IKIO Lighting IPO hits Street: Should you go for it? Here's what Anil Singhvi recommends

Noida-based IKIO Lighting — a provider of LED lighting solutions — launched a Rs 607-crore initial public offer (IPO) on Tuesday, June 6. The IPO comprises fresh issuance of shares as well as an offer for sale (OFS) by existing shareholders. Market wizard Anil Singhvi recommends applying for the IKIO Lighting IPO.  

EDITOR'S TAKE | Anil Singhvi says investors must apply for IKIO Lighting shares under the IPO

"Investors can put their money in IKIO Lighting with two perspectives: for listing gains and for the long term," Zee Business Managing Editor Anil Singhvi said. 

He is positive on IKIO Lighting for its experienced and trusted promoters, strong financials, high-margin business, attractive valuation and strong anchor investor book.

The market expert, however, points out some key risks for investors. The company is highly dependent on a single client and relies heavily on imports for raw material, Singhvi said. He also highlighted an increase in the company's inventory pileup and inconsistent cash flow among key negatives. 

IKIO Lighting IPO: Key things to know

Important dates 

Potential investors will be able to bid for the IKIO Lighting issue for three trading days, till June 8. The basis of allotment is likely on June 13 and the initiation of refunds the next day. Winning bidders are likely to receive the shares in their demat accounts on June 15. 

IKIO Lighting shares are set to be listed on stock exchanges BSE and NSE on June 16. 

Issue price and lot size

Potential investors will be able to bid for IKIO Lighting shares in a price band of Rs 270-285 apiece in multiples of 52 under the IPO. This translates to Rs 14,040-14,820 per lot. 

Out of the total issue, 35 per cent of the shares are reserved for retail investors, 15 per cent for non-institutional investors and the remaining 50 per cent for qualified institutional investors. 

Financials

IKIO Lighting's net profit came in at Rs 28 crore for the year ended March 2022 as against a net profit of Rs 20.6 crore for the previous year, according to its red herring prospectus (RHP). 

Its revenue stood at Rs 219.9 crore for the financial year 2021-22 as against Rs 159.7 crore for the previous year. 

Fund utilisation

IKIO Lighting plans to use proceeds from the IPO towards repayment or prepayment of certain debt, for investment in subsidiary IKIO Solutions for setting up a new facility in Noida and for general corporate purposes, according to the RHP. 

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