Shyam Metalics IPO subscribed 121 times; Sona Comstar sees muted demand
Premium- Retail individual investors, whose investments cannot exceed the maximum cap of ₹2 lakh in an IPO, applied for 11.62 times the shares on offer of Shyam Metalics
Steel producer Shyam Metalics and Energy Ltd saw a bumper response to its initial public offering that ended on Wednesday, with the public issue witnessing a subscription of more than 121 times the shares on offer.
As of 5pm, the overall book was subscribed 121.42 times, stock exchange data showed. At the upper end of its price band of ₹ 306 per share, the public issue received bids worth around Rs78,352 crore.
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The institutional investor category was subscribed 155.71 times. The non-institutional category comprising high net-worth individuals was subscribed 339.98 times.
Retail individual investors, whose investments cannot exceed the maximum cap of ₹2 lakh in an IPO, applied for 11.62 times the shares on offer, stock exchange data showed.
“Shyam Metalics has established itself as one of the leading metal producers in India. The company has been reporting positive EBITDA since 2005 indicating effective cost management. Debt to equity ratio for the company was around 0.27 as on December 2020 which further provides the company lesser leverage on its books thus ensuring the company’s operations do not get impacted with larger debts," said brokerage Indsec Securities and Finance Ltd in a report.
Meanwhile, Sona BLW Precision Forgings Ltd managed to garner a subscription of 2.33 times for its Rs5,550 crore IPO on the final day. The company managed to close its IPO successfully driven by institutional investors, the portion of the share sale reserved for whom was subscribed nearly 3.46 times. Non institutional investors and retail investors have applied for 0.4 times and 1.58 times respectively.
Concerns of slower than anticipated revival in auto sales volumes, steep rise in metal prices which are likely to hamper margins in near term may have impacted the demand for the IPO, analysts said.
"Sona BLW provides an exciting play on electrification and possesses healthy financial strength (28% margins, 20% RoCE) but valuations proposed are rich (74x P/E on FY21 basis). Nevertheless, we believe the company offers a good investment case on the back of strong growth prospects," said ICICI Securities in a note to its investors.
In Mumbai’s grey market, Shyam Metalics and Sona BLW shares were being quoted at a premium of ₹135 and ₹4 per share on Wednesday, two dealers said on condition of anonymity.
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