The IPO market is once again set to witness some action from today after a long hiatus as the public issue of Syrma SGS Technology opens. The Rs 840 crore IPO will open for subscription on August 12, Friday and close on August 18, Thursday. Ahead of the issue, the IPO has garnered interest from marquee names as part of its anchor book. A total of Rs 252 crore has been raised from 18 anchor investors ahead of the public issue, which includes both domestic as well as foreign investors such as Nomura Trust, Eastspring Investment, ICICI Prudential, IIFL, and Edelweiss, among others. 

Anchor investors

A total of 1,14,56,261 equity shares of face value Rs 10 each have been issued to anchor investors for Rs 220 per share — the upper end of the Rs 209-220 apiece IPO price band. Nomura Trust has picked up more than 13.63 lakh shares as part of the anchor book for a total amount of over Rs 30 crore. Eastspring Investments has also bought more than 13.63 lakh shares for an equal amount along with Volrado Venture Partners Fund. 

Domestic investor ICICI Prudential has also picked up more than 13 lakh shares of SGS Technology. IDFC, Edelweiss, IIFL, Tata Mutual Fund, and Franklin India are some of the other investors who participated in the anchor book portion. 

About the issue

Electronic manufacturing services firm Syrma SGS Technology is offering shares in the price band of Rs 209-220 per share through its IPO. The issue is a mix of fresh issue of equity shares and an offer for sale (OFS) by existing shareholders of the company. Syrma SGS will raise Rs 840 crore from IPO at the upper end of the price band of which, Rs 766 crore is likely to be part of the fresh issue and the remaining Rs 74 crore will be the OFS part. The company will get a large part of the money raised as the bulk of the issue is a fresh issue of equity shares. 

The promoter shareholding in the company stands at 61.47% pre-issue, which is likely to drop to 47.42?ter the successful completion of the IPO. Public shareholding will go up to 52.58% from the current 38.53%. Investors can bid for the issue beginning today in a bid lot of 68 shares translating to a minimum investment of Rs 14,960 per lot. 

Should you subscribe?

“In May 2022, Syrma has done a pre-IPO placement of around 3% equity at Rs. 290 per shares. At higher price band, the IPO is valued at 24.1% discount to the pre-IPO placement price, which may be considered favorable by the retail investors,” said analysts at Choice Broking. “But the company has demanded an EV/Sales multiple of 2.5x (to its FY22 proforma consolidated sales), which is at premium to the peer average. Thus the issue seems to be fully priced. Considering the high growth potential in the electronic manufacturing sector, we are recommending a “Subscribe with Caution” rating for the issue,” they added.