'SUBSCRIBE-Long Term' to Elin Electronics Limited IPO - Anand Rathi

Posted On : 2022-12-20 18:35:29( TIMEZONE : IST )

'SUBSCRIBE-Long Term' to Elin Electronics Limited IPO - Anand Rathi

Company Description

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.

Elin's key diversified portfolio in EMS includes the following:

- LED lighting, fans and switches including lighting products, ceiling, fresh air and TPW fans, and modular switches and sockets;

- Small appliances such as dry and steam irons, toasters, hand blenders, mixer grinders, hair dryer and hair straightener;

- Fractional horsepower motors, which is used in mixer grinder, hand blender, wet grinder, chimney, air conditioner, heat convector, TPW fans etc.;

- Other miscellaneous products such as terminal block for air conditioners, stainless steel blade for mixer grinders, die casting, radio sets.

Elin has 3 manufacturing facilities which are strategically located in Ghaziabad (Uttar Pradesh), Baddi (Himachal Pradesh) and Verna (Goa). Elin has backward integration of their major manufacturing processes.


The EMS player Elin Electronics has survived almost five decades in the industry from manufacturing tape deck mechanism for cassette players to LED lighting/fans/switches, fractional horsepower motors, small appliances etc. Elin continues to evolve and upgrade across its product verticals and drives strength from its robust R&D capabilities, diverse product verticals/customer base and its backward integrated manufacturing prowess.

The demand for motor-driven appliances including small and kitchen appliances is on the rise. Rising disposable income, electrification across India, decreasing prices due to increasing competition, upcoming new and additional manufacturing facilities to boost the demand for household appliances, and government initiatives such as power for all and housing for all programmes are key growth drivers for the company.

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.

Source : Equity Bulls


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