IPO Alert: Bharat FIH Limited files paper for a public listing

The electronics industry, one of the fastest-growing businesses in India, is projected to grow at a compound annual rate of 25.5% and reach ₹20,873 billion by 2026. The industry, which includes domestic manufacturing of electronic products and imports of finished goods, was valued at ₹6,711 billion at the end of fiscal 2021.

Electronic manufacturing services provider Bharat FIH Ltd (BFIH), a unit of Foxconn India, is planning to raise ₹5,004 crores via an initial public offering, for which the company has filed a draft prospectus with the Securities & Exchange Board of India.

The IPO will consist of a fresh issue of shares of up to ₹2,502 crores and an offer for the sale of shares worth ₹2,502 crores by promoters. Bharat FIH plans to use the proceeds from the offering to meet capital expenditure requirements and expansion of existing its campuses. The company plans to utilize ₹36.3 crores for investments in its subsidiary RSHTPL.

Besides, it will deploy around ₹707 crores to meet working capital requirements in fiscal 2023 and fiscal 2024. The remainder of the amount will be used for general corporate purposes.

EMS

Bharat FIH is one of the largest electronic manufacturing services providers in the country, with approximately 15% market share in 2021. In addition to its EMS services, the company is also building capabilities to serve original equipment manufacturers (OEM), with a comprehensive one-stop solution comprising a range of Original Design Manufacturing (ODM) services. The ODM services include product design & development, component manufacturing & sourcing, logistics, and after-sales services.

The Tamil Nadu-based company started operations in 2015 and has been focused on manufacturing mobile phones since then. The company provides manufacturing and assembly services to Xiaomi Technology India Private Limited, which is a market leader in the country’s smartphone industry.

The company has also been expanding its business into high-growth industries other than mobile phones, including mechanics, electric vehicles, televisions and hearables.

Key Figures

Bharat FIH generated revenues of ₹15,906 crores in the year ended March 2021, compared to ₹26,669 crores in the previous year. The company had a net profit of ₹162 crores in 2021, compared to ₹390 crores in the previous year.

The company sources PCBs and electronic components such as displays, antennas, connectors and camera modules primarily from China, which account for around 95% of all components and inputs sourced internationally.

The ongoing political tension between India and China poses a major risk for the company, in terms of imports. Another challenge facing it is the short supply of semiconductors and integrated chipsets, due to the unprecedented demand for smartphones and tablets globally.