Article

Dixon Technologies Ltd - Information Note

07 Aug 2019 Nikita Bhoota

Untitled Document

This document summarizes a few key points related to the issue and should not be treated as a comprehensive summary. Investors are requested to refer the Red Hearing Prospectus for further details regarding the issue, the issuer company and the risk factors before taking any investment decision. Please note that investment in securities is subject to risks including loss of principal amount and past performance is not indicative of future performance. Nothing herein constitutes an offer of securities for sale in any jurisdiction where it is unlawful to do so.

This document is not intended to be an advertisement and does not constitute an invitation or form any part of any issue for sale or solicitation of an offer to subscribe for or purchase any securities and neither this document nor anything contained herein shall form the basis for any contacts or commitment whatsoever.

Issue Opens: September 6, 2017
Issue Closes: September 8, 2017
Face Value: Rs 10
Price Band: Rs 1,760-1,766
Issue Size: Rs 600 cr (3.4 mn shares)
Bid Lot: 8 Equity shares         
Issue Type: 100% Book Building

% shareholding

Pre IPO

*Post IPO

Promoter

46.2

38.9

Public

53.8

61.1

Source: RHP, * calculated based on information from RHP (at upper band)

Company Background

Electronic manufacturing firm Dixon Technologies manufactures consumer durables, lighting, mobile phones and home appliances, which made up for 34%, 22%, 33% and 8% of FY17 revenue respectively. It also provides reverse logistics (2.6%) services including set top boxes and mobile repairs. Additionally, it is also a leading Original Design Manufacturer (ODM) of lighting products, LED TV and semi-automatic washing machines in India. ODM contributes 22% to total sales. Its key customers are Panasonic, Philips, Haier, Gionee, Surya Roshni, Reliance Retail, Intex Technologies, Mitashi and DishTV.

Objects of the Issue

The offer consists of Fresh Issue of ~0.34 mn Equity Shares (aggregating upto ~ Rs 60 cr) and Offer for Sale of up to ~ 3.05 mn Equity Shares. The proceeds of the Fresh Issue will be utilized in setting up a unit for manufacturing of LED TVs at Tirupati Facility (Rs 60 cr), repayment or prepayment of debt (Rs 22 cr) enhancing backward integration capabilities in lighting products (Rs 8.9 cr) and for other general corporate purposes.

Key Points

The company targets to increase its share of ODM sales as it controls entire manufacturing cycle of a product; thereby leading to higher margins as compared to OEM segment.

Dixon is setting up a unit for manufacturing of LED TVs at Tirupati. Also, manufacturing of CCTVs and DVRs (through a joint venture) will be carried out at this facility. The company also plans to export its products to South East Asia market.

Dixon has low working capital cycle, stable operating cash flows and high returns.

Valuation

On post issue basis, the company is valued at 39.7xFY17 EPS (calculation based on upper band price and reported net profit considering post issue O/S shares). There are no listed entities similar to its business offerings.

*For additional information and risk factors please refer to the Red Herring Prospectus. Please note that this document is for information purpose only.

Disclaimer: https://www.5paisa.com/research/disclaimer

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Dixon Technologies Ltd - Information Note

07 Aug 2019 Nikita Bhoota

Untitled Document

This document summarizes a few key points related to the issue and should not be treated as a comprehensive summary. Investors are requested to refer the Red Hearing Prospectus for further details regarding the issue, the issuer company and the risk factors before taking any investment decision. Please note that investment in securities is subject to risks including loss of principal amount and past performance is not indicative of future performance. Nothing herein constitutes an offer of securities for sale in any jurisdiction where it is unlawful to do so.

This document is not intended to be an advertisement and does not constitute an invitation or form any part of any issue for sale or solicitation of an offer to subscribe for or purchase any securities and neither this document nor anything contained herein shall form the basis for any contacts or commitment whatsoever.

Issue Opens: September 6, 2017
Issue Closes: September 8, 2017
Face Value: Rs 10
Price Band: Rs 1,760-1,766
Issue Size: Rs 600 cr (3.4 mn shares)
Bid Lot: 8 Equity shares         
Issue Type: 100% Book Building

% shareholding

Pre IPO

*Post IPO

Promoter

46.2

38.9

Public

53.8

61.1

Source: RHP, * calculated based on information from RHP (at upper band)

Company Background

Electronic manufacturing firm Dixon Technologies manufactures consumer durables, lighting, mobile phones and home appliances, which made up for 34%, 22%, 33% and 8% of FY17 revenue respectively. It also provides reverse logistics (2.6%) services including set top boxes and mobile repairs. Additionally, it is also a leading Original Design Manufacturer (ODM) of lighting products, LED TV and semi-automatic washing machines in India. ODM contributes 22% to total sales. Its key customers are Panasonic, Philips, Haier, Gionee, Surya Roshni, Reliance Retail, Intex Technologies, Mitashi and DishTV.

Objects of the Issue

The offer consists of Fresh Issue of ~0.34 mn Equity Shares (aggregating upto ~ Rs 60 cr) and Offer for Sale of up to ~ 3.05 mn Equity Shares. The proceeds of the Fresh Issue will be utilized in setting up a unit for manufacturing of LED TVs at Tirupati Facility (Rs 60 cr), repayment or prepayment of debt (Rs 22 cr) enhancing backward integration capabilities in lighting products (Rs 8.9 cr) and for other general corporate purposes.

Key Points

The company targets to increase its share of ODM sales as it controls entire manufacturing cycle of a product; thereby leading to higher margins as compared to OEM segment.

Dixon is setting up a unit for manufacturing of LED TVs at Tirupati. Also, manufacturing of CCTVs and DVRs (through a joint venture) will be carried out at this facility. The company also plans to export its products to South East Asia market.

Dixon has low working capital cycle, stable operating cash flows and high returns.

Valuation

On post issue basis, the company is valued at 39.7xFY17 EPS (calculation based on upper band price and reported net profit considering post issue O/S shares). There are no listed entities similar to its business offerings.

*For additional information and risk factors please refer to the Red Herring Prospectus. Please note that this document is for information purpose only.

Disclaimer: https://www.5paisa.com/research/disclaimer