GNG Electronics IPO: A Detailed Analysis
GNG Electronics Ltd, the India’s largest refurbisher of laptops and desktops, has launched its initial public offering (IPO) on July 23. The offer closes for subscription on July 25, and the company has fixed the price band in the range of Rs 225-237 per share.
The IPO comprises of a fresh issue of shares worth Rs 400 crore and an offer for sale of Rs 60-crore up to 25.5 lakh shares. The market value of GNG Electronics at the upper end of the price band is Rs 2,702 crore.
Objects of the Offer
The company plans to use the raised funds to prepay or repay certain outstanding borrowings availed by the company and Electronics Bazaar, and for general corporate purposes.
Why Invest in GNG Electronics?
GNG Electronics has been able to scale its revenue and Ebitda at 46.3% and 58.0% CAGR over FY23-25, despite operating on thin margins. The company has a strong track record of profitable operations and has been able to post superior returns due to its strict capital allocation policy.
The company’s Navi Mumbai facility has the capacity to refurbish ~360k laptops annually, of which it refurbished ~300k laptops during FY25. The modular nature of the fit-outs and machines used in the refurbishing process allows the company to scale its capacity rapidly.
Should You Subscribe to the IPO?
We believe that the company’s initial issue is fully priced in, as it is available at 26.3x trailing twelve months EV/Ebitda, higher than the peer’s TTM EV/Ebitda of 22.8x. We expect sustained growth in financials led by consistent demand for quality refurbished electronic products and thus assign a ‘Neutral’ rating to its initial issue.
DRChoksey’s Report
Click on the attachment to read the full report:
Conclusion
In conclusion, GNG Electronics IPO offers an attractive investment opportunity for investors looking to invest in the Indian stock market. With its strong track record of profitable operations, robust global procurement network, and extensive reach across 4,154 touchpoints in 38 countries, the company is well-positioned to continue its growth trajectory. However, investors should carefully consider their investment objectives, risk tolerance, and financial situation before investing in the IPO.
