Syrma SGS Technology IPO: Issue filled 37% on Day 1; should you subscribe? Anil Singhvi suggests this

The initial public offering (IPO) of Syrma SGS Technology, a technology-focused engineering and design company engaged in turnkey electronics manufacturing services, was subscribed 37% on the first day of opening of the issue.  

At the end of Day 1 on Friday, the IPO received bidding for 1,05,17,900 shares against 2,85,63,816 shares on offer. Retail Individual quota attracted maximum investors with subscription of 0.69 times, while, Non-Institutional Investors (NIIs), who bid for amount of more than 10 lakh, portion was subscribed 13% of allotted 20,01,004 shares, as per NSE IPO bidding details.   

Meanwhile, speaking about the IPO, Zee Business Managing Editor Anil Singhvi said that experienced and quality management and strong growth outlook of the company are two positive triggers for this IPO. Downtrend in margins, reasonable valuations, but not very attractive, are drawbacks of the Syrma SGS Technology IPO.  

Singhvi suggested the investors with high-risk threshold can apply for long-term. 

#IPOAlert :

#SyrmaSGSTech का IPO का आज दूसरा दिन, प्राइस बैंड ₹209-220/शेयर#SyrmaSGS टेक कंपनी में क्या है खास

शॉर्ट टर्म और लॉन्ग टर्म के लिहाज से क्या करें?

इश्यू को सब्सक्राइब करें या छोड़ दें?

जानिए अनिल सिंघवी की राय...@AnilSinghvi_ | #IPO pic.twitter.com/9lOJZyVCfU

— Zee Business (@ZeeBusiness) August 16, 2022

Earlier, Santosh Meena, Head of Research, Swastika Investmart Ltd, had said Syrma SGS Technology Limited is one of the India's leading and fastest growing Electronics system design and manufacturing (ESDM) companies.  

With a huge focus on R&D-based innovation and an experienced management team, the company has managed to enter into various growing segments like PCBA, Radio Frequency Identification (RFID), Electromagnetic and electromechanical parts, and other information technology-related products, including motherboards, DRAM modules, SSD and USB drives.  

The company’s business model starts from product concept design and focuses on every segment of the overall industry value chain; this gives them a competitive advantage over traditional OEM or ODM-based companies that focus on a single process or certain stages of production, thus creating lasting relationships with its marquee clients, said Meena.  

Swastika Investmart Head of Research agreed with Anil Singhvi that the issue has been priced at premium valuation.  

"Further, the geographically diversified manufacturing locations enable them to efficiently cater to the requirements of their customers in north and south India. Additionally, the business has had success using inorganic means to add new product lines and expand its geographic reach. The issue has been priced at a premium valuation, which is acceptable given its growth potential and competitive advantages. And therefore, we recommend investors to subscribe the issue," he added. 

Syrma SGS Tech IPO opened for subscription on August 12 and will close on August 18. The company has fixed a price band for the IPO at Rs 209-220 per share. The IPO comprises a fresh issue of shares worth Rs 766 crore and an offer for sale (OFS) of up to 33.69 lakh equity shares by promoter Veena Kumari Tandon. The company aims to raise Rs 840 crore at the upper price band of the issue