Syrma SGS Technology IPO Opens Today: Here’s everything you need to know

The Rs 840 crore Syrma SGS Technology IPO will be available for subscription till Thursday, August 18, 2022, and the price band of the company has been fixed at Rs 209-220 per share.

The Syrma SGS IPO is the first offer to hit the primary market in almost two-and-a-half months. Prior to this, Aether Industries IPO had opened for public subscription back on May 24-26, 2022.

The Syrma SGS Tech IPO comprises a fresh issue of shares worth Rs 766 crore and an offer for sale (OFS) of up to 33.69 lakh equity shares by promoter Veena Kumari Tandon.

The net proceeds from the fresh issue will be used for funding capital expenditure requirements for the development of an R&D facility and expansion / setting up of manufacturing facilities, funding our working capital requirements and general corporate purposes, according to the information given in the red herring prospectus (RHP).

Syrma SGS Technology is a technology-focused engineering and design firm that is engaged in turnkey electronics manufacturing services (EMS) that specialises in precision manufacturing.

Some of its top customers include TVS Motor Company, AO Smith India Water Products, Robert Bosch Engineering and Business Solution, Eureka Forbes and Hindustan Unilever, the RHP said.

It currently operates through 11 manufacturing facilities located across five states – Tamil Nadu, Karnataka, Himachal Pradesh, Haryana and Uttar Pradesh. It also has three R&D facilities, two of which are located in Chennai, Tamil Nadu and Gurgaon, Haryana, and one is located in Stuttgart, Germany.

In September last year, Syrma had acquired Gurugram-based SGS Tekniks in a cash and stock deal. Additionally, it acquired Perfect ID in October 2021.

Half of the issue size has been reserved for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors and the remaining 35 per cent for retail investors.

Investors who wish to subscribe to Syrma SGS IPO can bid in a lot of 68 equity shares and multiples thereafter. At the upper price band, they will be shelling out Rs 14,960 to get a single lot of Syrma SGS Technology. The shares will be listed on both BSE as well as the NSE.

The applicants also must note that the cut-off time for UPI mandate confirmation is Friday, August 19, 2022, upto 12:00 pm. If they fail to do so then their application may not be considered.

DAM Capital Advisors, ICICI Securities and IIFL Securities are the book running lead managers to the offer while Link Intime India is the registrar of the issue.

Before heading into the IPO, Syrma SGS Technology on Thursday raised over Rs 252.03 crore (Rs 2,52,03,77,420) from 18 anchor investors in lieu of 1,14,56,261 equity shares at Rs 220 each, data from the stock exchanges showed.

The anchor investors include Nomura, ICICI Prudential Mutual Fund (MF), Tata MF, IDFC MF, BNP Paribas Arbitrage, Edelweiss MF among others.

The research teams at Geojit Financial Services, Anand Rathi Share and Stock Brokers and Reliance Securities in their respective IPO notes have given a “Subscribe” rating to the offer for the long term.

Geojit Research in its IPO note said, “At the upper price band of Rs.220, SSTL is available at a P/E of 50.7x (FY22), which is available at a discount to its peers. Considering its good peer financial performance, strong focus on R&D, capacity expansion plans, positive industry outlook with government support through PLI schemes and China plus one strategy of multinational companies, we assign a “Subscribe” rating for the issue on a medium to long term basis.”

Anand Rathi Research noted, “At the upper end of the IPO price band, Syrma SGS Technology Ltd. is offered at P/E of 53.03x its FY22 earnings, with a post issue market capitalization of ₹38,770 Million. Syrma SGS Technology Ltd is one of the leading design and electronic manufacturing services companies with diversified product portfolio and service offerings catering to customers across various industries across countries. The Company is operating in one of the fastest growing sectors in the current market, including consumer electronics and appliances, telecommunications, automotive and industrial. The National Policy on Electronics (NPE) aims to make India a global hub of the electronic system design and manufacturing. However, the IPO is richly priced, hence we give the IPO a “Subscribe (Long Term)” rating.”

The share allotment is likely to take place on Tuesday, August 23, 2022, and the shares are expected to be listed on Friday, August 26, 2022, according to the timeline given in the RHP.