Markets

RITES, Fine Organic initial public offers see investor rush

Mumbai: The two initial public offerings (IPOs) which closed on Friday — state-owned RITES and Fine Organic Industries — received strong investor response.

The Rs 466-crore IPO of railways consulting company RITES closed on Friday with a total subscription of 67 times.

The Miniratna companys IPO, priced at Rs 180-185 per share, saw retail investors portion being subscribed 15.2 times and employees portion being subscribed 0.96 times. Both retail investors and eligible employees will get a discount of Rs 6 per share on the offer price. The quantum of shares reserved for qualified institutional buyers (QIBs) and high net worth individuals (HNIs) got subscribed 71.7 times and 194.6 times, respectively. Overall, the issue got bids for 168.9 crore shares against 2.5 crore shares on offer.

The Rs 600-crore IPO of oleochemicalbased additive manufacturer Fine Organic Industries also closed on Friday, with the issue garnering bids for 4.8 crore shares against 53.65 lakh shares on offer, which amounts to subscription of 8.9 times.

The QIB and HNI categories were subscribed 12.8 times and 21 times, respectively, while the retail investors category was subscribed 1.5 times.

The IPO included an offer for sale of 25% stake by the promoter group with a price band of Rs 780-783 per share. The company had raised Rs 180 crore from anchor investors at the upper end of the price band on Tuesday, a day ahead of the opening of the IPO on Wednesday.

While both the IPOs hit the market at the same time, analysts said RITES IPO got subscribed more because of attractive pricing.

“RITES IPO did well mainly because of the pricing and discount to retail investors even though the companys core profitability declined in FY16 and FY17 and RoE (return on equity) is not attractive for an asset-light consulting business,” said Geetanjali Kedia, senior research analyst at SPTulsian.com.

Growth visibility helped the IPO of Fine Organic, said analysts.

“It has good growth visibility as capacity will double in the next two years. Valuation versus peers is also attractive,” said Kedia.

Ahead of the IPO, most of the domestic brokers had recommended subscribing to the IPO of RITES citing reasonable valuations. However, analysts were divided on Fine Organics with many of them recommending subscribing to the issue only with a long-term horizon.

Between January and May, 15 companies have raised about Rs 20,400 crore through the IPO route, data by primary market tracker Prime Database showed.

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