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Lava International Limited IPO Company Profile:

Lava International Limited is a leading end-to-end focused company of mobile handset Solutions and mobile handsets based in India, with operations in a number of countries. The company design, manufacture, market, distribute and service mobile handsets, tablets, and other electronics accessories under its own “LAVA” and “XOLO” brands, and provide value-added software services. Lava International Limited also offers mobile handsets solutions to original equipment manufacturers (“OEMs”) ranging from sourcing, design, manufacturing, quality testing, embedding software, and distribution

According to F&S (“Frost and Sullivan (India) Private Limited”), Lava International Limited is the third largest feature phone company in India with a market share of 13.4%, in terms of sales volume in the financial year 2021. The company has a presence in many emerging markets, such as Thailand, Sri Lanka, the Middle East, Bangladesh, Mexico, Indonesia, and Nepal. According to F&S, Lava International Limited is the fifth largest feature phone company with a market share of 5.0% in the world, in terms of sales volume in the CY 2020, and the fifth, third and sixth largest feature phone company, respectively, in North America, Asia, and the MEA region, in terms of sales volume in the CY 2020.

Lava International Limited has successfully signed:

  • A partnership license agreement with Lenovo, which entitles it to distribute mobile handsets manufactured by it under the MOTOROLA brand in India and overseas and

  • A multi-year contract with HMD for an end-to-end design, manufacturing, supply chain, and distribution of mobile handsets under the Nokia brand in India and overseas.

Lava International Limited generated revenue from operations of ₹5,512.87 crores, of which approximately 29.33% was derived from the Indian market and approximately 70.67% was derived from the international markets for the financial year 2021.

According to F&S, Lava International Limited was also among the pioneers in India to launch:

  • A smartphone with an octa-core chipset and two gigabytes of RAM at a price of less than ₹10,000 in 2015
  • The lightest smartphone in the Indian market with a 4,000 mAh battery in 2015
  • Smartphone with the Android Lollipop 5.1 operating system at a price of less than ₹5,000 in 2015
  • A smartphone on Android Oreo Go at MWC in 2018,
  • A 4G feature phone in 2017, and
  • Customer-centric smartphone with a safety application for women

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    Lava International Limited IPO Details:

    IPO Open Date Not Available
    IPO Close Date Not Available
    Listing Date Not Available
    Face Value ₹5 per share
    Price Not Available
    Lot Size Not Available
    Issue Size Not Available
    Fresh Issue [●] shares

    (aggregating up to ₹500 Cr)

    Offer for Sale 43,727,603 shares

    (aggregating up to [●])

    Issue Type Book Built Issue IPO
    Listing At BSE, NSE
    QIB Shares Offered Not more than 50% of the Offer
    NII (HNI) Shares Offered Not less than 15% of the Offer
    Retail Shares Offered Not less than 35% of the Offer
    Company Promoters Hari Om Rai, Shailendra Nath Rai, Sunil Bhalla and Vishal Sehgal

    Lava International Limited IPO Financial Analysis:

    Particulars FY-21(in cr.) FY-20(in cr.) FY-19(in cr.) CAGR
    Revenue from sale 5512.87 5264.33 5108.35 2.6%
    Other Income 10.80 18.12 20.40  
    Operating Cost 4665.99 4496.94 4281.26  
    Employee Cost 190.22 199.07 323.00
    Other expenses 416.25 387.18 341.30
    EBITDA 251.22 199.26 183.20 11.1%
    EBITDA margin% 4.56% 3.79% 3.59%  
    Depreciation 39.04 33.05 41.50
    Interest 28.58 38.99 60.14
    Loss from joint venture 0.17 0.56 0.35
    PBT 183.43 126.65 81.21 31.2%
    Total tax 10.82 18.89 8.03
    PAT 172.61 107.76 73.18 33.1%
    PAT margin% 3.13% 2.05% 1.43%  
    Dep./revenue% 0.71% 0.63% 0.81%
    Int./revenue% 0.52% 0.74% 1.18%

    Lava International Limited IPO Strengths:

    • According to F&S, India’s mobile phone subscription market is projected to grow from 1,181 million subscriptions for the financial year 2021 to an estimated 1,369.1 million subscriptions for the financial year 2026 at a CAGR of 3.0%. The combination of Lava International Limited’s leading market position, innovative design and product development capabilities, large-scale manufacturing and robust service capabilities, and extensive distribution network well-positioned it to benefit from favorable market dynamics in India

    • Lava International Limited’s commitment to and track record of product innovation and design, strong engineering, and experienced research and development team will serve as key elements driving the long-term growth of the company

    • Lava International Limited’s extensive distribution network is supported by its supply chain operation experience and empowered by its information technology capabilities. To achieve end-to-end automation, the company has integrated the SAP system and “My Lava” application, and JDA software. Lava International Limited’s SAP system has different modules including financial accounting, raw material management, sale and distribution, production planning, and marketing customised for the operating needs of the company

    • Lava International Limited is among one of the 16 eligible companies approved by the Government of India to receive incentives under the PLI scheme. With the established manufacturing facilities in Noida, Uttar Pradesh, the company is well-positioned to take advantage of the PLI scheme to further expand its manufacturing operations, increase its domestic sales and grow its international presence through exports.

    Lava International Limited IPO Risk factors:

    • Lava International Limited faces competition, including from other large and established competitors, and the company may fail to compete successfully against existing or new competitors, which may reduce the demand for its products and services which may lead to reduced prices, operating margins, profits and further result in loss of market share

    • Customer preferences in the markets the company operates in are difficult to predict and changes in those preferences or the introduction of new products by its competitors could put its products at a competitive disadvantage. While Lava International Limited strives to offer its customers products that are value for money, there is no certainty that such products would be continued to be preferred by the customers over more expensive substitutes.

    • If Lava International Limited’s products become obsolete due to a breakthrough in the development of technology or alternate products, the business, results of operations, financial condition, and cash flows may be adversely affected.

    • Lava International Limited has experienced negative cash flows in relation to its operating, investing, and financing activities in the last three financial years. Any negative cash flows in the future would adversely affect the results of operations and the financial condition of the company.

    Objects of the Offer:

    Lava International Limited proposes to utilize the Net Proceeds raised through the Fresh Issue for the following objects:

    • Marketing and brand-building activities
    • Funding acquisition and other strategic initiatives
    • Investment in Material Subsidiaries for funding their working capital requirements and
    • General corporate purpose

    Lava International Limited IPO Prospectus

    Registrar to the Issue:

    Link Intime India Private Limited

    C-101, 1st Floor, 247 Park

    L.B.S. Marg, Vikhroli West

    Mumbai – 400 083, Maharashtra

    Phone: +91 22 4918 6200

    Email: lava.ipo@linkintime.co.in

    Website: www.linkintime.co.in