Bharat FIH Ltd IPO

Bharat FIH Limited is a subsidiary of Foxconn Technology Group which holds manufacturing contracts for two major smartphone brands. This company is a prominent manufacturer of smartphones of Xiaomi and Apple in India. This makes Bharat FIH Ltd one of the leading companies promoting the Make in India initiative. 

Bharat FIH Private Limited had filed its DRHP to SEBI with the plan to go public with an IPO a few years back. According to its preliminary documents, Bharat FIH Limited aimed to raise Rs. 5,000 crores with an IPO. However, this company is keeping its IPO plans on hold owing to unfavourable market conditions. 

This blog will take you through the necessary details of the DRHP that you must know to invest in Bharat FIH Ltd IPO. 

About Bharat FIH Limited

Bharat FIH Ltd is a subsidiary of FIH Mobile Ltd which has Foxconn Technology Group as its parent company. This firm is India’s largest Electronic Manufacturing Service provider with a 15% market share in 2021 as per its DRHP.

The company’s customers are mainly original equipment manufacturers like Xiaomi, boAt and Ola Electric. This makes Bharat FIH Limited a one-stop-shop for Original Design Manufacturing services that involve product design, manufacture of components, sourcing, logistics, and customer service after sale. 

Since its inception in 2015, the company’s niche has been mobile phone manufacturing. Bharat FIH ranks as the largest provider of EMS services in the mobile phones segment occupying a market share of 23% in FY 2023. Furthermore, this company is the largest provider of phone manufacturing and assembly services to Xiaomi Technology Private Limited, the market leader for smartphones in India.

This company’s application towards the Production Linked Incentive scheme has been approved. With it, the company will receive certain incentives for manufacturing IT hardware, telecom and networking products and mobile phones. PLI schemes like Atmanirbhar Bharat offer incentives to companies that contribute towards the Indian Government’s Make in India movement.

Bharat FIH Ltd runs its operation on campuses situated in Andhra Pradesh and Tamil Nadu. These campuses hold 94 production lines, 35 assembly lines, 30 sub-assembly mechanics lines and 29 surface mount technology lines. The company has recently inaugurated its R&D facility in the Indian Institute of Technology (Madras) Research Park. 

According to the DRHP, the total income of Bharat FIH Ltd became Rs. 1,59,066.57 million in FY 2021 from Rs. 3,43,923 million in FY 2019. The total expense of this company has fallen from Rs. 3,46,036.98 million in FY 2019 to Rs. 1,57,101.52 million in FY 2021. 

IPO Details and Objectives

On December 21, 2021, Bharat FIH filed its preliminary documents with the market regulator to launch an IPO. Using the upcoming Bharat FIH Limited IPO, the company plans to raise total funds of Rs. 50,038 million. It expects to earn Rs. 25,019 million by offering a fresh issue of shares. It will also offer equity shares worth Rs. 25,019 million as an Offer for Sale by one of the two promoters- Wonderful Stars Pte Ltd.

Bharat FIH Ltd plans to use the net proceeds of its upcoming IPO to fund capital expenditure regarding business expansion. The company will also use the funds to finance the expenses of its subsidiary and for general corporate purposes. 

The company is yet to declare the number of shares it will sell as fresh issues and OFS. Moreover, its upcoming IPO will also be a complete book-built issue. This implies you have to place bids above or equal to the IPO floor price to invest in Bharat FIH Ltd IPO. The face value of equity shares as set by the company is Rs. 10 per share.

According to recent reports, this Foxconn subsidiary is planning to delay its IPO launch owing to unfavourable market conditions.

Strengths of Bharat FIH Limited

The following strengths make the upcoming Bharat FIH IPO worth investing in. 

• This company holds the position of the largest EMS provider in India in terms of market share, size, scale and potential for substantial growth. 
• The company reaps substantial benefits from government schemes like Atmanirbhar Bharat. On receiving PLI approval for mobile manufacturing, this company will earn a subsidy of 4-6% on incremental revenue.
• Bharat FIH Ltd continues to hold a strategic and long-term relationship with its OEM customers. 
• This company has in-house capabilities across the ODM value chain that assist in efficient vertical integration. 

Risks Involved

Besides the above strengths, here are a few risks that may hamper the business of Bharat FIH Private Limited.

• This company earns a significant income from a single customer. Reduction of sales to this particular customer can lead to an adverse fall in this company’s finances and operation. 
• The safety measures intended to prevent the outbreak and spread of the COVID-19 pandemic had and will continue to have a significant impact on this company’s business, operation and cashflow. A similar global event could have long-term negative consequences.

Summary

Like any other equity investment, IPOs come with a fair share of risks. Therefore, before you decide to invest in the Bharat FIH Ltd IPO, you must study the DRHP thoroughly to know whether this investment aligns with your risk appetite and financial goals. It is also a good idea to take the help of a qualified investment advisor to plan out your investments.

Bharat FIH Limited is a prominent name in today’s manufacturing and services industry. While it has currently put its IPO plans on hold, this can change as soon as the market is favourable. Keep checking this site to get the latest updates on this company’s IPO.

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