Indigenous mobile maker Lava is all set for its Initial Public Offering as the company has notified its shareholders of an extraordinary general meeting scheduled on Friday, September 10th.
The company will seek approval for its IPO worth 2,400 crore INR from its shareholders. This will consist of an offer for sale by existing shareholders and the issuance of fresh equity.
A copy of the letter shared with shareholders had as many as seven items that will be considered and approved by the shareholders.
Lava will issue bonus shares in 1:1 ratio to existing shareholders, the domestic mobile maker will also seek approval for a stock split of shares in 1:1 ratio, to a face value of Rs.5 per share after the split.
According to dealers in the unlisted market, the stock split and bonus issues were on the cards as shareholders were informed about the same via e-mails by the company earlier.
Following the IPO buzz, the shares of Lava rallied to 600-620 INR apiece, they were previously trading at 525-550 INR at the beginning of the week.
Rajesh Singla, Founder of Planify, a pre-IPO consultancy said.” We expect it to trade in the range of Rs. 160-170 after the split and bonus and the company’s valuation at this price is about $1-$1.2 billion.”
Lava is adding more products into its portfolio and has strongholds in small Asian and African nations, he also expects the DRHP to be filed in the coming weeks.
Lava has overseas operations in 11 nations, including Thailand, Nepal, Bangladesh, Sri Lanka, Indonesia, Mexico, and some West Asian nations. The company reported Rs.5,264 crores worth of revenue for the year ended on March 31, 2020, in comparison to Rs,5,108 crores reported for the year ago. Net Profits stood at Rs.107 crore on that revenue, in comparison to 73 crores in the previous year.
“At current valuation, the company is available at less than twice the sales-to-market cap, which makes it a decent bet, However, one should wait for the latest numbers,” said Dinesh Gupta, Co-Founder of Delhi-based UnlistedZone.
The Noida-headquartered Lava International has not announced its earnings for the financial year ended March 31, 2021.
Gupta is bullish with respect to Lava, he expects it to be a big beneficiary of the Production-Linked Incentive scheme for mobile manufacturing in India.
“The PLI scheme will boost their margins and if the company is able to reap the benefits, the bottom line will substantially improve.”
Phone makers are expected to benefit a lot from the PLI scheme, which offers 4-6% incentives for mobile manufacturers, Lava is one of five domestic manufacturers that have got approvals under this scheme.
Does this improve Lava’s position in India?, the brand has expressed its intentions to release a slew of new devices around Diwali this year with top-notch specs. Lava is definitely looking to gain a bigger share in the market, the IPO appears to be a step towards making that a reality.