The initial share sale of IKIO Lighting, a LED lighting solutions provider, was subscribed 2.43 times on Day 2 with non-institutional investors (NIIs) and retail investors doing the heavy lifting. The NII part was subscribed 4.99 times, retail investors portion 2.51 times, while the qualified institutional buyers (QIB) category was subscribed 0.31 times.

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The Rs 606.5-crore Initial Public Offer (IPO) of IKIO Lighting received bids for 3,70,49,064 shares against 1,52,24,074 shares on offer for the subscription by 10:30 am on Wednesday, June 7, 2023, according to data from NSE.

The IPO, which has a fresh issue of up to Rs 350 crore and an Offer for Sale (OFS) of up to 90 lakh equity shares, will close tomorrow (June 8). The price band is at Rs 270-285 a share till Thursday in a lot size of 52 equity shares. The company is looking to raise Rs 607 crore from its primary offering.

According to market observers, the company's shares are commanding a premium of Rs 105 in the unlisted market.

Five brokerages have given "subscribe" recommendations to the issue, with some of them seeing the potential in the long term.

Here's what analysts say —

Reliance Securities: "IKIO Lighting enjoys long term relationships with most of its clients Considering the healthy business prospects, company’s high return ratios & margins, debt repayment and valuation comfort at 47.8 times P/E (price-earnings) on annualised FY23 financials," analysts at Reliance Securities said, adding a 'subscribe' rating to the issue.

Swastika Investmart: Analysts at Swastika Investmart has advised investors to "subscribe" to the issue both for listing gains and long term. "The company has a diverse product basket with a focus on high-margin areas, and we can witness its growth through consistent financial performance," the note stated.

Hem Securities: The brokerage has a 'subscribe' tag on the public offer. "The company is well poised to capture the growth of the LED market with a diverse product basket & focus on high-margin areas. It enjoys long-term relationships with leading industry customers & has a strong focus on R&D. "We like the company as it has established infrastructure with backward integration along with strong and consistent financial performance," it said.

Mehta Equities: The brokerage has given a "subscribe" rating to the IPO as it said that IKIO's offer gives investors an opportunity to invest in one of the growing original design manufacturing (ODM) EMS businesses.

Anand Rathi: Analysts at Anand Rathi have assigned a subscribe rating for the IPO, saying the company is a well established player in a niche market which has strong RoE despite its small size.

Kotak Securities: The brokerage has assigned "un-rated" tag to the IPO, which comprises fresh issue of up to Rs 350 crore by the company and the OFS of up to 90 lakh equity shares by the selling shareholders.

IKIO IPO Day 1 bidding

On the first day of bidding, the issue saw a strong demand from the investors. The public offer, which kicked-off for subscription on Tuesday, received 1.55 times subscription. It received bids for 2,36,67,020 shares against 1,52,24,074 shares on offer.

A day before the issue opened for subscription, IKIO Lighting mobilised Rs 181.95 crore by allocation of 63.84 lakh equity shares to 16 anchor investors at a price of Rs 285 per share, the upper price band, the company said in a statement.

HDFC Mutual Fund, ICICI Prudential, Goldman Sachs, Quant Mutual Fund, Malabar India Fund, Mirae Asset India, Rohdea Master Fund, Motilal Oswal Select Opportunities Fund, Cohesion MK Best Ideas, Citigroup, and Societe Generale were the investors participating in the Anchor book.

Motilal Oswal Investment and Advisors are book running lead managers to the issue, while Kfin Technologies is the registrar to the issue. The shares of the company are proposed to be listed on BSE and NSE.

The net proceeds from the public offer will be used towards repayment of certain borrowings, investments in its subsidiary IKIO Solutions for setting up a new facility in Noida, and other general corporate purposes.

First Published:Jun 7, 2023 11:09 AM IST