Can IKIO Lighting shares beat Mankind Pharma, Sah Polymers in terms of listing pop?

With huge 67.75 times subscription and a grey market premium (GMP) of Rs 90-95 apiece, IKIO Lighting initial public offer (IPO) is likely to deliver a listing pop when it debuts on June 16. But can it deliver better listing gains than Mankind Pharma and Sah Polymers? 

On May 9, shares of Mankind Pharma delivered a 20.37 per cent listing pop, before ending the day up 31.86 per cent. Earlier in January, Sah Polymers got listed at a premium of 31 per cent. 

In the case of IKIO Lighting, it was the first IPO in FY24 that saw over 50 times subscription. Harsha Engineers International, Electronics Mart India, DCX Systems, Dreamfolks Services and Campus Activewear were five mainboard issues that saw over 50 times subscription in FY23. They had, on an average, delivered 40.4 per cent return. In the case of IKIO Lightening, analysts sees 20-25 per cent listing gains ahead. The grey market premium also suggest similar gains.    

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Astha Jain of Hem Securities expects IKIO Lighting to see a 20-25 per cent listing pop while she sees the stock rising 30 per cent in the short-term. Jain noted that IKIO Lighting is in premium lightening space where it enjoys high margins and no major competition. The company, she said, is fully backward integrated and has original design manufacturer (ODM) shares of over 90 per cent of revenues.

"Here, IKIO clearly has an advantage. To recall, Elin Electronics that was listed last year in December had similar business but its ODM share was insignificant," Jain noted.

Shares of Elin Electronics last traded at Rs 158.55 apiece against the listing price of Rs 243, down 31 per cent.

Also Read: IKIO Lighting IPO allotment status to be finalised today; grey market premium takes a hit
 

Narottam Dharawat of Dharawat Securities finds IKOI Lightening an average company. He however, believes that the liquidity in the system is quite strong and any IPO that comes in the market now will easily sail through, thanks to solid gains that investors made in the recent couple of SME IPOs. He cited the case of Crayon Advertising, which got listed on June 2 and has doubled investor wealth since. 

Dharawat said the IKIO IPO was commanding Rs 50-60 GMP and that he expects 15-20 per cent listing pop. "There are chances that the listing gain may be even higher, given markets are near all-time high and there are hopes among investors about halt in Fed rates."

IKIO is a LED lighting manufacturer and solutions provider in India, deriving entire business from the B2B channel. It is largely an original design manufacturer (ODM) with business operations ranging from designing, developing, manufacturing and supplying products to customers, which in-turn distribute these products under their own brands.

IKIO is also exploring export opportunities in the LED lighting/RV segments through new client additions. It earned about 15 per cent (9MFY23) of its total revenue from exports (mainly to US).

Consolidated revenue grew at CAGR of 23 per cent over FY20-22 led by LED lighting segment, which grew at CAGR of 24 per cent during the same period. The Ebitda margin increased 600 basis points to 23.3 per cent supported by savings in RM costs and other costs. PAT grew at a CAGR of 54 per cent to Rs 51 crore, tracking Ebitda margin expansion.

 

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