Foxconn’s Bharat FIH Files Draft Papers for Rs. 5,000 Crores IPO

On Wednesday, 23 December 2021, Foxconn’s Indian subsidiary Bharat FIH filed DRHP (draft red herring prospectus) for an IPO (Initial Public Offering). The company now awaits approval from the market regulator SEBI to be able to raise Rs. 5,000 (US$662.97million) from the public issue.

Bharat FIH is the Indian arm of the Hong-Kong listed FIH Mobiles and Foxconn Technology Group. It is a manufacturer of mobile handsets with notable clients like Apple, Microsoft, Xiaomi, HTC, Nokia, Huawei and Sony Mobile.

Read along to find more about Bharat FIH and its upcoming IPO.

About the Company – Bharat FIH

Established in 2015 in Andhra Pradesh, Bharat FIH Pvt. Ltd., is India’s largest Electronics Manufacturing Services (EMS). It is ranked among the top 50 companies in the country in terms of revenue and size.

The company delivers end-to-end services to many top local and global brands. It provides a complete range of services in the electronics sector, from R&D to manufacturing and supply chain management. It is notable for manufacturing casings, PCBA, mechanics, components and providing final assembly of Xiaomi mobile phones.

Besides mobile phones, this company has also recently expanded its business to televisions, hearables, electric vehicles and mechanics. It also develops the capabilities to provide a comprehensive and vertically-integrated one-stop solution for OEMs (Original Equipment Manufacturers).

Bharat FIH has the largest manufacturing capacity in the region, with over 50 mobile assembly lines producing three phones every second. It has three manufacturing facilities, two at Sriperumbudur in Tamil Nadu and one at Sri City in Andhra Pradesh. It has a highly experienced team, employing around 25,000 people, 85% of which are women.

What Do We Know About Bharat FIH’s Upcoming IPO?

Bharat FIH intends to raise around Rs. 5,004 crores with a fresh issuance of shares worth Rs. 2,502 crores and an OFS (offer for sale) of another Rs. 2,502 crores. The OFS will be put forth by the promoter group and Wonderful Stars, a Foxconn unit, which currently holds a 99.97% stake in the firm.

75% shares of the public issue will be reserved for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 10% for Retail Individual Investors (RIIs).

The company intends to use proceeds from the IPO for the following purposes:

• Capital infusion of Rs. 36.32 crores into its subsidiary RSHTPL (Rising Stars Hi-Tech Pvt. Ltd.)
• Funding expansion and up-gradation of their existing campuses with the fresh issuance
• For working capital requirements of the company
• General corporate purposes

Bharat FIH has appointed S&R Associates and Shardul Amarchand Mangaldas as legal advisors for the public issue. The lead book-running lead managers (BRLM) for the IPO are BNP Paribas, Citigroup Global Markets India, HSBC Securities, and Capital Markets India, and Kotak Mahindra Capital.

Financial Situation of Bharat FIH

Bharat FIH is India’s largest electronics manufacturer, with around 15% market share as of FY21. For the six months ended 30 September 2021, the company clocked net profits of Rs. 89.17 crores from its Rs. 10,155.79 crores operation.

The company’s revenues have jumped 60% from last year when the Covid-19 pandemic seriously impacted operations. It clocked Rs. 161.91 crores in FY21, down from Rs. 389.71 crores in the year ended on 31 March 2020.

FIH Mobile, another Foxconn Group Company, listed on the Hong Kong stock exchange, witnessed a 6% jump in share prices on 22 December following the IPO announcement.

Now let us look at its financials for the last three fiscals.

Note: Values are in Rs. Millions

Parting Thoughts

Bharat FIH is a market leader in mobile phone manufacturing in the country and has been expanding its business into other high-growth industries. It expects some of these industries to benefit from the Indian Government’s regulatory support, such as production-linked incentive schemes (PLIs) under Aatmanirbhar Bharat Abhiyan.

As of October 2021, the company’s applications for PLIs for mobile phones, telecom and networking products have already been approved. Bharat FIH also expects substantial growth opportunities given the significant under-penetration and increase in demand for the products it manufactures.

The company is now enhancing its product research and development teams to provide new offerings for new high-growth industries and categories of customers. Recently, it inaugurated an R&D centre in the Indian Institution of Technology at Madras Research Park to come up with innovative EMS and ODM solutions.

Frequently Asked Questions

1. What are the opening and closing dates of Bharat FIH IPO?

The opening and closing date of this IPO has not been revealed in the draft papers. These details will be updated after approval from SEBI.

2. Is Bharat FIH a profitable company?

Yes, since 2019, the company has become profitable and is on course to post a profit for the third straight year.

3. What is the main business of Bharat FIH?

In addition to its main EMS services, Bharat FIH provides manufacturing services and vertically-integrated one-stop solutions for OEMs. Their operations include:

• Product design and development
• Component manufacturing
• Sourcing PCBs and electronic components
• Logistics services
• After-sales services

Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.