tier customer base End to end solutions provider with dedicated research and development capabilities Flexible and cost-effective manufacturing capabilities Strong Financial Performance and stable cash flows
FINANCIAL PERFORMANCE Consolidated net worth of the company stood at ` 198 crore, as of March 31, 2017. The company reported PAT of ` 46.48 crore, grew at a rate of 27.6% over the past year. Total consolidated revenue grew at a compounded annual growth rate (CAGR) of 34 % while the bottomline expanded by 78 % over the past five years. The company has a total debt of ` 65 crores, the debt-to-equity ratio of the company is quite lower, stands at 0.3 times as of March 31, 2017. The company has no listed competitor as it generates revenue from various business segments which is a big positive.
SNAPSHOT - CONSOLIDATED Revenue from operations (net), PAT and EBITDA, as restated, on a consolidated basis, grew at a CAGR of 33.78%, 78.34% and 44.36%, respectively from Fiscal 2013 to Fiscal 2017. FINANCIAL PERFORMANCE (In Cr) PARTICULARS FY17 FY16 FY15 FY14 FY13 REVENUE 2456.7 1389.4 1201.3 1093.7 766.9 EBITDA 92.2 60.4 33.9 29.3 21.2 EBITDA % 3.75 4.35 2.83 2.68 2.77 PAT 50.3 42.5 11.8 13.5 4.9 PAT % 2.05 3.06 0.99 1.24 0.65
INDUSTRY OVERVIEW Indian Consumer Electronics and Appliances (CEA) market has been witnessing sustained double digit growth rate in the past few years. Increasing product awareness, affordable pricing, innovative products and the high disposable incomes have aided in the strong growth in the CEA market in India The EMS market in India enjoys unique benefits of an explosive domestic demand and the migration of manufacturing from other manufacturing havens driven by multiplicity of factors. These reasons have resulted in the Indian EMS market growing at a higher rate than the average global market and are expected to intensify in the next decade.
RISK FOR THE BUSINESS Company is highly dependent on certain key customers for substantial portion of its revenues. Loss of relationship with any of these customers may have adverse effect on profitability and operations. Shortages in, or rises in the prices of, raw materials or components for products manufacture, which account for majority of costs, may adversely affect business. Company depend on certain suppliers for raw materials and other components required for manufacturing process which could result in delays and adversely affect output.
Continue Company as well as customers operate in a highly competitive industry. Failure to compete effectively may impact on business. Some of Companies Group have incurred losses in the past and may incur losses in the future. The GOI has implemented a new national tax regime by imposing GST. Company had negative cash flows in the past years
VALUATION Dixon is highly dependent on certain key customers for a substantial portion of revenues (aggregate of five customers account for 82.93% of revenue ) Loss of relationship with any of these customers may impact business and its dependency on certain suppliers for raw materials any delays can adversely affect output. Company as well as customers operate in a highly competitive industry. Failure to compete may impact on business. Taking into consideration, its dependency on certain key customers, rapidly changing consumer preferences, advancement in technology, cut throat competition our recommendation remains NEUTRAL for this IPO.
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