Prince Pipes IPO subscribed 30% on Day 2 so far

NEW DELHI: The initial public offering (IPO) of

Prince Pipes and Fittings

was subscribed 30 per cent till 10.15 am on Thursday. The issue received bids for 60,06,420 shares against an issue size of 1,97,74,012 shares.

The issue, whose bidding process kicked off on Wednesday, is demanding a PE multiple of 23.5 times at the upper limit of the price band Rs 177-178 per share.

The company on Tuesday raised Rs 150 crore from eight anchor investors, namely SBI Oman, Aditya Birla MF, SBI Life Insurance, HDFC Life Insurance, Mirae Asset MF, HDFC MF, Tata MF and NewMark Capital.

Analyst commentaries on the issue has been a bit mixed, given the outstanding litigations against company promoters who have exposure to real estate and infrastructure businesses. Some analysts say one may still subscribe to the issue for listing gains.

IDBI Capital said the company has six strategically located manufacturing plants and extensive distribution network of over 1,400. "Its focus on creating a strong brand recall has supported healthy sales growth over the years," IDBI Capital said.

“With the IPO proceeds, the company intends to repay partial debt and expand capacity at Rajasthan and Telangana plants. At the upper end of the price band at Rs 178, the company is fairly valued at 23 times PE on FY19 EPS of Rs 7.6. We recommend ‘subscribe’ rating to this issue, considering healthy sales growth driven by higher volume and improvement in net profitability driven by lower interest outgo, which strengthens its near term growth prospects,” it said.

Motilal Oswal Institutional Equities said there are concerns over the promoter’s pledge and related party transactions. But it feels valuations seem reasonable vis-à-vis peers, given the company’s financials and return ratios. “Hence, investors can 'subscribe' to the IPO from a listing gains perspective,” it said.

The brokerage said the company is focusing on improving product mix to expand its margins -- 13.9 per cent as of Q1FY20. Focus will be more on Housing and Water Supply & Sanitation, it said, adding that the company also plans to take its Trubore brand (premium brand in TN) pan-India over next 3-4 years.

IPO

via https://www.AiUpNow.com

December 19, 2019 at 12:07AM by , Khareem Sudlow