Cyient DLM Complete IPO Review- Buy or Not?

In this article, we will analyze the upcoming IPO of Cyient DLM Solution Ltd and evaluate whether it is worth considering for investment.

Cyient DLM is a leading Electronic Manufacturing Services (EMS) company that designs, manufactures, and provides maintenance services for electronic products across various industries.

We will delve into the company’s business model, financial performance, client base, revenue breakdown, and valuation to help you make an informed decision regarding the IPO.

Company Overview

Cyient DLM is a 30-year-old company known for its end-to-end solutions in the electronic manufacturing sector. The company operates through two segments: B2P (built-to-print) and B2S (built-to-specifications).

B2P involves manufacturing products based on client-provided designs, while B2S involves designing and manufacturing products according to client specifications. Cyient DLM serves industries such as aerospace, defense, medical technology, and industrial products.

Financial Analysis

Analyzing the financial performance of Cyient DLM, we observe steady revenue growth over the years.

In the financial year 2021, the company recorded a total revenue of 636.91 crores, which increased to 838.34 crores in 2023, representing a growth rate of 31.62%. Net profit also witnessed significant growth, nearly tripling from 11.81 crores in 2021 to 38.73 crores in 2023.

However, it is important to note that the net profit declined from 39.40 crores in 2022 to 31.73 crores in 2023. The company’s borrowing increased by 7.25% in the financial year 2023.

Valuation and IPO Details

The IPO issue price for Cyient DLM is set at 265 rupees per share, with a lot size of 56 shares. The company’s earnings per share (EPS) stands at 16.7, resulting in a price-to-earnings (PE) ratio of 15.86.

The IPO has garnered interest from institutional investors, as indicated by the anchor book, which includes prominent names such as ICICI Prudential, HDFC Mutual Fund, Aditya Birla Mutual Fund, and BNP PARIBAS.

The market premium for Cyient DLM stands at Rs 100, suggesting a potential listing gain of 37.73%.

Investment Considerations

While Cyient DLM shows promise with its impressive revenue growth and strong client base, there are certain factors to consider before making an investment decision.

The company’s dependence on a limited number of clients presents a concentration risk. If major clients were to withdraw their business, it could impact the company’s stability.

Additionally, the decline in net profit from 2022 to 2023 and the increase in borrowing raise concerns.

Final Thoughts

The Cyient DLM IPO presents an opportunity for investors to consider. With its established position in the electronic manufacturing industry and consistent revenue growth, the company has attracted institutional investors.

However, it is crucial to assess the risks associated with client concentration and the recent decline in net profit. By carefully weighing the company’s financials, valuation, and market conditions, investors can make an informed decision regarding participation in the IPO.

Disclaimer: This article provides an analysis of the Cyient DLM IPO and does not constitute financial advice. Investors should conduct their research and consult with a financial advisor before making investment decisions.

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