IPO Wave Returns As Four Firms Eye Rs 6,500 Cr

Rains have hit Mumbai and they have come not only early but have come with full force. In a similar fashion, the primary markets after a hiatus of three months is seeing a flood of issues in the market place. There were two mainboard IPOs which were open last week and four which would be opening and closing this week.

The first IPO last week was Borana Weaves Limited which had tapped the markets with its fresh issue for Rs 144.89 crores. The issue consisted of a fresh issue of 67.08 lakh shares in a price band of Rs 205-216. The issue was open from May 20 to 22. The issue received excellent response and was oversubscribed 148.78 times. QIB portion was subscribed 87.21 times, HNI portion was subscribed 237.42 times and Retail portion was subscribed 200.53 times. The issue would list on May 27.

The second issue was from Belrise Industries Limited which had tapped the capital markets with its fresh issue for Rs 2,150 crores in a price band of Rs 85-90. The issue had opened through May 20 and 23. Even though this is a large issue, there is no offer for sale component. The primary objective of the issue is to repay debt of Rs 1,618.12 crores. The PE for the issue on a fully diluted basis is 17.78-18.83 times. The price looked decent and the issue therefore received excellent support. It was subscribed 43.73 times overall. QIB portion was subscribed 114.72 times, HNI portion was subscribed 40.58 times and retail portion was subscribed 4.52 times. The issue would be listing on May 28.

The first of the issues to open in this week is from Schloss Bangalore Limited. The company is raising Rs 2,500 crores from a fresh issue and Rs 1,000 crores from an offer for sale in a price band of Rs 413-435. The issue is open through May 26 and 29. The companies name ‘SCHLOSS’ in German means castle and therefore the company is into the business of luxury premium palace hotels in India. It acquired the erstwhile hotels of Leela Palace in Bengaluru, Jaipur, Chennai, Udaipur and New Delhi. All these hotels are owned by the company going public. Besides these, it has eight hotels which are managed. The EPS for the year was Rs 1.97. The PE multiple at this EPS is 209.64-220.81. Even on valuations it is more expensive than that company which trades at a PE multiple of 57.17 times.

The second issue is from Aegis Vopak Terminals Limited which is also open from May 26 to 28. The issue consists of a fresh issue of Rs 2,800 crores and the price band is Rs 223-235 per equity share. The company is the largest Indian third-party owner and operator of tank storage terminals for liquefied petroleum gas and liquid products in terms of storage capacity as of 31/12/2024. The company has an aggregate storage capacity of 1.50 million cubic meters for liquid products and 70,800 metric tons of static capacity for LPG. The majority of the storage facilities are spread across the west coast of India.

The fully diluted EPS was Rs 0.89. The PE multiple for the year ended March 24 is in a band of 245.05-258 times. Looking at the nature of the business the capacity utilization needs to improve before the valuations come to reasonable levels. This issue therefore becomes for the longer term and only investors looking at such an investment horizon should invest.

The third IPO is from ProstarM Limited which is tapping the capital markets with its issue for 1.60 crore shares in a price band of Rs 95-105. The issue would be open from May 27 to 29. The company is engaged in the business of power solution products and is a one-stop solution provider for the same, It does designing, manufacturing, assembling, sales & service and supply of energy storage equipment and power conditioning equipment. The PE band for the share based on March 24 numbers is at 17.46-19.30 times. Looking at the opportunity that lithium-ion cells offer in all applications, investment is warranted for a medium-term perspective.

The fourth and final IPO is from Scoda Tubes Limited which is tapping the capital markets with its fresh issue for Rs 220 crores in a price band of Rs 130-140. The issue will open from May 28 to 30. The object of the issue is to spend Rs 76.99 crores in capex and Rs 110 crores in working capital. The company is a manufacturer of stainless-steel tubes and pipes. Earlier these products were primarily imported and slowly and steadily over the last decade or so, they are being manufactured in India.

The EPS was Rs 4.60. For the nine months ended December 24, the EPS was Rs 6.08. The PE band for the company is 28.26-30.43 which is attractive considering the future prospects.

Invest for medium term perspective

The above four issues are all basically for the medium term. While there could be listing gains looking at the market mood, real money would only be made in the medium term

(The author is the founder of Kejriwal Research and Investment Services,

an advisory firm)