Avalon Technologies shares make a flat debut on Dalal Street. What should investors do?

Shares of Avalon Technologies made its flat market debut on Tuesday with the stock listing at ₹436 per piece on the NSE, as compared to its issue price of ₹415-436 per share. On the BSE, Avalon Technologies shares started trading at ₹431 apiece, a discount of 1.15 per cent to the issue price of ₹436.

"Avalon Technologies Ltd made its debut in the market at a listing price of 436. The company's issue price was ₹415-436, so shares are listed at par with no profit and no loss. Investors with a high-risk tolerance may consider holding Avalon Technologies Ltd. shares long-term, with a recommended stop loss of around 405, which is lower price band of the issue," said Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd.

"Avalon Technologies is a fully integrated EMS company with end-to-end operations that deliver box-build solutions in India. The company operates in a business with high entry barriers and has a global delivery footprint. Despite its strong and stable financial performance, Avalon Technologies experienced a decline in its PAT margin during the first eight months of FY22 and currently has a high debt ratio," Gour added.

"The initial public offering by Avalon received a good response, however, on 18th April, the company got listed at ₹431 on BSE & NSE and hence got a flat response since debut. Even though Avalon looks great in terms profitability and return ratios, the stock is in a lot of verticals & the valuation seems a little expensive, resulting in the lackluster response. Being India still lagging in consumption of electronics and green energy in comparison of its global peers, investors can invest in Avalon Technologies with a long-term view and at a more reasonable price," said Manoj kumar Dalmia, Founder and Director, Proficient equities Private limited.

Avalon Technologies GMP

Shares of Avalon Technologies were commanding a mild premium of ₹8-10 apiece in the grey market just a day ahead of its market debut. This means that grey market too was expecting flat listing of Avalon Technologies shares.

"The IPO of Avalon Technologies received a lackluster response across all categories. While the company has reported attractive margins compared to its peers, the IPO pricing was bit expensive, leaving little for investors on table. Additionally, primary market sentiments remains to be jittery, which may result in a flat listing for Avalon Technologies with the IPO likely to list around its issue price," said Abhay Doshi, Founder at UnlistedArena.com.

The Initial Public Offer (IPO) of ₹865 crore received lackluster response from investors across categories as the issue was highly priced, according to primary and secondary market experts.

The public issue of Avalon Technologies was subscribed 2.21 times on the last day of subscription, helped by huge participation from institutional buyers.

The IPO received bids for 2.53 crore shares against 1.14 crore shares on offer, according to data from the NSE.

The portion for Qualified Institutional Buyers (QIBs) got subscribed 3.57 times, while the category meant for Retail Individual Investors (RIIs) attracted 84 per cent subscription. The quota for non-institutional investors was subscribed 41 per cent.

The initial public offer of up to ₹865 crore had a price range of ₹415-436 a share. The IPO had a fresh issue aggregating up to ₹320 crore and an offer for sale of up to ₹545 crore by promoters and existing shareholders.

Proceeds from the fresh issue would be used towards debt payment, funding working capital requirements and general corporate purposes.

Founded in 1999, Avalon is an end-to-end electronic manufacturing service solutions provider. It has 12 manufacturing units located across the US and India.

JM Financial, DAM Capital Advisors, IIFL Securities and Nomura Financial Advisory and Securities (India) were the managers to the offer.