Cyient DLM IPO envisages to raise ₹592 crore entirely through a fresh issue of equity shares. The price band for the issue has been fixed at ₹250 to ₹265. This entails issue of 2,23,39,623 shares. Cyient DLM provides design-led manufacturing (DLM) services to the aerospace, defense, medical technology, consumer products, transportation, and heavy equipment industries. The company’s DLM services include electronics manufacturing, wire cable harness, PCB assembly, in-circuit testing, aerospace CNC machining, precision tooling, vibration testing, and first article inspection.
Issue Opens
27th June, 2023
Issue Closes
30th June, 2023
Issue Size (Rs.)
₹592 crore
Issue Size (shares)
Fresh Issue of 2,23,39,623 shares
Face Value
₹ 10/- Per Share
Price Band
₹ 250 – 265
Bid Lot
56 Shares
Issue Structure :
QIB
75% of the offer
NIB
15% of the offer
Retail
10% of offer
BRLMs
Axis Capital, JM Financial
Registrar
KFin Technologies Ltd
About Cyient DLM:
Cyient DLM was founded in 1993 and is headquartered in Mysuru, India.
The company has manufacturing facilities in India, United States, and Europe.
Cyient DLM is AS9100-certified and NADCAP-certified.
Cyient DLM is one of the leading integrated Electronic Manufacturing Services (“EMS”) and solutions provider with strong capabilities across the value chain and the entire life cycle of a product.
The company is a qualified supplier to global OEMs in the Aerospace and Defence, Medical Technology, and Industrial sectors.
It has focus on ‘Low volume, high mix’ (LVHM) which is is a type of contract manufacturing setup that lays very high emphasis on quality and customization which changes according to the requirements of the customer.
Cyient DLM Thas over 22 years of experience in developing high-mix, low-to-medium volume highly complex systems. T
Cyient DLM r EMS is provided as Build to Print (“B2P”) and Build to Specification (“B2S”) services to their clients.
B2P solutions involve client providing the design for the product for which they provide agile and flexible manufacturing services.
Their B2S services involve utilizing their own design capabilities to design the relevant product based on the specifications provided by the client and manufacturing the product.
Cyient DLM offerings primarily comprise: (i) printed circuit board (“PCB”) assembly (“PCBA”), (ii) cable harnesses, and (iii) box builds which are used in safety-critical systems such as cockpits, inflight systems, landing systems, and medical diagnostic equipment’s.
Has a manufacturing area of 65,929 sq. ft. It is engaged in the manufacture of PCBA, cable harnesses and box builds for clients in the aerospace and defence industries.
Hyderabad
Located in SEZ, has a manufacturing area of 150,932 sq. ft.. It is into manufacture of PCBA, cable harnesses and box builds for clients based in non-aerospace and non-defence industries, such as medical technology, healthcare etc.
Bengaluru
The facility has a manufacturing area of about 12,200 sq. ft.. It is focused on precision manufacturing.
Dr. Tushar Suvagiya, Dr. Subhash Padmani, and Dr. Ravi Apte are the company promoters.
Cyient DLM IPO: Financials
Particulars/ Rs Cr.
2023
2022
2021
Revenue from Operations
832.03
720.53
628.03
Revenue Growth (%)
15.47%
14.73%
–
EBITDA
87.78
84.04
45.94
EBITDA Margin (%)
10.55%
11.66%
7.32%
Profit before Tax
43.16
50.73
15.6
Net Profit
31.73
39.8
11.81
Net Profit Margin (%)
3.81%
5.52%
1.88%
Share Capital
52.87
1.37
1.37
Reserves
145.01
75.75
36.29
Net Worth
197.87
77.11
37.65
EPS – Basic & Diluted (₹)
7.75
16.17
4.8
RONW (%) as stated
16.03%
51.61%
31.38%
Net Asset Value (₹)
48.33
31.34
15.3
ROCE (%)
13.48%
17.56%
11.48%
Post Issue share Cap
79
FV in Rs.
10
IPO price
265
EPS FY23
4.00
PE Fy23
66.24
Market cap in Lacs
2102
Market Cap/sales
2.53
sales cagr
15%
Cyient DLM IPO: Salient Points
Cyient DLM was promoted by five professionals, who then sold their stakes to Cyient Ltd and are now on the board as nominees of Cyient.
Now it is 100% subsidiary of Cyient Limited. Cyient DLM supplies products comprising printed circuit board assembly (PCBA), cable harnesses, box builds such as cockpits, inflight systems, landing systems to global OEMs.
Exports contributed to 59.71% of revenue in FY2023.
In FY2023 about 90.75% of its total revenue was contributed by its Mysuru unit.
