Subscribe-Long Term to Elin Electronics: Anand Rathi

2022-12-21 16:23:25 By : Ms. Alice Meng

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Anand Rathi IPO report on Elin Electronics

Elin Electronics Ltd is one of the oldest (53 years-founded in 1969) electronics manufacturing services (“EMS”) manufacturer of end-to-end product solutions for major brands of lighting, fans, and small/ kitchen appliances in India, and are one of the largest fractional horsepower motors manufacturers in India. Based on the overall market, Elin is projected to be the largest players in this category, with a market share of 12% in Fiscal 2021. In addition, it is also one of the key players in LED lighting and flashlight with EMS market share of approximately 7% in Fiscal 2021, and are one of the key players in small appliances vertical with EMS market share of 10.7% in Fiscal 2021. Elin manufactures and assemble a wide array of products and provide end-to-end product solutions and it serves under both original equipment manufacturer (“OEM”) and original design manufacturer (“ODM”) business models. Under the OEM model, they manufacture and supply products basis designs developed by their customers, who then further distribute these products under their own brands. Under the ODM model, in addition to manufacturing, Elin conceptualize and design the products which are then marketed to their customers’ prospective customers under their brands. They have developed ODM capabilities with respect to lighting products and small appliances.

On the valuations front Elin Electronics seems to be reasonably valued at a FY22 PE of 31.3x post-issue and 29.7x its FY23 annualized earnings (post issue) as compared to Dixon Technologies & Amber Enterprises which are trading at P/E of 140.4x & 62.8x respectively. As Elin’s Revenue/PAT is growing at a robust CAGR of 18%/19% respectively (FY20-22) with an even robust industry outlook coupled with consistent margins we recommend “SUBSCRIBE-Long Term” rating to this IPO.

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