GNG Electronics IPO review (Apply)

•    The company is numero uno Indian player for refurbished IT devices and provides related services globally.
•    It is most preferred partner for giant companies in IT hardware.
•    The company marked steady growth in its top and bottom lines for the reported periods.
•    Based on recent financial data, the issue appears fully priced.
•    Well-informed investors can grab it for medium to long term.

ABOUT COMPANY:
GNG Electronics Ltd. (GEL) is India’s largest refurbisher of laptops and desktops and among the largest refurbishers of ICT Devices overall, both globally and in India with significant presence across India, USA, Europe, Africa and UAE, in terms of value, as of March 31, 2025 (Source: 1Lattice Report). It follows a repair-over-replacement approach, which provides cost advantages and helps achieve true sustainability by reducing carbon footprint. GEL is India’s largest Microsoft authorized refurbisher, in terms of refurbishing capability, as of Fiscal 2025 (Source: 1Lattice Report). It also serves as an IT asset disposal partner for India’s second – largest software company, in terms of market capitalization as of Fiscal 2025, procuring their used IT assets (Source: 1Lattice Report).

The global refurbished personal computers market grew from US$ 9.7B in CY18 to US$ 17.1B in CY24, reflecting an 9.9% CAGR, and is expected to grow at 18.9% over CY24-29 reaching US$ 40.6B. By CY29, the global used and refurbished PCs market is projected to reach US$ 61.0B, with a CAGR of 10.4%, as more consumers seek cost-effective options without compromising on performance. Similarly, the Indian refurbished PC market grew from US$ 0.2 billion in FY19 to US$ 1 billion in FY25, showing a 28% CAGR, and is expected to reach US$ 4 billion by FY30, at a CAGR of 30%. A common trend in both the Indian and global markets is the increasing preference for refurbished devices over “as-is used” devices. In India, the organized market share grew from 5.2% in FY19 to 13.2% in FY25, with a robust CAGR of 35.5%. This share is projected to further expand to 39.7% by FY30, at an impressive CAGR of 45.5%. 

GEL operates under the brand “Electronics Bazaar”, with presence across the full refurbishment value chain i.e., from sourcing to refurbishment to sales, to after – sale services and providing warranty. It solves customers’ requirement of affordable, reliable and premium ICT Devices which are as good as new devices, both functionally and aesthetically, and are backed by proven warranty. The company also provides tailor – made solutions for customers. Its comprehensive process of refurbishment of ICT Devices such as laptops, desktops, tablets, servers, premium smartphones, mobile workstations and accessories ensures that such devices are similar to new, in terms of both performance and aesthetics, and able to offer laptops at one-third price of new devices and other devices like desktops, tablets, servers, premium smartphones, mobile workstations and accessories at 35-50% price of new devices (Source: 1Lattice Report). It is one of the few companies which pioneered the concept of warranty for the refurbished ICT Devices to provide comfort and trust to customers and are still industry leading the warranty terms (Source: 1Lattice Report). Devices refurbished by us sell at a premium compared to other players in the industry due to superior quality of product and ability to provide proven and reliable warranty solution (Source: 1Lattice Report).

GEL is also a certified refurbishment partner with Lenovo and HP, which are top two global brands, in terms of market share of 26% and 22%, respectively, as of CY 2024 (Source: 1Lattice Report). Additionally, it serves as IT asset disposition (“ITAD”) partners for leasing companies, IT consulting companies and banks as it meets their sustainability and data privacy requirements. It offers other value – added services such as ITAD and e – waste management services, warranties, doorstep service, on–site installation, flexible pay options, easy upgrades, assured buyback programmes and buyback programmes for refurbished ICT Devices. The company provides tailored buyback solutions for laptops and desktops to help large format retail stores such as Vijay Sales (India) Private Limited (“Vijay Sales”) and OEM brand stores such as HP India Sales Private Limited (“HP”) and Lenovo Global Technology (India) Private Limited (“Lenovo”) to run efficient, customer – friendly buyback programs facilitating sale of new devices. It also offers other categories of ICT Devices such as open – box and brand-new ICT Devices, providing customers with a range of options that cater to different needs and budgets. In addition, the company also offers ICT Devices customized to the customer specifications and requirements. Moreover, it offers a wide range of stock keeping units (“SKUs”) and as of March 31, 2025, its portfolio included 5,840 SKUs.