The company, has taken 15.00% of the paid-up equity share capital of ICS, at a price of Rs 380.73 per ICS Share and for a total consideration of Rs 89.20 crore.
Cyient DLM undertook Rs. 108 cr pre-IPO placement Rs. 265 per share on 6th June 2023.
Post the IPO, Promoters will hold 66.65% of the equity share capital, Amansa Investment Ltd will hold 5.14% and rest 28.21% with be with other public shareholders.
Cyient DLM IPO: Assessment
The EMS market in the country is experiencing significant tailwinds.
Indian EMS sector accounted about 2.2% of the global EMS market(USD 20 billion) in 2022.
India’s EMS sector is growing a with a CAGR of 32.3%, and is estimated to contribute 7.0% (USD 80 billion) of the worldwide EMS market by 2026.
The company has strong backing of its parent, Cyient is an information technology (IT) services company, offering niche product and process engineering services in diverse domains, such as aerospace, hi-tech, heavy engineering, utilities, telecommunication and geographic information system (GIS) services, to players in the mining industry and government entities.
Its EMS focus is also more niche compared to the more generic EMS offerings in the market by other listed players.
It has presence in defence (38% of the FY23 revenue), industrial (25% of FY23 revenue), aerospace (20% of FY 23 revenue) and medical equipment (16% of Fy23 revenue).
It enjoy slong-term relationships as an integrated partner to multiple marquee customers such as Honeywell International Inc., Thales Global Services S.A.S (“Thales”), ABB Inc, Bharat Electronics Limited and Molbio Diagnostics Private Limited, having had an average relationship of over 11 years as on March 31, 2023 with the aforementioned customers.
Due to nature of its business where it is involved in the design process as per client needs or for the clients, there is good amount of customer stickiness.
It has sizeable orders in Hand. Order book and concentration is shown below:
Particulars
As of March 31, 2023
As of March 31, 2022
As of March 31, 2021
Order book (in ₹ million)
24,325.47
12,029.76
9,061.18
Order book concentration (top 10 customers)
96.57
88.99
93.35
Peers
Qualitative & Financial Parameters
Kaynes Technology
Syrma SGS
DCX Systems
Cyient DLM
Focus end- user segments
Automotive
Industrial
Defence (Aerospace, Land, Naval)
Aerospace & Defence
Power & Energy
Consumer Electronics
Industrial electronics
Medical
Aerospace, Defence & Other
Automotive
Medical electronics
Energy & Industrial
· Healthcare/medical
Computer/IT
Satellites & Civil Aviation
Rail Transport
Industrial Automation & Controls
Healthcare/Medical
Railways
Market share (%)
0.5
0.7
0.8
0.5
Revenue from operations (₹ millions)
7,062.49
12,666.48
11,022.73
7,205.33
Domestic Revenue from operations %
19.99
45.23
78.57
55.02
International Revenue from operations %
80.01
54.77
21.43
44.98
As at and for the year ended March 31, 2023
Revenue from operations (₹ in
11,261.14
20,483.88
12,536.34
8,320.33
million)
Domestic Revenue from operations (₹ millions)
Not available
Not available
Not available
40.29
International Revenue operations (₹ millions)
Not available
Not available
Not available
59.71
EBITDA (₹ millions)
1,683.18
1,877.69
836.73
877.8
EBITDA margin %
14.95%
9.17%
6.67%
10.55%
Profit for the year (₹ millions)
951.96
1,230.76
716.81
317.27
Profit margin for the year (%)
8.45%
6.01%
5.72%
3.81%
RONW (%)
13.14%
11.60%
15.13%
16.03%
ROCE (%)
14.45%
10.46%
10.35%
13.48%
Inventory Turnover (times)
2.44
3.51
8.73
1.86
EPS Diluted (₹)
19.61
7.5
8.44
7.75
PE
94.1
68.4
35.2
66
Cyient DLM is one of the leading integrated Electronic Manufacturing Services (“EMS”) and solutions providers with strong capabilities across the value chain and the entire life cycle of a product. Its Electronic Manufacturing Services are provided as Build to Print (“B2P”) and Build to Specification (“B2S”) services to clients.
Cyient DLM IPO is offered at PE ratio is 66x (fy23 earnings). Bit streched valuations but good pedigree, good tailwinds for Electronic Manufacturing Services (“EMS”) and a sector that is expected to exhibit good growth on coming years.
I intend apply in Cyient DLM IPO and shall do it on Day 1. The Cyient DLM IPO is expected to garner a good response. Looks promising to me both from a moderate listing gain perspective or as a short to long term investment.
GMP as reported on social media has been steady and may be in range of Rs. 80-90.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.
