PremiumThere were two stock listings on Thursday. Shares of Shyam Metalics and Energy Ltd made a firm debut while Sona BLW Precision Ltd, also known as Sona Comstar made a tepid start.
The private equity firm Blackstone Group backed company Sona Comstar was listed at ₹301, a 3.8% premium to the issue price of ₹291 per share. However, soon after the stock surged nearly 25% backed by robust volumes. The stock closed at ₹361.20 on the NSE.
Sona Comstar's ₹5,550-crore initial public offer (IPO), open during 14-16 June, was subscribed 2.28 times at a price band of ₹285-291 per share. The company plans to use the proceeds from the issue to repay debt of ₹225 crore and general corporate purposes.
“Sona Comstar, despite being in a niche space of electric vehicle components, saw a little tepid listing premium due to its large issue size of Rs5550 crore. On the other hand, Shyam Metalics witnessed good listing premium given its presence in the metal space which is in an upcycle and that too in the value added steel products. Both the companies are present in niche space and have good business fundamentals and financials," Hemang Jani, Head Equity Strategist, Broking & Distribution, Motilal Oswal Financial Services said.
Jani likes Sona Comstar given its presence in fast growing global EV market, diversified portfolio across categories and robust financials. “Though the valuation at 74 times price to earnings appears fully priced in, given its thrust in fast evolving EV space both in India and globally, market would like to give premium to such emerging growth story," Jani added.
Meanwhile, shares of Shyam Metalics and Energy Limited was listed at ₹380, a 24.18% increase from its issue from ₹306. The ₹909-crore initial public offering (IPO) of Shyam Metalics was subscribed 121.43 times in its share sale during 14-16 June. The stock closed at ₹376.15 on the NSE.
“Shyam Metalics would trade at price to earnings (PE) of 21 times for FY20 which is quite attractive as compared to listed peers," said Canara Securities ahead of the IPO.
The demand and pricing in the steel industry is volatile and are sensitive to the cyclical nature. Manufacturing plants and sources of raw materials are primarily concentrated in eastern India and any adverse developments affecting this region could have an adverse effect on business, Canara Securities said.
Shyam Metalics and Energy is an integrated metal producing company based in India with a focus on long steel products and ferro alloys. It currently operates three manufacturing plants in Sambalpur in Odisha, along with Jamuria and Mangalpur in West Bengal.
“Rising demand growth from long steel and Ferro alloys. Planned expansion in new high growth potential sectors. It is planning to set up a Blast Furnace, the output of which may serve as a raw material for the planned DI Pipes unit alongside IF units," said Axis Capital.
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