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Industry : Electronics - Components

IKIO Lighting Ltd View all IPOs

Price Band

Rs. 270 T0 Rs. 285

IKIO Lighting is going public with a Fresh issue and an Offer for Sale. The issue opens on 6th June 2023.

MOJO CALL

Why

Avoid

MOJO CALL

Avoid

Neutral

Single Customer Accounts For More Than 50 Percent Of The Sales

The LED industry is highly competitive, which may affect profit margins in the future. One area of concern is that a significant portion of their revenue, more than 50%, comes from a single customer, formerly known as Philips India and now called Signify. Relying heavily on a single customer puts the business at risk and makes it vulnerable.

Rich Valuations

The post-issue market capitalization of the company is projected to be Rs 2100 crore. With annual sales of Rs 220 crore as of March 2022, the company's market capitalization to sales ratio would be approximately 10x, which is quite high. Even if we consider the sales for the first nine months of FY23 and annualize them, the market capitalization to sales ratio would still be around 6.5x. Furthermore, the PE ratio, based on the FY22 numbers, is calculated to be 75x. These valuation metrics make us uneasy and lead us to believe that the company may not generate long-term wealth for its investors.

Issue Details

Issue Opens	6th June 2023
Issue Closes	8th June 2023
Price Band	Rs. 270 To Rs. 285
Issue size (Upper Band)	Rs. 607 Cr
Issue Type	FRESH ISSUE & OFFER FOR SALE
Market cap (based on upper band)	Rs 2100 Cr
Sales- March 2022 (Rs./Crs)	221 Cr
Net Profit - March 2022 (Rs./Crs)	28 Cr
Industry	Electronics - Components
Promoters	Hardeep Singh
Lead Manager	Motilal Oswal

Objective of the Issue

Details

Fresh Issue – Rs.350cr & Offer for Sale Rs.257cr

Funds received from the Offer for Sale will not be used by the firm

Repayment/prepayment, in full or part, of certain borrowings availed by the Company and its Subsidiaries on a consolidated basis

Investment in its wholly-owned subsidiary, IKIO Solutions Private Limited, for setting up a new facility at Noida, Uttar Pradesh

General corporate purposes.

List of Shareholders Selling Their Stake

Name	Type	Number of Equity Shares for OFS	% of Total Offerings (OFS)
Hardeep Singh	Promoter	6,000,000	67%
Surmeet Kaur	Promoter	3,000,000	33%

Business Operations

About Company

IKIO Lighting is an LED lighting solutions manufacturer. They are an original design manufacturer because they design, develop, manufacture, and supply products to clients who resell them under their own brand names.

Their products include: LED Lighting ,Refrigeration Lights,ABS Piping

IKIO also collaborates with customers by creating products based on their designs.

The top ten customers contributed 86% of total revenue, while the top twenty customers contributed 91%.

Revenue Breakdown by segment:
Products	9MFY23	FY 22	FY 21	FY 20
LED Lighting	91%	92%	94%	96%
Refrigeration Lights	2%	0%	0%	0%
ABS Piping	0%	1%	0%	0%
Other Products	7%	7%	6%	4%

Financials

Financial Overview

In 9 months till December 2022, the company reported a revenue of Rs. 243 crore and a net profit of Rs. 35 crore.

In FY22, the company reported a revenue of Rs. 221 crore as compared to Rs. 160 crore in FY21.

The company reported a net profit of Rs 28 crore in FY2022 compared to Rs 21 crore, a growth of 33 percent.

In FY22, the company reported a RONW of 36.64%, down from 42.60% in FY21 and 57.84% in FY20.

Financial Performance (Rs/crore)

Rs./Crs	9MFY23	FY 22	FY 21	FY 20
Sales	243	221	160	141
Net Profit	35	28	21	16
Net Profit Margin	14%	13%	13%	11%