GNG Electronics IPO receives 1.47 times subscription applications by noon of Day 1

Mumbai, July 23, 2025: The ₹460-crore Initial Public Offering (IPO) of GNG Electronics Limited commenced with a strong showing on its opening day, garnering bids for 2.09 crore equity shares against the 1.41 crore shares on offer, by 12:00 p.m. This translates to an overall subscription of 1.47 times.

GNG Electronics, recognised as India’s largest laptop refurbisher, launched its three-day IPO today with a price band set at ₹225-₹237 per share. The issue comprises a fresh issue of ₹400 crore and an offer-for-sale (OFS) of 25.5 lakh equity shares by the promoters.

Segment-Wise Bidding Snapshot (as of 12:00 AM, Jul 23)

Strong Interest from Retail Investors

Retail Individual Investors (RIIs) demonstrated robust enthusiasm on Day 1, with their quota being subscribed 1.74 times. They placed bids for 1.23 crore shares, indicating significant individual investor confidence. Notably, approximately 90% of the retail demand came in at the cut-off price, suggesting a readiness to pay the maximum possible price within the band to secure an allotment. The IPO has reserved 35% of the total issue for retail investors, reflecting a substantial opportunity for individual participation.

Non-institutional investors (NIIs) also showed strong momentum, leading the subscription with their portion being oversubscribed 2.77 times. Demand was particularly notable in the ₹2-10 lakh category within the NII segment.

Muted QIB Response on Day 1

In contrast to the retail and NII segments, Qualified Institutional Buyers (QIBs) largely remained on the sidelines during the initial hours of Day 1, subscribing to just 2% of their allocated quota. This is a common pattern, as institutional demand typically builds up and sees a significant surge on the final day of the IPO.

Price Sensitivity Noted

The bidding data indicates a degree of price sensitivity among investors, as the majority of applications have been concentrated at the lower end of the price band, specifically at the floor price of ₹225 per share. The cumulative demand shows a marginal drop as the price increases towards the cap of ₹237, suggesting that investors are seeking value at the lower price point.

IPO Details Recap

Financial Performance

GNG Electronics has demonstrated robust financial growth. For the financial year ending 31 March 2025 (FY25), the company reported a revenue of ₹1,420.37 crore, marking a 24% increase from ₹1,143.80 crore in FY24. The Profit After Tax (PAT) surged by 32% to ₹69.03 crore in FY25, up from ₹52.31 crore in FY24. Over the last two years, the company’s revenue has grown at a Compound Annual Growth Rate (CAGR) of 46.27% and net profit at 45.9%. The company also maintains a strong Return on Equity (RoE) of over 30%. However, it should be noted that the business requires significant working capital, which has seen net working capital days increase to 68 in FY25 from 42 in FY24, with total borrowings standing at ₹446.92 crore in FY25. The proceeds from the IPO are earmarked for debt repayment (₹320 crore) and general corporate purposes, which are expected to reduce interest expenses and enhance profitability.

As of 31 March 2025, GNG Electronics showcased strong Key Performance Indicators (KPIs):

• Return on Equity (RoE): 30.40%
• Return on Capital Employed (ROCE): 17.31%
• Debt/Equity Ratio: 1.95
• PAT Margin: 4.89%
• EBITDA Margin: 8.94%
• Price to Book Value: 10.17

Regarding valuation, the Pre-IPO P/E ratio stands at 33.35x, while the Post-IPO P/E ratio is 39.14x. The Pre-IPO Earnings Per Share (EPS) was ₹7.11, which is expected to be ₹6.05 Post-IPO. This indicates that the IPO is being offered at a higher valuation relative to its current earnings.

IPO Strengths and Risk Factors

Strengths of GNG Electronics IPO:

• Market Leadership: GNG is India’s largest refurbisher of laptops and desktops and a major global player. It operates across the full refurbishment value chain, ensuring quality.
• Strong Financial Performance: The company shows consistent growth, with revenue up 24% and PAT up 32% in FY25. It also maintains an impressive Return on Equity (RoE) of over 30%.
• Global Presence & Supply Chain: Operating in 38 countries with five facilities, it has a robust global supply and distribution network. This ensures efficient sourcing and broad market reach.
• ESG Focus: Its business model reduces e-waste, aligning with global sustainability goals. This attracts environmentally conscious consumers and businesses.

Risk Factors:

• Product & Geographical Concentration: Over 75% of revenue comes from laptop sales and foreign markets (especially the UAE). This exposes the company to specific product demand shifts and currency risks.
• Working Capital & Debt: The business is working capital intensive, with increasing working capital days and substantial borrowings. This could impact financial flexibility despite debt reduction plans.
• Sourcing & Material Price Fluctuations: Reliance on external suppliers for used devices and components means price increases or supply disruptions could hit profitability. Long-term agreements are not always in place.
• Intense Competition: Operating in a highly competitive, price-sensitive market means competition from both organised and unorganised players. This may affect market share and pricing power.
• Regulatory Changes: The industry is subject to evolving regulations on e-waste and trade policies. Adverse changes could increase compliance costs and impact the business model.

IPO Analysis For Retail Investors

GNG Electronics’IPO has kicked off on a strong note, especially among retail and non-institutional investors. Here’s a concise breakdown of what retail investors should consider:

Positives

• Strong Subscription on Day 1: The retail portion is already subscribed 1.74x, showing solid demand. Cut-off bidding by 90% of retail participants suggests confidence in the IPO.
• Impressive Financials: Revenue and PAT have grown consistently, with a RoE above 30%, indicating efficient capital use.
• Sector Tailwinds: As a leader in laptop refurbishment, GNG benefits from rising demand for affordable electronics and growing sustainability focus.
• Debt Repayment Plan: IPO proceeds will reduce debt, potentially improving margins and lowering financial risk.

Risks

• Working Capital-Intensive Model: The rising net working capital days and current debt levels highlight pressure on liquidity.
• High Foreign Exposure: Significant dependence on overseas markets, especially the UAE, brings forex and geopolitical risks.
• Price Sensitivity: Investor bids are skewed towards the lower price band, hinting at cautious optimism regarding valuation.

About GNG Electronics

GNG Electronics Limited, operating under the brand “Electronics Bazaar,” is India’s leading ICT refurbisher with operations across India, the UAE, the USA, and Europe. It reported FY25 revenue of ₹14,111 million and net profit of ₹690 million. The company plans to utilise IPO proceeds for debt repayment and general corporate purposes.

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