The initial public offering (IPO) of Exxaro Tiles, the Gujarat-based vitrified tiles maker, was subscribed 10.4 times on August 5 as the demand from investors remained strong on the second day of bidding.
The offer received bids for 11.91 crore equity shares against an IPO size of 1.14 crore shares, subscription data available on exchanges shows.
The portion set aside for retail investors was subscribed 21.3 times and that of employees saw 1.57 times subscription.
Qualified institutional investors had put in bids 1.66 times their reserved portion and non-institutional investors had bought 97 percent of their portion.
Exxaro Tiles garnered Rs 23.68 crore through anchor investors on August 3 against an offer size of Rs 161.09 crore. The offer comprises a fresh issue of Rs 134.23 crore and an offer for sale of Rs 26.85 crore by shareholders.
The proceeds from the fresh issue will be used to repay debt and working capital requirements.
Also read: Exxaro Tiles IPO: 10 things to know about the issue and the company
Exxaro Tiles commenced business as a manufacturer of frit, a raw material for tiles, and has over the years, evolved into a manufacturer of vitrified tiles.
"At the upper band of Rs 120, the issue is valued at P/E 35(x) its FY21 diluted EPS of Rs 3.4. The organised tiles industry has been gaining market share post GST implementation and midsized companies having stronger balance sheet and stable product portfolio are likely to deliver higher growth potential going ahead," Arihant Capital Markets said.
The brokerage likes the company which is backed by a widespread dealer network, in-house manufacturing facility and wide product portfolio of more than 1,000 designs.
"The company is continuously focusing on enhancing brand value and continued to improve operating efficiencies through technology enhancements and setting up own gas station which will help in sustaining margin going ahead," said the brokerage, which recommended subscribing the issue.
Exxaro is promoted by Mukeshkumar Patel, Dineshbhai Patel, Rameshbhai Patel and Kirankumar Patel, each with expertise in ceramics tiles industry.
In the grey market, Exxaro Tiles shares were trading at a premium of Rs 15-20 or 12.5-16.7 percent over and above the higher end of issue price band of Rs 120, IPO Watch and IPO Central data shows.
The grey market is an unofficial trading platform where shares get traded well before allotment in an IPO and listing on bourses.Disclaimer: The views and investment tips expressed by expert on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.