Elin Electronics makes weak debut; lists 2% below issue price

Elin Electronics (Elin) made a weak stock market debut, with its shares listed at Rs 243, a 2 per cent discount to its issue price of Rs 247 on the BSE on Friday in an otherwise firm market. The stock of household appliances company started trade at Rs 244 on the National Stock Exchange (NSE).

Post listing, the market price of Elin dipped to Rs 235.25, down 5 per cent against its issue price. It hit a high of Rs 245 in intra-day trade so far. At 10:20 AM; the stock was quoted at Rs 236.25, down 4 per cent from its issue price. In comparison, the S&P BSE Sensex was up 0.17 per cent at 61,235.

Elin operates in the electronics manufacturing services (EMS) industry. It is a manufacturer of fractional horsepower motors, lighting, fans and small/ kitchen appliances, etc, for leading brands in India. Elin manufactures and assembles a wide range of products. It serves under both original equipment manufacturers (OEM) and original design manufacturer (ODM) business models.

Among EMS players, the company has a market share of 12 per cent in fractional horsepower motors, 7.2 per cent in LED lighting & flashlights and 10.7% in small appliances as of FY21.

Elin caters to its customers through a diversified product portfolio. This has not only helped the company to gain market share over the years but has also aided in gaining wallet share of existing customers. As a result, the revenue has grown at 18 per cent CAGR in FY20-22. Elin has maintained its EBITDA margin in the range of 7-8 per cent over FY20-22 supported by cost control measures, addition of new product categories and increasing focus on high margin ODM business. In addition, PAT has grown at a CAGR of 19 per cent in FY20-22 supported by higher EBITDA, ICICI Securities had said in IPO note.

One can subscribe to IPO for long term as Elin is a leading electronics manufacturing services (EMS) manufacturer of end-to-end product solutions for major brands of lighting, fans, and small/ kitchen appliances in India, and is one of the largest fractional horsepower motors manufacturers in India. In addition, they are one of the key players in LED lighting and flashlight with EMS market share of approximately 7 per cent in FY2021 and is also one of the key players in small appliances vertical with EMS market share of 10.7 per cent in FY2021, Prabhudas Lilladher Advisory Team had said in IPO note.

The company has a varied product diversification with a strong customer base including Phillips, Bosch, Usha, Panasonic and such. Out of their Top-20 customers, they have been serving 11 customers for over 10 years and have been serving 16 customers for over 5 years. Company’s high customer retention capabilities are due to their one-stop-shop facilities and consistently maintaining high standards of manufacturing quality of products in a timely manner, the brokerage firm said.