IPO watch: Raymond-backed JK Files & Engineering, Elin Electronics get Sebi's nod to launch offers

Even as Indian equities witnessed sharp volatility in the recent past, the enthusiasm in the initial public offering (IPO) market is far from over. The primary market continues to see a surge in IPO activities with two more companies lined up to garner as much as ₹1,560 crore through initial share sales. Last week, API Holdings, the parent of online pharmacy PharmEasy, CMR Green Technologies, and Wellness Forever Medicare got approval from the market regulator Sebi to launch their public offer.

Raymond-promoted JK Files & Engineering and Elin Electronics have received approval from Sebi to raise funds via IPOs. JK Files & Engineering, one of the world's leading manufacturers of steel files, and electric motor manufacturer Elin Electronics are planning to raise ₹800 crore and ₹760 crore, respectively, through the public listing of shares.

Elin Electronics had filed draft documents with SEBI in November 2021 to raise capital via an IPO, while JK Files & Engineering submitted paper before the regulator in December 2021. The companies received the regulator's observation letter on February 23, the latest update available on the Sebi showed on Monday.

As per the preliminary documents filed with Sebi, JK Files' public issue is completely an offer of sale (OFS) by its promoter Raymond, while Elin Electronics’ offer would be a combination of fresh issue and OFS.

Here’s all you need to know about JK Files & Engineering and Elin Electronics IPO:

JK Files & Engineering

• The auto components manufacturer, a subsidiary of Raymond, filed draft red herring prospectus (DRHP) in December 2021 to float IPO. On December 1, Raymond’s board had approved the listing of its subsidiary JK Files & Engineering on the domestic exchanges BSE and NSE.

• The public issue is entirely an OFS of equity shares worth around ₹800 crore by promoter Raymond, a leading player in suiting and shirting. Since the issue is completely OFS, the company will not receive any fund raised from the IPO.

• The company manufactures precision engineered components for tools and hardware (files and drills) and marketing of hand tools, power tool accessories and power tool machines and manufacturing of auto components and engineering products -- ring gears, flexplates and water pump bearings.

• For the financial year ended March 31, 2021, the company reported a consolidated profit of ₹25.46 crore against ₹14 crore in the previous year. The revenue stood at ₹350 crore comnpared with ₹382 crore in the prior year.

• SBI Capital Markets, DAM Capital Advisors (formerly known as IDFC Securities) and HDFC Bank have been hired as book running lead managers to the issue.

Elin Electronics

• Homegrown electric motor manufacturer Elin Electronics had filed preliminary papers Sebi to raise ₹760 crore through IPO in November 2021.

• As per the draft prospectus, the company would raise up to ₹175 crore via fresh equity offering, and up to ₹585 crore through OFS, which will see promoters and other diluting their shareholding in the company.

• The OFS comprises of up to ₹239.4 crore equity offloading by promoters and ₹345.60 crore by existing shareholders.

• The Delhi-based company intends to use capital raised from the fresh equities to repay debt, fund capital expenditure for upgrading and expansion of existing plants in Ghaziabad, Uttar Pradesh and Verna, Goa besides general corporate purposes.

• The company is a leading electronics manufacturing services (EMS) manufacturer of end-to end product solutions for major brands of lighting, fans, and small/ kitchen appliances in India, and leading fractional horsepower motors manufacturers in India.

• For the fiscal 2020-21, the company reported 9.8% growth in revenues from operations to ₹862.38 crore, from ₹785.58 crore in fiscal 2020. The net profit surged to ₹34.86 crore as compared to ₹27.49 crore in the previous fiscal.

• Axis Capital and JM Financial are the book-running lead managers to the IPO.

  Apart from these companies, investors kept a close watch on the public offer of Life Insurance Corporation (LIC) of India, which is touted to be the country’s largest IPO ever. Among others, hotel aggregator OYO, supply chain company Delhivery, hospital chain Medanta, and travel business Ixigo are also expected to float their initial share sale in the current quarter.