It has sales network with refurbished ICT Devices being sold in 38 countries as of March 31, 2025. Its sales network comprises 4,154 touchpoints, in India and globally, as of March 31, 2025. These touchpoints include sale of ICT Devices through IT Solutions Providers/ Value Added Resellers, System Integrators, E-Tailers, Rental and Leasing Companies and Distributors/Aggregators. GEL even supplies to global refurbishment companies including US based companies such as Joy Systems Inc, HUBX LLC, PlanITROI LLC, and Europe based companies such as PhoenixRM Ltd (Trading as GreenIT), ATX Computers Group, who procure from it on account of GEL’s quality, skill set and cost advantages. Additionally, in India, among other prominent names, it supplies to HP India Sales Private Limited, Lenovo Global Technology (India) Private Limited and Vijay Sales (India) Private Limited.

The customers serviced by it increased to 4154 as of March 31, 2025 against 1833 as of March 31, 2023. Number of devices refurbished for the said periods were respectively 590787 and 248135. As of March 31, 2025, it had 1194 employees on its payroll.

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden/combo book building route IPO of fresh equity shares issue worth Rs. 400.00 cr. (approx. 16877637 shares at the upper cap), and an Offer for Sale (OFS) of 2550000 equity shares (worth Rs. 60.44 cr. at the upper cap). The company has announced a price band of Rs. 225 – Rs. 237 per equity shares of Rs. 2 each. The overall size of the issue will be approx. 19427637 shares worth Rs. 460.44 cr. The issue opens for subscription on July 23, 2025, and will close on July 25, 2025. The minimum application to be made is for 63 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 17.04% of the post-IPO paid-up equity capital. From the net proceeds of the fresh equity issue, the company will utilize Rs. 320.00 cr. for repayment/prepayment of certain borrowings, and the rest for general corporate purposes. 

The joint Book Running Lead Managers (BRLMs) to this issue are Motilal Oswal Investment Advisors Ltd., IIFL Capital Services Ltd., JM financial Ltd., while Bigshare Services Pvt. Ltd., is the registrar to the issue. Motilal Oswal Financial Services Ltd., and JM Financial Services Ltd. are the syndicate members. 

Having issued initial equity shares at par, the company issued further equity shares in the price range of Rs. 460.00 – Rs. 20451.40 per share (based on Rs. 2 FV), between March 2015, and March 2022. It has also issued bonus shares in the ratio of 500 for 1 in December 2024. The average cost of acquisition of shares by the promoters/selling stakeholders is Rs. 0.28, and Rs. 3.47 per share. 

Post-IPO, its current paid-up equity capital of Rs. 19.43/ cr. will stand enhanced to Rs. 22.80 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 2702.07 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit of Rs. 662.79 cr. / Rs. 32.43 cr. (FY23), Rs. 1143.80 cr. / Rs. 52.31 cr. (FY24), and Rs. 1420.37 cr. / Rs. 69.03 cr. (FY25). This indicates the ongoing trends and likely prospects for this refurbishing of IT devices segment.

For the last three fiscals, the company has posted an average EPS of Rs. 5.89 and an average RoNW of 30.68%. The issue is priced at a P/BV of 10.17 based on its NAV of Rs. 23.31 as of March 31, 2025, and at a P/BV of 4.31 based on its post-IPO NAV of Rs. 54.95 per share (at the upper cap). 

If we attribute FY25 annualized earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 39.17. Based on FY24 earnings, the P/E stands at 51.63. Thus, the issue appears fully priced.

The company reported PAT margins of 4.92% (FY23), 4.60% (FY24), 4.89% (FY25), and RoCE margins of 17.91%, 16.72%, 17.31% for the referred periods, respectively. 

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It has already adopted a dividend policy in December 2024, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Newjaisa Techno., as its listed peer. It is trading at a P/E of NA, (as of July 18, 2025). However, they are not truly comparable on an apple-to-apple basis. This compare is meaningless, as Newjaisa is a minuscule local player, while GNG is a global player with well-established global brand “Electronics Bazaar”.

MERCHANT BANKER’S TRACK RECORD:
The three BRLMs associated with the offer have handled 76 pubic issues in the past three fiscals, out of which 17 issues closed below the offer price on the listing date.