Lava International Seeks to Go Public

A Brief Overview

Known as the country’s very own mobile manufacturer, Lava International has circulated a letter among its existing shareholders seeking their go-ahead in order to go public by way of an initial public offering (or IPO).

This letter highlighted its desire to go public by offering equity shares. This transition to public ownership would be based on market conditions, the ability to acquire regulatory approvals, and consent to keep in mind the applicable law and other facts as well. Both book running lead managers and advisors appointed to oversee this offering would be in charge of carrying out the IPO in due time.

Founded in 2009, Lava International has as its key figures Hari Om Rai, Sunil Bhalla, Shailendra Nath Rai, and Vishal Sehgal.

Anticipated IPO Objectives of Lava International

Lava International’s IPO will be made up of fresh issue stock in addition to providing stocks on offer-for-sale by existing shareholders who are capable of doing so.

With a target to raise INR 1,400 to INR 1,500 Crore via a primary offering, this move by Lava International highlights the likely trend of domestic manufacturers upping the ante in the face of competition by their Chinese counterparts.

The Production Linked Incentive (or PLI) scheme launched as of April last year and expanded upon in November provides companies with incentives based on the incremental sales they garner from the domestic manufacturing of their products.

Headquartered in Uttar Pradesh’s Noida, Lava International seeks to take advantage of and is set to benefit from this PLI scheme in place which offers an incentive ranging from 4 to 6 percent for mobile manufacturers. In addition to Lava International, four other Indian manufacturers have gained rights to operate within this scheme via the government.

Exports appear to be the prime focus of Lava International’s expansionary goals. Currently, Lava International’s operations dominate 11 countries including but not limited to India’s neighbors like Bangladesh, Nepal, and Sri Lanka as well as Thailand, Indonesia, and Mexico among others.

Thus far it has sent in proposals that outline its low-cost phone-making abilities to high-ranking telecom players based in the United States.

Its expansionary goals seek to establish itself within the continent of Africa as well although it has launched a few of its products in Egypt in 2016.

Financial Performance and Positions

Mentioned below are key features that highlight the financial performance and position of Lava International over the past few years.

Financial Performance in FY 2018-2019 and FY 2019-2020 – In comparison to FY2018-2019 which saw Lava International earn a revenue of INR 5,108 Crores, FY2019-2020 saw it reap a revenue amounting to INR 5,264 Crores indicative of growth of INR 156 Crores. Profits too rose from INR 73 Crores in the previous year in comparison to INR 107 Crores for FY 2019-2020. Lava International’s performance for FY 2020-2021 is therefore likely to be positive as well.

Position – Lava International has established itself as a leader in its field and comes in as 4^th largest in the country, 2^ndlargest in Thailand, and 3^rd largest in Sri Lanka.

Other Pertinent Information

Shares of Lava International have been amounting to INR 375 to INR 400 within the unofficial market which showcases unlisted shares. As of May 2021, Lava International priced its shares at INR 533 each based on a rights issue which saw it value itself at INR 6,650 Crores which approximated 1.27 times its annual revenue for the last financial year.

Lava International is known for its superior mobile handset designs and capabilities ranging from industrial and mechanical to hardware and software design.

Concluding Thoughts

Lava International’s aims to take advantage of the government-sponsored PLI scheme will indicate how well the company succeeds in the face of competition from its Chinese rivals. Although it has circulated a letter among its shareholders highlighting its desire to go public, concrete action is yet to be taken.