“The company is exploring options for undertaking an initial public offering of its equity shares, subject to market conditions, regulatory approvals, consents and applicable law and other considerations. The offer may be undertaken by the company at an appropriate time in consultation with the book running lead managers (BRLMs) and other advisers appointed for the offer,” the letter said.
ETMarkets has seen the copy of the letter.
Lava has plans to raise Rs 1,400-1,500 crore via the primary offering, the sources said. The company’s plans signal the comeback of Indian phone manufacturing years after domestic producers had been edged out of India’s large market by Chinese rivals.
Lava reported Rs 5,264 crore revenue for the year ended on March 31, 2020, compared with Rs 5,108 crore reported for the year ago. Net profit stood at Rs 107 crore, compared with Rs 73 crore in the previous year. The company is likely to post robust numbers for FY2020-21 as well.
Lava shares have been trading in the Rs 375-400 price range in the unofficial market for unlisted shares. In the previous month, the company allotted shares at Rs 533 apiece via a rights issue, valuing itself at Rs 6,650 crore, just 1.27 times its annual revenue in FY 2019-20.
Dinesh Gupta, Co-founder of UnlistedZone, said the management was committed towards the IPO and logically, the issue price cannot be less than the rights issue price.
“The company is a good bet considering the expansions and growth plans. PLI scheme of the government will add to its margins, strengthening the balance sheet,” he said.
Phonemakers are expected to benefit from the PLI scheme, which offers 4-6% incentive for mobile manufacturers. Lava is one of five domestic manufacturers that have got approvals under the scheme.
However, not everyone is bullish on the company. Sambhav Aggarwal of Delhi-based Arms Securities said, “The illusion might be a delusion. We don’t see many people using the brand. One should wait for the latest numbers, before taking a final call.”
The Noida-headquartered Lava International is eyeing expansion with exports in focus. It has submitted proposals to make low-cost phones for top telecom players in the US too. The company has overseas operations in 11 countries, including Thailand, Nepal, Bangladesh, Sri Lanka, Indonesia, Mexico and some West Asian countries.
