Dixon Tech ends 64% up, BRNL gains 1.5%

MUMBAI: Consumer electronics manufacturer Dixon Technologies (India) Ltd made a stellar stock market debut on Monday. The stock closed at ₹2,892.80, up 63.8% from its issue price of ₹1,766 per share. It was listed on the bourses at ₹2,725 per share, offering a premium of 54.3% from its issue price and soared 71% to touch an intra-day high of ₹3,020.35 per share on the BSE. This is one of the best stock markets listing after Avenue Supermarts Ltd and Central Depository Services (India) Ltd or CSDL in 2017. Avenue Supermarts gained 114% and CSDL climbed 75.6% at closing on first day of trade.

On the other hand, Bharat Road Network Ltd (BRNL) which also got listed on exchanges today made a tepid start. It closed at ₹208.15, up 1.5% from its issue price of ₹205 per share. The road builder’s ₹600-crore IPO was subscribed 1.81 times last week.

The issue of Dixon Technologies, red-flagged by few analysts on valuation concerns, was oversubscribed 117.8 times at a price band of ₹1,760-1,766 per share. The IPO of Dixon Technologies, which closed on September 8, saw the portion reserved for qualified institutional buyers subscribed 134.7 times. Non-institutional investors bid 345.6 times the shares on offer and retail individual investors 10.6 times. The company was aiming to raise around ₹600 crore through a fresh issue and offer for sale of shares.

Ahead of its IPO, the company had raised ₹179.79 crore by selling shares to institutional investors.

“We do not find anything wrong with the business model but we are not comfortable recommending investors to invest in such low-margin business. At the higher price band of ₹1,766, the stock is valued at 39.7 price to earnings (PE) on FY17 basis. There are many listed opportunities with better financials available at lower and comfortable valuation,” said Centrum Broking Ltd in a note on September 5.

“It may be noted that 90% of the money raised is going to the selling shareholder and not into the company,” it added.

Dixon is the largest homegrown design-focused and solutions company engaged in manufacturing products in consumer durables, lighting and mobile phone segments in India.